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 / Second Quarter 1997 / Issue 7(originally published by Booz & Company)


Conceptual Re-engineering at Nissan

Another example: When I became president and chief executive four years ago of the Nissan Motor Corporation U.S.A., the American sales, marketing and distribution arm of Nissan (which encompasses the Nissan and Infiniti brands), I transformed the previous and perennial record of falling short of sales objectives into a sales increase of more than 30 percent, followed by solid sales/profit accomplishments every succeeding year. However, despite the huge achievements, the employees told us in a survey that we didn't understand their needs! I was surprised that corporate success didn't automatically breed high morale. I was also surprised to find that employee-oriented company activities related to performance evaluation and career planning that had worked for me as I was beginning my career didn't affect this generation the same way.

A third example: Despite spending significant amounts of marketing dollars, and despite terrific products, our imagery indicators kept falling and the cost of sales per unit kept rising. We were all puzzled that our sales momentum and our marketing messages on the attributes of our various models were seemingly falling on deaf ears.

I quickly came to realize that our employees and consumers were telling us the same thing: that, as executives, we were out of touch and trying to satisfy ourselves through our mind-set -- rather than being able to see the world through their eyes.

For me, it was a relatively simple matter to make the shift. But to carry out that change within our company required a conceptual re-engineering process that has been anything but simple. It is a year old at this point and certainly hasn't run its course.


Consumer behavior has changed dramatically in the last decade. When consumers felt everything would improve as they grew older, their spending patterns were predictable. As they moved up in status and income, everything they purchased seemed to be bigger and better.

But the economic dislocations and uncertainties of the last 20 years, and especially of the early 90's, have created a curious hybrid: cautious consumers who are nevertheless willing to pamper themselves once in a while, as long as the pampering is perceived to be worth the money.

No company has had more impact on our recent understanding of consumers than Starbucks, the Seattle-based coffeehouse-cum-cultural-center/neighborhood-hangout chain. It has grown from a local fern bar into a national presence by persuading people to plunk down $2.50 and more for a cup of coffee. It is not just a normal cup of coffee, of course, being a very good cup with a pleasant place to drink it -- but that's not the point.

Starbucks has redefined leisure, giving its customers a new kind of (non-alcoholic) place to interact and take a break -- the same lifestyle/break that Coke ("The Pause That Refreshes"), then Pepsi ("For Those Who Think Young"), then McDonald's ("You Deserve a Break Today") offered their consumers. It's the same kind of lifestyle/break that we auto makers say our customers will get when our ads show them driving for pleasure -- whether it's an Infiniti sweeping along a scenic road or a Pathfinder plowing through the snow.

Moreover, Starbucks challenged the former wisdom that brand identity was no longer important. It is one of the hallmark companies that have resurrected brand loyalty, by giving customers good value (even though the cost is relatively outrageous) with no aggravation in a nice environment.

Unfortunately, the car industry is seriously out of sync with consumers on the "non-aggravation" scale. Surveys consistently indicate that buying a house and buying a car are about equal in the amount of stress and anxiety they cause consumers. All but the most determined and confident hagglers typically sign off on a car deal thinking they were taken advantage of by a sharp salesperson, and therefore paid too much.

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