The role of experiential marketing in the Indian auto sector

Cars are still considered to be luxury in our country and to attract buyers, automotive manufacturers are working their way towards newer alternatives for connecting with potential buyers. People are becoming more brand conscious but this is a fairly slow process. Indians are very conservative with regard to spending a huge amount for cars and that is one reason why Indian and foreign car makers are spending crores of rupees every year to form that bond with car buyers.

Experiential marketing in the auto industry has a checkered history in fact. The economic reforms policies of 1991 opened the floodgates for aspirational consumers, soon after, an Indian company called Mahindra & Mahindra took a bold and risky decision: it wanted to become a major player in the Indian automobile industry (Yes, we know Tata Motors too has travelled the same path; but let's keep that story for another day!). It might sound incredible today, but M&M back then decided that "experiential" will be a key component of the marketing strategy of the company as it launched itself into uncharted territory. Back in those days, the Indian auto industry had a handful of automakers. Today, about two and half decades later, there are about 30 carmakers in the country with over 200 products on sale.

Before 1991, you had not many choices to pick from. Test drives were rare and the waiting period was months and sometimes years. In 1989, the Indian auto market for passenger vehicles had reached a sales number of 200,000 for the entire year. Today, the monthly sales of passenger vehicles exceed 200,000. We are one of the largest auto markets and expected to become the third largest market in the world by 2020. Major manufacturers like Maruti Suzuki are targeting sales of two million a year by 2020.As the market has opened to several automakers, everyone is looking at ways and means to engage with the consumer. There are several different campaigns that are held prior to a new product launch, during the launch and post it has been introduced in the market. Land Rover Experience is example where the brand invites potential customers to not just drive but take the vehicle for off-roading in the natural built conditions. Land Rover has been giving an opportunity to its existing and potential buyers to drive a Land Rover in a river, down a hill and other aspects to showcase how the brand is superior when it comes to off-roading. It encourages the buyer to try different things with their SUV and at the same time highlights the capabilities of the Land Rover DNA.
“One of the key reasons for Mercedes-Benz's strong brand presence and recall is its 'customer centric' approach. This is reflected in the marketing approach of the brand. We have adopted 'experiential marketing' as one of our key elements for customer engagements. We have pioneered the industry with experiential engagements like MB Trophy, StarDrive and now LuxeDrive,” stated Eberhard Kern, MD and CEO at Mercedes-Benz India. The German brand stands that experiential is leading to a whole lot of new ideation and‎ generating content for digital engagement. They have seen a lot of content integration through our experiential events like LuxeDrive, which has generated popular content and conversations. They have engaged several celebrities from different genres including popular Indian chef VikasKhanna.
Eberhardstates that in the coming few years - marketing will be driven by content and more integration with on-ground, digital, print, PR will be key to consumer engagement. The company is already witnessing this change. He states, “We have created LuxeDrive which is an ideal experiential event and combines haute couture and gourmet with the thrills of motoring. We are taking LuxeDrive to newer markets and newer customer groups."
We spoke to Frank Schloeder, Director of Marketing at BMW, who stated," Experiential has always been a key pillar in our strategy. In Luxury Marketing, it’s even more important, as it’s all about direct interaction with your target audience. That is not possible with ATL. Experiential is key in Luxury Marketing and will always remain very important also in future. When you offer high value luxury goods, people want to touch and feel it and also interact with the company. You can’t replace this with anything else."
Audi too has its Audi Drive Experience and then there is also the BMW Experience Tour to connect with the customers. About 10-15 percent of the marketing spends of automakers goes into experiential marketing. This percentage won’t increase, however the marketing budgets shall shoot up and so we can expect an increase in the number of experiential events. Today luxury carmakers especially the Germans spend in excess of 100 crore annually. Jaguar Land Rover is likely to touch this kind of spends in a year’s period, as they will be introducing more products. Recently, the company has launched the Discovery Sport, which is an all-new SUV that is luxurious and a serious off-roader too.

It isn’t just the luxury carmakers like Mercedes-Benz and Jaguar Land Rover who are spending towards experiential; automakers in other segments too are spending a good chunk of their money to emotionally connect with the buyers. Renault very recentlyconducted – “Passion for Life” as a two-day experience drivein Raipur. The unique part of this experience was that the excited 600 participants were also handed over certificates of participation and received encouragement from the able trainers. People of all ages participated in this drive around an obstacle course. Along with the experience drive, the two-day experience also included a blood donation drive in which many people volunteered. Renault also organized a free vehicle check-up in which more than 200 vehicles were serviced.

Tata Motors is one great example of a company who spends towards experiential marketing. The company conducted several campaigns for the recently launched Zest and Bolt. As the Bolt hatchback is sport, it was showcased in some stadiums during the IPL matches and many of them got an opportunity to experience the hatchback and the sedan during the match. The Zest and the Bolt were showcased to several potential car buyers at a customer clinic immediately after the 2014 Auto Expo. The brandalso participated in the Malhar festival of St Xaviers College in Mumbai with the newly launched GenX Nano. It has remained active with on-ground activities even after the launch. There is also a club called “S.O.U.L”(Safari Owners United League), which is a club for Safari Owners. There are several road-trips planned in a year for existing Safari buyers, where they get to meet and interact with like-minded car buyers.

