Q&A: Mercedes’ Steve Cannon

NEW YORK With the launch of a $75 million campaign for Mercedes-Benz’ 2010 E-Class, U.S. vp, marketing Steve Cannon discussed the psyche of Mercedes owners, the role of  “rational red meat” in the ads and why the automaker is creating mobile apps for the first time. The following are excerpts of an interview with senior reporter Andrew McMains.

Adweek: How has the economy impacted your consumers?

Cannon: They’re definitely nervous. They’ve been shaken like they’ve never been shaken before. So, a bunch of confidence has been removed from the system. They’re still very optimistic. For the most part, these are people who are go-getters. They build companies, they’re leaders, they’re entrepreneurs. So, while they’ve taken a hit, there’s an underpinning of absolute optimism in all of our communications that we’ve had with those folks. Everybody has told us that they’re definitely taking tighter control over household finances. They’re postponing some things — some of that casual dining, some of that impulse stuff they’ve cut out. One lady talked about her 24-hour rule. She still loves to shop but she walks back out, gives herself 24 hours and, in most cases, doesn’t go back. So, they’re definitely cutting back. 

What have you learned from your dealers?

The dealers are definitely seeing a more cost-cautious customer. The way the dealers see it, it expresses itself in traffic: There’s a whole lot less traffic out there. [Customers] are giving them some reasons for optimism, so the E-Class is coming at a great time. It gives them a reason to re-engage with a very big customer base. The E-Class is in its ninth generation. We’ve got lots of E-Class customers out there and it’s important in a time like this to work with your loyal customer base. It’s easier to maintain loyalty than it is to [try for] conquest in a tough, tough market.

What are the biggest challenges of marketing a luxury product in a recession?

The biggest challenge for us is to connect with consumers that are postponing [purchases], cutting back. Almost to a person, though, in the dialogues I’ve had with Mercedes-Benz customers, they don’t see their Mercedes-Benz as a luxury. You’ve probably heard a couple of phrases out there, like “conspicuous consumption” and “luxury shame.” None of our customers are ashamed of the cars they own. In fact, for them a Mercedes-Benz is a necessity and it’s not a luxury by any stretch of the imagination. But we definitely have to give them the rational reasons to buy. That’s why our campaign is built on the heritage of 120 years and nine generations, but it’s all about innovation. That’s why we spent a lot of time highlighting [features such as] the attention assist, lane-keeping assist, blind spot merger, this automatic breaking system — life-saving technologies that matter to the customer whether you’re in a recession or not. So, we’ve built communications that’s giving them lots of rational red meat.

Have all your models been hit equally by MBUSA’s 30 percent sales decline year-to-date through May?

GLK is a great story. That just launched in January and we’ve got 30 percent share of the segment. That’s all on-top volume, which is great…Obviously, the segments that have been hardest hit are at the top [of the price range]. Some of the bigger trucks have been hit harder than the overall market. Most of the fun-to-have roadster SL and the heavier car S-class segments are down significantly. So, while the overall market [sales] were down 30 percent, the market itself is down 35 [percent]. The slight silver lining through a tough year is the fact that we’ve been gaining market share.

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