What's behind the curtain
Posted by Tom Gable
General Motors held a major media event to promote the 230 mile-per-gallon capability of its Volt electric car, preceded by a “What is 230″ viral campaign. PR and marketing experts jumped in quickly to question the goal of the hype program for a car that wasn’t due out for one year. Was it a preemptive strike against other electric cars in the queue? Or one small step for GM in repositioning itself?
The campaign did create buzz, plus questions, criticism and skepticism – the PR reputation management Trifecta.
Even worse, the media missed the big story and one that potentially pops the 230 MPG bubble: the Volt will be more costly to own and operate than less expensive cars getting far worse gas mileage.
The media debate centered on the validity of the MPG claims. The Los Angeles Times pointed out that the 230 MPG was based on city driving where the car might never use the gasoline engine. GM had calculated highway mileage for longer trips but didn’t release the data. Cynics wondered if the number fell in the Hummer range.
CNET raised similar questions about the mileage calculations and said it “begs an obvious question: how can the mileage of electric vehicles be compared to gasoline cars?”
AdAge took umbrage with the “What is 230?” buzz campaign.
“The push was flawed because it was ill-timed, targeted a group that is not likely to be the core Volt buyer and — most of all — didn’t offer enough clues to engage people,” Abbey Klaassen wrote.
Ian Schafer, CEO of Deep Focus, said he saw more talk about the government moving onto a 230-volt standard than this being for an electric car. Jokesters wondered if the question came from Conan O’Brien asking what was the new weight of Christie Alley.
Scout Labs, which measures social-media chatter, noted in AdAge that the “What is 230″ buzz also helped deliver a spike for rival Toyota’s Prius, an unintended consequence.
AdAge asked GM why do a teaser campaign. CEO Fritz Henderson said that in order to win a new generation of buyers, “we need to relate to people between 16 and 30. They communicate differently and we need to make sure we plug into that.”
“That may be true, but so is this: At $40,000, the Volt will be too expensive for much of that demographic,” AdAge notes, which gets to the BIG issue.
Surprisingly, if you do the math on costs of the Volt versus traditional cars costing less and getting significantly lower miles per gallon, the Volt loses.
The following table shows the cost of owning and buying gasoline for cars costing $20,000, $30,000 and $40,000 (estimated cost of the Volt). The 48-month and 60-month payments were calculated at 10 percent interest using Bankrate.
For mileage, the calculations were based on driving 10,000 miles a year and getting 20 or 40 miles per gallon at a price of $4.00 a gallon. We rounded off the Volt to 200 MPG from 230, assuming there might be a little highway driving.
In the worst-case scenario of traditional cars getting 20 miles per gallon over five years and a total fuel cost of $10,000 versus $1,000 for the Volt, the $20,000 and $30,000 cars are $16,496 and $3,748 cheaper to own and operate than the electric Volt. At 40 MPG, the savings are $21,496 and $8,748 over five years ($5,000 total fuel cost versus $1,000 for the Volt).
Bottom line: before using all your big guns, tools and tactics to launch a new initiative, position or product, analyze the backfire. Will it be minor, from the omnipresent critics and skeptics, or could it create long-term damage to your reputation and future business and marketing goals?
Four and Five Year Costs – Volt Versus 20MPG and 40MPG Cars Costing $20k and $30k
|
Car Cost |
48 |
Annual |
Subtotal |
20 MPG |
TOTAL |
Diff |
|
$20,000 |
$507 |
$6,087 |
$24,349 |
$8,000 |
$32,349 |
$17,147 |
|
$30,000 |
$761 |
$9,131 |
$36,522 |
$8,000 |
$44,522 |
$4,974 |
|
$40,000 |
$1,015 |
$12,174 |
$48,696 |
$800 |
$49,496 |
|
|
48 |
Annual |
Subtotal |
40 MPG |
TOTAL |
Diff |
|
|
$20,000 |
$507 |
$6,087 |
$24,349 |
$4,000 |
$28,349 |
$21,147 |
|
$30,000 |
$761 |
$9,131 |
$36,522 |
$4,000 |
$40,522 |
$8,974 |
|
$40,000 |
$1,015 |
$12,174 |
$48,696 |
$800 |
$49,496 |
|
|
60 |
Annual |
Total |
20 MPG |
TOTAL |
Diff |
|
|
$20,000 |
$425 |
$5,099 |
$25,496 |
$10,000 |
$35,496 |
$16,496 |
|
$30,000 |
$637 |
$7,649 |
$38,245 |
$10,000 |
$48,245 |
$3,748 |
|
$40,000 |
$850 |
$10,199 |
$50,993 |
$1,000 |
$51,993 |
|
|
60 |
Annual |
Total |
40 MPG |
TOTAL |
Diff |
|
|
$20,000 |
$425 |
$5,099 |
$25,496 |
$5,000 |
$30,496 |
$21,496 |
|
$30,000 |
$637 |
$7,649 |
$38,245 |
$5,000 |
$43,245 |
$8,748 |
|
$40,000 |
$850 |
$10,199 |
$50,993 |
$1,000 |
$51,993 |
