During the New York International Auto Show this past week, Nissan’s CEO, Carlos Ghosn, made an impassioned plea to the auto industry to wean themselves from their addiction to discounts and incentives. Ghosn is quoted as saying, "Incentives are an insidious, confusing carousel that no one seems willing to get off.” He went on to say, "You'd be hard-pressed to name another industry so reliant on discounts." [SOURCES: NY Times article and CBS Marketwatch article]
Unfortunately, the discount addiction afflicting automakers hasn’t improved much since Brand Autopsy first made public the EDEO (Employee Discounts for Every One) Epidemic. While the EDEO discount programs may be dormant, they have been replaced by other dangerous discount deals. It has been reported the auto industry discounted, on average, $3,200 per vehicle sold in March 2006. (Oh my.)
Just maybe … this one courageous act by an auto executive will break the Circle of Discount Addiction that automakers are endlessly addicted to.
With Ghosn’s courageous words, the walls of denial are showing initial signs of crumbling, which may lead to finally breaking the Circle of Discount Addiction. Or, maybe the auto executives are too far down the destructive path of discount addiction that they cannot imagine operating in a business environment without it.
In an earlier post, I touched upon the difficulties discount addicted marketers face when trying to break the Circle of Discount Addiction …
"It’s very hard for the discount addicted marketer to maintain any semblance of a normal business life when he’s reached this point. Problems at staff meetings and at off-site business retreats start to intensify and clashes with the legal department over marketing verbiage in advertising collateral become more common.Faced with these devastating situations, the discount addicted marketer makes a promise to stop using low price marketing schemes. The promise by the marketer may be sincere and perhaps the marketer has come to accept he has a problem and has a desire to stop. Unfortunately, the marketer goes into fiscal withdrawal soon after the last discount tactic expires and unable to withstand the pain, the marketer starts to use again.
Following the broken promises, the discount addicted marketer once again retreats deep into denial. He will use low price marketing schemes less, he says, but he doesn’t have to stop because he doesn’t really have a problem. The circle of discount addiction continues.”
It pains me greatly to see an industry suffer so mightily from abusing low price marketing schemes. As a marketing doctor with Brand Autopsy, I’ve seen far too many businesses overdose on discounting. And once these businesses OD on discounts … they never seem to recover and regain the marketing vitality they once enjoyed.
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