Case Study:
How do companies “share the love” with their customers? Subaru of America, the automobile manufacturing division and brand name of Japanese transportation conglomerate Fuji Heavy Industries, attempts to “share the love” through its marketing efforts. Alexander Edwards, president of market researcher Strategic Vision, says, “In their marketing they’ve been focusing on what creates love between the owner and the automobile.” The focus of Subaru’s promotional campaign is to build the connection of fun and adventure with the Subaru brand. In 1968, Subaru of America began in Philadelphia and subsequently moved its headquarters to Cherry Hill, New Jersey. In 1986, the company was acquired by Fuji Heavy Industries. Internationally, the Subaru brand is identified by its use of boxer engines and the all-wheel drive train layout. In 2008, Subaru was the nineteenth seller of automobiles in the United States. The next year Subaru moved up to the number 11 slot. Subaru was the fastest growing mass-market automobile brand in the United States, outselling BMW. As it grew, Subaru decided to move away from its traditional customers who were concentrated in regions like the North American Rocky Mountains, New England, and the Pacific Northwest. The challenge is to appeal to drivers who don’t necessarily live in such a rough terrain, but not lose ground with its core customers. Edwards states that the average household income of a Subaru owner is $88,000, the same as Honda Motor and $10,000 more than Toyota. The average owner is younger than the industry average and more likely to be college educated. Subaru customers are penny-wise and do not make automobile purchases that stretch their budgets. This market wants to acquire exciting driving experiences, but not with a big price tag. Kevin Mayer, Subaru’s U.S.A.’s director of marketing communications, says, “We wanted to develop the next stage of that partnership. The idea was to emotionally connect with the customers.” The company’s research showed that its’ target market is particularly eco-friendly. One of the brand-building strategies was to build a manufacturing plant located in an official wildlife preserve with no landfill waste. Another is that at an annual sales event, customers can donate $250 of their Subaru purchase to one of five charities. The end result of these activities is that the company’s acquisition costs per customer are lower than those of its competition. Subaru takes a holistic approach to marketing its brand with the goal to demonstrate to customers that it “cares about their passion points.” Subaru managers believe that the market for the upscale buyer who values freedom and frugality exceeds 60 million. There are currently 2.4 million Subarus in use, which makes for a huge opportunity in the U.S.A. In order to maintain or grow market share, the firm will have to attract more customers. Its past tactics may or may not work in other regions of the country. If Subaru has to adjust its marketing tactics, will it harm its relationships with current customers who value the company’s outdoors, eco-friendly brand personality?
Question: Summarize the case and identify the dilemma facing Subaru.