Much Ado About Chrysler - George Murphey interview examines Chrysler Group marketing strategies and plans - Company Profile - Statistical Data Included

Brandweek, April 9, 2001 by Karl Greenberg

Daimler Chrysler. It was supposed to be a merger of equals, but not long after the $36 billion fusion of Daimler-Benz and Chrysler in 1998, the combined entity began looking less like a high-powered two-seat coupe and more like a bicycle-built-for-two with a flat tire and missing rider on the back seat.

A persistent underlying problem within Chrysler Group's marketing division--characterized by overestimating market demand that resulted, for example, in a glut of Town & Country and Voyager minivans last year--led to critical mistakes in the second half of 2000 and a staggering loss of more than $2 billion. As a result, DaimlerChrysler has been forced to make drastic management changes and institute massive white- and blue-collar layoffs, along with production cuts.

The bad news culminated in reports late last month that the German-American company was considering selling off its money-losing U.S. unit. DaimlerChrysler would not comment on those reports, but CEO Jurgen Schrempp has called a sale of Chrysler "out of the question." Meanwhile, the automaker is forging ahead with its $3.6 billion turnaround plan for the Chrysler Group.

As part of that effort, the company went fishing for global marketing talent and found it at Ford, which had just come off a banner year with product and marketing-driven success in its Ford Division. Along with former vp-global marketing Jim Schroer, Daimler brought in George Murphy, 45, former Ford Division general marketing manager and one-time vp-worldwide product management at General Electric. Murphy joined DC in February, taking the reins from Arthur "Bud" Liebler.

As sup-global brand marketing, Murphy arrives as DaimlerChrysler is trying to re-badge itself as an "aspirational" car maker. His charge? To give the Jeep, Dodge and Chrysler brands a new life consistent with their core brand values--Dodge: "bold, capable, powerful"; Chrysler: "expressive, athletic, refined"; Jeep: "authenticity, reach, mastery nature."

"That's one of the reasons I came here," Murphy said during a recent interview with Brandweek. "To find what the brands stand for, what their true customers are, what the emotional piece of it is and to help the system decide which types of vehicles with which nameplates maximize profitability."

He has his work cut out for him. While Chrysler chalked up record sales in 2000 on the strength of its Town & Country and Voyager minivans, its troubles began when Hondas acclaimed Odyssey minivan and others entered the fray Suddenly Chrysler was sitting on excess inventory Consumers were not only opting for other brands, they began bypassing minivans altogether for more trendy SUVs. The company was forced into offering large discounts--as it did across all its vehicle categories--which cut into margins and overshadowed those initial gains.

Chrysler's share in the minivan market fell from 50% in May 1999 to about 44% in July 2000, per Ward's Automotive Reports. Attempting a comeback, Chrysler launched a $100 million ad campaign in September for its 2001 model minivans, touting such "firsts" as power gatelifts. Though initial sales were strong the minivans were left unsold, partly because their innovations made them too costly At the end of 2,000, Chrysler's minivan share was down to 35.3%.

In other segments, Chrysler is banking on its 2002 model launches to prove it can add life to its Jeep and Dodge divisions. Jeep Liberty which will eventually replace the Cherokee, and Dodge's 2002 Ram 1500 quad cab truck are scheduled to arrive during the summer and fall, respectively The company has touted the start of a "Dodge Ram renaissance," as all-new versions of the heavy-duty 2500 and 3500 models will follow for the 2003 model year.

Industry observers have warned, however that the new vehicles may contain the same overengineering and high sticker prices. Though Chrysler has said it will take two years to fix the production problems, it also plans to respond on the front end by eliminating some unnecessary options. Indeed, the company has trimmed the base price for Liberty to under $20,000.

How much Chrysler Group will be able to right its course rests on Murphy's shoulders. Recently he and Schroer unveiled a new strategy to promote Chrysler, Dodge and Jeep in grocery and convenience stores, and at fast-food restaurants by 2002.

Officially Murphy oversees all marketing operations, including brand and corporate advertising, customer relationship marketing, motorsports, product marketing plans and research activities. How will he coordinate those efforts to return the world's fifth-largest automaker to profitability? He elaborates in the following interview.

Brandweek: Traditionally automakers made a certain number of cars and marketers figured out how to move them. But with demand expected to continue waning over the next couple of years, how will marketers work with production to make sure the cars being pumped out are the ones consumers will want?

Murphy: The industry used to be about, "How do you sell a mass product to a lot of people?" The whole mindset has to change. Now it's, "How do you start with a customer with confidence and help translate that to things the design community can action?"