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


Conceptual Re-engineering at Nissan

Nissan's identity during this period was murky. Until the early 1980's, we were well known as Datsun. Datsun's organization in the United States was started in 1960 by Yutaka Katayama, an entrepreneurial free spirit who guided the subsidiary until 1975, when he returned to Tokyo. Under Mr. Katayama, Datsun was regarded as the franchise for the real driver, that is, someone who enjoys driv-ing, as opposed to someone who just wants to get from one place to another. Datsun sold the first affordable high-performance sports car, the 240Z (shown above), and introduced the 510 performance sedan. It also sold the first small pickup truck in the American market.

In the early 1980's, the parent company decided to give all of its worldwide subsidiaries the Nissan name. With too little fanfare, Datsun disappeared in the United States. The company underestimated the difficulty of regenerating a successful brand with a new name in an extremely large country where the public is bombarded with thousands of commercial messages.

In short, few consumers realized that Datsun was now Nissan. We had lost the equity we had built up with car owners who had loved the 240Z and trusted the Datsun name. It would be many years before we were successful in gaining the same trust in the Nissan name.

In 1989, we entered the luxury car market with Infiniti, facing stiff competition from two earlier entries, Honda's Acura and, most especially, Toyota's Lexus. Infiniti now gets the highest industry marks for its core commitment to customers -- the Total Ownership Experience philosophy.


The 90's have been a decade of unending change for the car industry in the United States.

As the decade opened, the economy was settling into a long, slow-growth mode. Consumers demanded -- and got -- improved quality. The Government required increasing amounts of R&D investments for emissions and regulatory compliance. The pressure rose to shorten model life cycles, in order to woo prospective car buyers with the newest, greatest, everything-est vehicle.

Everyone's historical optimism carried over into tomorrow's production schedules, which, when added together, totaled much more than the industry's projected annual sales. Formerly great brands began to wither from confusion and misunderstanding ("We Are Not Your Father's Car").

Meanwhile, real estate values, which fueled consumer optimism, stopped rising reliably -- and then actually fell steadily. Consumers held on to their cars longer.

Enter stage left: "program cars," so called because they were part of an increased rental car company disposal program for manufacturers' excess production. The manufacturers even bought rental car companies for disposal purposes! Successful -- to a fault. The rapid turnover of doubly discounted vehicles (new to rental, then rental to auctioned used cars) was too much for even the cash-rich manufacturers to sustain. Exit stage right.

Enter stage right, in its place: lease programs from captive finance companies. At the same time, entering from center stage: dealer and customer incentive programs. All designed to "re-price" the manufacturer's suggested retail price to the level the consumer is willing to pay (the transaction price). The added enticement of leasing is that the total cost of incentivizing, by artificially increasing the residual values, can be delayed somewhat until the vehicle comes out of service.

From the orchestra pit comes a nonstop cacophony of "multitiered" advertising messages from all manufacturers and dealers, each touting a new product or new deal. But these "good news" messages are at odds with the welcome that consumers receive when they step into the showroom. There, the environment of oversupply and declining profits produces pressure for more sales -- today! -- and the sorry spectacle of one dealership putting down another to "win" the consumer's business. Sounds like a frenzied, futile mating dance, doesn't it?

But wait, there is more. To continue the stage left/stage right analogy, we then have whole new theaters open up. Examples: "brokers," the Internet, Circuit City's CarMax, Republic's AutoNation, and a host of public offering activities by dealer groups hoping to cash in on the public's possible attraction to their alternatives to the traditional dealership.

AutoNation has even bought its own rental car companies (Alamo and National). This time, however, the purpose is for the supply of "used" vehicles to AutoNation, rather than their disposal.

In other words, wherever you look, the car industry is in flux, forcing companies like Nissan to respond with changes of their own.


The most visible expression of Nissan's new marketing attitude and new reliance on its heritage was the ad campaign that debuted during the 1996 summer Olympic Games.

The "Love Life, Love People, Love Cars!" philosophy of the company's founder in the United States, Yutaka Katayama, was brought to life again in the set-up spots of the campaign. Mr. Katayama, known as Mr. K, first advanced that slogan in the 1960's as he established the Datsun brand in America. The new campaign's opening spots also introduced a "Mr. K" character, a lovable dog, and recalled the company's remarkable heritage of Datsun vehicles.

The American public is bombarded by more automotive commercials than any other kind. The average television viewer glazes over (or clicks away from) more than 6,000 car commercials annually. The battle for distinctive imagery is daunting, indeed. Because the history of our industry is product-oriented, most franchises promote themselves through advertising of model lines.

Nissan took a different route, following the Olympic spots with an unbelievable home-run commercial. This one followed the escapades of a young boy's male doll, as he commandeers a remote-controlled Nissan 300ZX to go to the boy's sister's room and entice the sister's female doll to leave her beau to join him for a ride -- all to the sounds of Van Halen's "You Really Got Me."

Created by TBWA Chiat/Day, the spot broke all the rules for the category. It dealt very little with the product itself. In fact, the 300ZX was a low-volume model that had recently been targeted for phaseout. But consumers got it. Time magazine, USA Today and Rolling Stone all named the spot the No. 1 commercial for the year in any category.

A few more commercials have followed (and many more are in the works), making this a true campaign. And already, USA Today's public polling placed Nissan in its esteemed Top Five listingfor campaigns in all categories in 1996, joining such perennial favoritesas Pepsi and Polaroid.


There are a bit more than 1,100 Nissan dealers in the United States, selling 700,000-plus vehicles annually. Another 150 dealers sell the company's Infiniti line, which accounts for 55,000-plus sales each year. Together, these operations represent approximately 5 percent of the car industry in the United States.

Although the dealers are independent entrepreneurs, our fortunes are inextricably entwined. We take the position that we should act as partners, treating each other with trust, respect and a sense of fairness. Thus, our dealers have complete access to our executive actions, decisions and retailer support programs.

Our retailers basically expect that we should keep them competitive with their rivals with regard to product offerings and quality, pricing and incentive support, as well as with imagery and showroom traffic. In return, we expect them efficiently and effectively to handle consumers and owners in such a way that they add value to the entire experience.

There are those in the industry, and from without, who predict (and are working toward) the demise of manufacturer/retailer relationships like ours. The irony is that, while we have been slow as an industry to respond to consumer needs, our distribution system is still the one that can best serve the customer over the long term.

Reprint No. 97206

Robert J. Thomas, Robert J. Thomas has been president and chief executive of the Nissan Motor Corporation U.S.A. since 1993. Mr. Thomas joined Nissan in 1982, as national sales planning analysis manager. He laterserved as regional sales manager in the Jacksonville, Fla., region, andwas appointed director, fleet and leasing operations, in 1984. In 1991,he was appointed vice president, corporate strategy and resource development. Mr. Thomas holds a bachelor's degree in engineering management from the United States Air Force Academy.
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