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Advertising Strategies in the American Automotive Industry: an Analysis of Information Content in Television Advertisments

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Advertising Strategies in the American Automotive Industry: an Analysis of Information Content in Television Advertisments ADVERTISING STRATEGIES IN THE AMERICAN AUTOMOTIVE INDUSTRY: AN ANALYSIS OF INFORMATION CONTENT IN TELEVISION ADVERTISMENTS A THESIS Presented to The Faculty of the Department of Economics and Business The Colorado College In Partial Fulfillment of the Requirements for the Degree Bachelor of Arts By Jessica Lynne Velasquez May 2012 ADVERTISING STRATEGIES IN THE AMERICAN AUTOMOTIVE INDUSTRY: AN ANALYSIS OF INFORMATION CONTENT IN TELEVISION ADVERTISMENTS Jessica Lynne Velasquez May 2012 Economics Abstract The automotive industry is a critical component of the American economy. The success of the industry is largely dependent upon the effectiveness of the advertising strategies and brand messaging of each company. The purpose of this thesis is to examine advertising strategies employed by three American automotive manufacturers through the analysis of informational content in television commercials. Furthermore, this thesis will address possible changes in advertising strategies as a result of an economic recession. This study found that there is a greater focus on general brand imaging during periods of economic recovery. KEYWORDS: (Automobile Industry, Advertising, Big Three) TABLE OF CONTENTS ABSTRACT…………………………………………………………………………... iii ACKNOWLEDGEMENTS…………………………………………………………… iv 1 INTRODUCTION………………………………………………………………… 1 1.1 Government Bail Out………………………………………………………… 6 2 BUYER DEMOGRAPHICS……………………………………………………… 10 3 METHODOLOGY………………………………………………………………... 16 4 DATA ANALYSIS AND RESULTS……………………………………………. 22 4.1 Ford Motor Company………………………………………………………….. 22 4.2 General Motors………………………………………………………………… 26 4.3 Chrysler………………………………………………………………………... 29 4.4 Ford Analysis…………………………………………………………………... 35 4.5 General Motors Analysis………………………………………………………. 36 4.6 Chrysler Analysis……………………………………………………………… 36 4.7 Conclusion …………………………………………………………………….. 38 5 CONCLUSION……………………………………………………………………... 41 LIST OF TABLES 3.1 Evaluative Criteria Rubric For Commercial Content Analysis ……………... 18 3.2 Modified Evaluative Criteria Rubric For Commercial Content Analysis…… 19 3.3 Summary of Commercials Under Analysis………………………………….. 21 4.1 Summary of Results…………………………………………………………. 34 5.1 Proportion of Television Advertisements Evaluated as Informative………... 42 ACKNOWLEDGEMENTS I would like to thank my advisor Professor Esther Redmount for all of her guidance and support throughout this whole process. I would also like to give a very special thank you to my family for their unconditional love. Thank you for supporting me in everything I do! CHAPTER I INTRODUCTION The American automotive industry is an absolute critical component of the U.S economy. The success of the industry has significant financial and social implications, on both a national and global level. A large portion of the industry’s success is dependent upon its ability to attract and retain consumers through the use of advertisements. The purpose of this thesis is to examine advertising strategies in the American automotive industry through the analysis of informational content found in television commercials. Furthermore, the goal of this thesis is to discover if informational content, and thus advertising strategies, changes after a recessionary period has disrupted the economy and the subsequent industries affected. Black. You could have Ford Motor Company’s Model T in any color, so long as it was black. At the time of production for the Model T, the American automobile industry was characterized by high competition but few consumer choices. As time went on, the competition decreased and the number of consumer choices sky rocketed. The industry became a classic tale of survival of the fittest. It was not long before three strong contenders emerged and dominated the market share for U.S. total vehicle sales. The American automotive industry is no Cinderella story however. It is not immune to the trials and tribulations of the American economy. With skyrocketing gas prices and increasing unemployment, those same industry giants were forced to reorganize and 1 2 refocus their business plans. Since the most recent economic recession of 2009, the American automotive industry has undergone major restructuring while attempting to move forward and set the stage for future production. This thesis will focus on how the automotive industry, specifically three American based companies, is using television advertisements as a means to position themselves within the market and convey specific messages representative of their brand. This thesis will analyze if and how those messages have changed over time, using the most recent recessionary period as a measuring point. Beginning in the 1930’s, the United States automobile industry became synonymous with the “Big Three” automakers. The big three refer to Ford Motor Company, General Motors Corporation and Chrysler Corporation. In 1961, their U.S. total vehicle sales market share equaled a combined 85.34 percent.1 No other automotive company came close to matching that sort of dominance during that time period. This was due in part to the ability of these companies to mass produce, a method first used by Ford. “Built Ford Tough” The first of the Big Three American automakers is Ford Motor Company. Henry Ford founded Ford Motor Company in 1903 in Dearborn, Michigan. Henry Ford used 1 Wards Auto. U.S total vehicle sales market share by company. 