In 2013 Ford India had decided to launch the Ecosport at a time when car sales in the country had started showing alarming signs of deceleration. The marketing team had to brainstorm and come up with something innovative. Thus was born the experiential Urban Discovery campaign. Three months before the launch, the Ford marketing team identified 100 potential buyers and wove the experiential Urban Discovery campaign around them. Even the guys at Ford were pleasantly surprised by the unbelievable customer reaction. Before the campaign reached its experiential climax, more than 60 urban Indians had booked the Ecosport.

That one example illustrates the sheer power of experiential marketing when it comes to the automobile industry. And marketing masterminds in the company acknowledge that. Says Rahul Gautam, Vice President, marketing at Ford India, "Experiential has been gaining popularity as a medium in the last couple of years and continues to grow. Ford’s strategy in experiential has been towards touching an emotional chord to make communication a lot more meaningful and impactful. Be it the EcoSport ‘Urban Discoveries’ campaign in 2013 or the recent Ford Figo Aspire 'What Drives You' campaign, all our campaigns draw their strength from experiences and will continue to do so in the future".

Mahindra was one of the first in the country to have launched an experiential campaign called Mahindra Great Escape, back in 1993. The idea and the strategy was simple: the company encouraged customers to actually go on long drives (Indian roads back then were not even a shadow of the many expressways we see today!) to personally and first hand experience the quality parameters of their newly launched SUV. Since then, the Mahindra Scorpio has become a kind of case study when it comes to successful as well as durable brand launches in the Indian automobile industry. The Great Escape was an annual event for many years. Then, towards the beginning of this decade, M&M decided to expand the scale and scope of this experiential process. The company in fact launched an entirely new vertical called Mahindra Adventure for this strategic purpose. At the moment, Mahindra Adventure organizes 10 Great Escapes every year across the country, apart from numerous one off experiential campaigns. It has also gone global by adding Nepal and Bhutan as destinations. There are plans to take this even to South Africa and Chile where Mahindra SUVs are quite popular.

The top 5 auto brands contribute to about 60% of thespends in advertising and at the moment, most of them spend about 10% of their budgets on experiential marketing. The budgets for both are on the rise, but we cannot expect the percentage to increase for regular car makers, however for luxury car manufacturers the number is on the rise and we shall see an increase in the percentage of spendings for on ground activities as buying a luxury car is more of an emotional connect than a necessity. So makers like Maruti Suzuki, Tata Motors, Hyundai, Mahindra are amongst top spenders in the market, with the German automakers like Mercedes-Benz, Audi and BMW leading the front for luxury car makers.

The number of events and the budget for affordable cars is higher and even the number of people attending it are greater in number. Hence, the expense for these segment makers is on the higher side than luxury car manufacturers.

As per our research, the total advertising spends in auto sector (annually) is 2300 – 2400 cr. Of this, the total spends towards experiential marketing is 290-300 cr**. Across the board, it is now acknowledged that experiential marketing will play an increasingly bigger role in the Indian auto industry. And it is not just about announcing a glitzy launch function where customers gawk more at the skimpily clad glamorous models wrapping themselves around a new car model.

As advertising in traditional media becomes more and more cluttered and more prohibitively expensive, the smarter marketing teams in auto companies will keep devising new and innovative campaigns that revolve around experiential marketing. Quite simply, no auto company can afford to ignore the power of experiential marketing as a tool.
The push for more and more experiential marketing and bigger budgets for this tool will gather momentum in the days to come, particularly in the auto industry which is one of the most spectacular success stories of brand marketing.

More than 30 years ago, Maruti Suzuki seeded the automobile revolution in the car segment in India. Simultaneously, a joint venture between Hero Motors and Honda seeded the two wheeler revolution in the country. Back then, barely 50,000 cars were sold in India every year. And there were just three brands. Look at how things have changed since then. Virtually every major global airmobile company in the world now has a presence in the country and is fighting tooth and nail for a slice of the pie. After a few years of recession, there are unmistakable signs of a sustained recovery in car sales. The day is not far off when car sales in India will cross the significant milestone of 5 million units per year, making it the third largest market in the world. Something similar has happened with two wheelers. Hero Motors is now the largest two-wheeler company in the world. And of all delicious ironies, it's erstwhile partner Honda, which now operates independently in India, is giving a tough fight to Hero in the face to become the number one two wheeler company in India!

They say competition is the mother of marketing. And the auto industry in India is perhaps one of the most fiercely competitive in the world. As companies keep launching new models to lure customers, they will inevitably invest heavily in mass marketing and advertising campaigns. But make no mistake, experiential will emerge as the arguably most important strategic tool in the armory of marketing whiz kids. After all, humans have demonstrated a strong and strange emotional connect with cars over the decades. If you have any doubts, start playing that legendary Beatles song one more time: Baby You Can Drive My Car.


*This article was first published in BW APPLAUSE
** Numbers are indicative and directional but not absolute.