Brand Health Check: Peugeot

The model represented a high-point for the marque, which two decades

earlier had emerged as a mass-market manufacturer, after starting out as
a specialist, upmarket brand.

It has since lost its way. According to the Society of Motor
Manufacturers and Traders, Peugeot's UK market share dwindled from 8.2%
in 2002 to 5.9% last year.

While competitors' strategies, consumer tastes and the market itself
have changed since the 205 launched, Peugeot has struggled to adapt.

Its most recent setback was the failed launch of the 1007, a
premium-price small minivan, whose USP was electric sliding doors.
Suffering from a poor reception, the French car maker was forced to
scale back production.

The company is in desperate need of further innovation, as some of its
more successful models have long passed their sell-by. The French car
industry, which includes Renault as well as Peugeot and its sister brand
Citroen, has a reputation for producing stylish, practical and
innovative models. But design alone is not enough - and what they are
not associated with is premium pricing.

This is a particular problem because of the emergence of the value-led
Asian marques Daihatsu, Kia and Hyundai. The unreliability associated
with these companies is largely behind them, and consumers are now
confident they will not be let down.

Meanwhile, the premium German marques, such as BMW and Mercedes-Benz,
have started to encroach on Peugeot's territory by producing the small
cars that were once the domain of mass manufacturers. This means
consumers now have far more opportunity to trade up in terms of brand,
while still buying a small car.

Squeezed at both ends, Peugeot is attempting to fight back with the
launch of its 407 saloon and the upcoming introduction of the 207, the
successor to the popular 206.

Will they be enough to lure back drivers to the marque? We asked Jorian
Murray, managing director of DDB London, which handles the Volkswagen
account, and Richard Gillingwater, director of strategy at automotive
brand experience specialist Marketplace.

DIAGNOSIS 1 - JORIAN MURRAY MANAGING DIRECTOR, DDB LONDON

In the 90s, Peugeot was a force to be reckoned with. The 405 was a huge
hit in the executive saloon sector, offering French style and
panache.

Supported by iconic ad campaigns such as 'Fields of fire' showing a
cornfield bursting into flame accompanied by Berlin's song Take My
Breath Away, this truly was the sexiest car a sales rep could have. The
media strategy was equally ballsy, investing entire annual ad budgets
behind single high-profile campaigns for iconic models. Peugeot was
bold, sexy and stylish.

However, Peugeot is now squeezed from above and below. On one hand,
premium brands such as BMW and Audi have extended their model range into
the midmarket with the 1 Series and A3, while on the other, Peugeot's
design credentials are being undermined by the mass-market brands; the
Corsa, Focus and Megane have upped the style stakes across the entire
market. Add to this the more attractive Japanese models and low-profile
and fragmented communication campaigns, and the reasons behind Peugeot's
poor sales become clear.

REMEDY

- Reclaim the excitement and passion of Peugeot in the 90s and seize the
sexy, stylish French high-ground.

- Use bold, ballsy, high-profile campaigns, focusing on single, iconic
models.

- Return to the flattering campaigns that made Peugeot drivers feel
special.

- The 206 has been struggling to compete with the Clio, Yaris and Polo,
but the new 207 gives Peugeot a chance to reclaim its traditional young
female market.

DIAGNOSIS 2 - RICHARD GILLINGWATER DIRECTOR OF STRATEGY, MARKETPLACE

Why buy a Peugeot? A tricky question. It's not the cheapest, nor the
most reliable, nor the most stylish car around - in fact, Peugeot is
hampered by a failure to carve any niche for itself in the market over
the past decade. As a result, its sales results for the six months
ending in June 2005 show that its UK market shrunk by almost 5%, mostly
due to a 16% fall in sales to private buyers.

With its traditional reputation for small, stylish cars increasingly
eclipsed by Japanese competition, and a history tainted by poor-quality
engineering, Peugeot can't rely on the strength of its product alone to
attract new customers.

Although its brand values - style, innovation, performance and
reliability - are essential, they're not unique. Peugeot needs to
establish a USP to reconnect with customers.

The cars are priced from £6000 to £26,000, and with
individual communication strategies focused on the different models,
Peugeot needs to create a clear and relevant brand position for its
marque to mend its fragmented image.

REMEDY

- Peugeot's corporate language is based around manufacturing. Shift this
focus to a brand- and customer-centric internal communication.

- Connect the brand to people's lives. 'The drive of your life' - is it
really? The strapline needs to make an emotional connection with
potential customers.

- Build consistency of campaigns.

- Deliver a unique brand experience that reflects the brand's core
promise.