2010. Internet on-line. Available from <www.WardsAuto.com>. [December, 2011]. 3 the knowledge he obtained from building race cars and his passion for performance to establish himself and his company in a highly competitive and saturated automobile industry. Ford set the stage in 1907 with the introduction of the Model T. The Model T was a family car, a car that the average man earning an average salary could afford.2 The Model T was not only made for the masses; it was produced in masses. Ford capitalized on the conveyor belt assembly line method to produce the Model T’s. The company quickly recognized the need to diversify their selection and in the 1920’s the company not only added more models but it acquired Lincoln, creating an opportunity to offer luxury vehicles to its customers. This helped to keep Ford competitive in a market with several other major competitors, like General Motors. “Chevy Runs Deep” General Motors is the second company of the Big Three American automobile manufacturers. General Motors was established in September of 1908 by William Durant with headquarters in Detroit, Michigan. Durant was initially a horse drawn carriage salesman and went on to form his own carriage company before becoming the general manager of Buick. He eventually went on to form General Motors, which became a holding company for Buick. In a span of only a few years, General Motors also acquired such companies as Oldsmobile, Cadillac, Pontiac, GMC and Chevrolet. 2 Wicks, Frank. 2003. The Remarkable Henry Ford. Mechanical Engineering. 4 “Grab Life By The Horns” The third American automotive company included in the Big Three classification is Chrysler. Walter P. Chrysler, the founder of the Chrysler Corporation, ironically began his career at Buick where he started off as a works manager. It wasn’t until June of 1925 that Walter Chrysler founded the Chrysler Corporation after a reorganization of the Maxwell Motor Company. The Chrysler Corporation soon launched its Chrysler automobile which helped drive Chrysler into the number two spot for U.S. sales after only ten years. Soon after, Chrysler introduced several new brands, Plymouth, DeSoto and Dodge. Today, Chrysler now encompasses the Dodge, Ram and Jeep brands. While not the case a decade ago, it is now necessary to look beyond the Big Three American automakers to fully understand the industry as a whole. There are several other major players in the automotive industry that deserve recognition. Those competitors include Toyota, Nissan and Honda. Toyota is a Japanese-based automobile manufacturer that was founded in 1937. It began operations in the United States in 1957, setting up shop in Hollywood, California. The company found success in the U.S. market quickly with the Land Cruiser and Toyota Corona, followed up shortly thereafter with the even more successful Toyota Corolla. Toyota went from having only 5 0.06 percent of the U.S. market share in 1965 to 15.01 percent in 2010, coming in third behind General Motors and Ford. 3 Nissan Motor Company was established in 1933 in Japan. Like Toyota, Nissan found it crucial to export to the United States. The company made its entrance into the U.S. automobile market with the Nissan Datsun. Nissan formerly established itself in the U.S. in 1960 with the establishment of Nissan Motor Corporation U.S.A. Honda is yet another example of a Japanese automotive manufacturer that is now grounded in the American marketplace. Honda was founded in September of 1948. It became the first Japanese manufacturer to release its own luxury brand, Acura. The company experienced success in the U.S. marketplace since the vehicles it produces range from small to mid-size and include fuel efficient options. Honda has grown from having only 0.04 percent of the U.S. market share for total vehicle sales in 1970 to 10.45 percent in 2010.4 A much smaller section of the U.S. market share for total vehicle sales is held by German companies such as BMW and Volkswagen. BMW was founded in 1917 with its headquarters in Munich, Germany. Associated with BMW are Mini and Rolls Royce. In 2010, BMW accounted for 2.26 percent of the market share for total vehicle sales in the United States.5 Volkswagen was founded in 1937 in Wolfsburg, Germany. The company belongs to the Volkswagen Group, which today now owns Audi and Bentley, 3 Wards Auto. U.S total vehicle sales market share by company. 2010. Internet on-line. Available from <www.WardsAuto.com>. [December, 2011]. 4 Ibid. 5 Ibid. 6 among several others. In 2010, Volkswagen owned 3.04 percent of the market share for total vehicle sales in the United States. Government Bail Out In 2009, the government provided over 25 billion dollars in aid to the Big Three automobile makers. Trouble began brewing much earlier for these companies however.
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