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Ad firms roll the dice with car campaigns

Selling cars in Slovakia is no longer a simple matter of booking a few TV spots. Foreign car makers are finding that the big sums they spend on classic advertising campaigns are not buying them bigger slices of the market pie. The domestic manufacturer Škoda, on the other hand, has captured almost half the market with a cheap, traditional ad strategy.
Škoda is able to spend less on advertising for several reasons. First, Slovak consumers already feel a deep loyalty to the old "made in Czechoslovakia" brand, paying their respects both to the Škoda tradition as well as to the low retail price of their cars. Nor do Slovaks need to be told that Škoda service stations have the cheapest parts and the most locations in the industry. Add up all these factors and it is no surprise that the Škoda name is a top seller with minimum ad exposure.

Selling cars in Slovakia is no longer a simple matter of booking a few TV spots. Foreign car makers are finding that the big sums they spend on classic advertising campaigns are not buying them bigger slices of the market pie. The domestic manufacturer Škoda, on the other hand, has captured almost half the market with a cheap, traditional ad strategy.

Škoda is able to spend less on advertising for several reasons. First, Slovak consumers already feel a deep loyalty to the old "made in Czechoslovakia" brand, paying their respects both to the Škoda tradition as well as to the low retail price of their cars. Nor do Slovaks need to be told that Škoda service stations have the cheapest parts and the most locations in the industry. Add up all these factors and it is no surprise that the Škoda name is a top seller with minimum ad exposure.

Foreign car makers have decided to rethink their advertising campaigns as a result. If they can't beat Škoda's prices, the new thinking goes, then they will have to mold the public's perception that consumers get more car for their crowns when they buy foreign. But the jury is still out on whether big-money campaigns and new-wave approaches are enough to lure Slovaks away from their beloved Škoda.

Adding to the mix is that foreign car brands, hurt by Slovak import duties and surcharges, are finding that they cannot beat Škoda's bottom line. As a result, foreign car advertising campaigns are beginning to turn on what extra services and products consumers receive when they buy foreign.

Most advertisers agree that classic, "above-the-line" advertising, which involves print and electronic media and billboards, will always have a place in ad campaigns for car makers. "You have to do something in classical advertising, to remind people that you are still here, still OK," said Martin Gärtner, Daewoo's account representative at Image s.r.o..

'New wave' advertising

But, according to Gärtner last year's big ad campaigns, like Daewoo, Renault, and Citroen, were not efficient. "You can spend 30 million crowns saying your car is the best, but everybody has a good car," he said. "It's not working now. You have to say more."

Hence the 'new wave' in auto advertising, the "added value" approach. Gärtner said that Daewoo has decided to concentrate on "strengthening its dealer network, the work of dealers, sale and service." Image's advertising strategy for Daewoo is one that emphasizes the concrete benefits rather than the image of the foreign brand. "Classical advertising is not so important this year," said Gärtner. "You have to say what [people get] more in your car, so we are trying to do more things with our previous buyers and clients."

Gärtner believes that future advertising trends will focus more on the consumer. To make his case Gärtner cited a monthly Daewoo magazine, lotteries, customer outings and singing competitions as new gimmicks.

This is not to say that traditional advertising methods are dead. But the relative cost is high, when compared to the results. During the first seven months of 1997, the French car maker Citroen spent 9.1 million Sk ($300,000) on advertising in Slovakia, more than any of its market competitors. Citroen's market share, however, stood at just 1.97 percent, only marginally better than last year's 1.8 percent, and only good enough for tenth in market share (see chart above).

On the other hand, industry leader Škoda, enjoying a 46.6 percent market share, has spent only 4.3 million Sk ($143,000) on ad campaigns this year.

Another case shows that Daewoo which invested heavily in advertising in 1996 - 13.6 million Sk ($453,000) - boosted its market share to 15 percent, good for second position. However Peter Polák, Škoda's account representative at Soria & Grey, Slovakia's largest ad agency, suggested that the money spent last year on advertising at Daewoo had more to do with healing a sore market image than with adopting a cutting-edge advertising approach. "Have you driven a Daewoo? Just go try," he proposed.

Škoda's secret

Škoda can afford to be arrogant with its dominant market position. When asked about Škoda's advertising expenditures, Polak would only say that Škoda spends "not so much" on advertising as its competitors. Gärtner put it differently. "When you look at (Škoda's) ad agency, they do nothing, because they don't have to."

Dušan Koblišek, Director of Škoda dealer BOAT spol. s.r.o., agreed that his suppliers are sitting pretty. "Škoda spends only what is necessary for advertising", he said. "They don't have to build up the name...Škoda is an old, established company."

But there is more behind the high-visibility Škoda name than just tradition. "They have the widest sales and service network, the cheapest service and spare parts prices in Slovakia", said Gärtner.

Koblišek also singled out the simplicity of Škoda designs. "It's very important for people to be able to say, 'I can repair (my car) myself, somewhere at the side of the road'."

Other advertising agencies, however, see retail prices at the root of it all. "Škoda doesn't need to hype its name," said Slavomír Marušinec, of the Prague-based McCann Erickson, Opel's ad rep for Slovakia. "Because their initial retail price is cheaper than everyone else's...the only thing other car brands can stress is that their prices are not far from Škoda's."

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