The long farewell: Peugeot' departure from the U.S. market

Business Horizons, May-June, 1995 by Jean-Loup Archawski, Francis W. Wolek

PMA's commitment to this high-volume, full-line approach is evident in its policies of building as large a distribution network as possible so that it would reach a critical mass for brand recognition. One of PMA's presidents had the goal of a dealer network comparable in size to Volvo's, a company with five times Peugeot's sales. The following statements of Peugeot's president Jacques Calvet in 1990 also reflect a commitment to the culture of mass operations:

I'd be a complete fool if I didn't feel the impact of the new competition. I've been clear-minded about the problem for a long time. But... I think [lucidity] should lead to a strategic choice, and ours is to improve our group's production, its productivity and the quality of its products. (Resener 1990)

After the success of Peugeot's diesels, PMA began to develop an American approach to the market. However, sales dropped markedly and attention-winning success did not emerge to counter the mass-volume culture that dominated Peugeot in both Europe and the United States. For example, from the mid-1970s to the 1990s, Peugeot was essentially a one-model company (the 505) in the United States. Why couldn't it have operated with a distribution and marketing system appropriate to this de facto niche position? One answer is that Peugeot had become a prominent player in an industry that was permeated with mass-volume thinking. The problem was that such thinking was an obstacle to strategically focusing on a target market with a specifically designed car and distribution system.

A STRATEGY FOR LONG-TERM CUSTOMER LOYALTY

What strategies did Peugeot try and with what success? The executives who led PMA were aware of the need for an American strategy. Indeed the themes that dominated the firm's advertising show that management tried several different strategies over the years.

Strategic Alternatives

The following themes characterized Peugeot advertising during the 1970s and 80s:

* 1971 to 1976--"Comfort'' advertisements stressing space, extensive testing, room, and plush seating.

* 1977--"Luxury Car Comparisons" stressing the engineering of a Mercedes, BMW, or Jaguar with greater comfort.

* 1981--"Upscale Sports" ties stressing association with tennis and skiing.

* 1983--"Slice of Life" advertisements associating Peugeot ownership with upscale life styles.

* 1984 to 1987--"Performance" advertisements stressing the engineering, comfort ("Nothing Else Feels Like It"), and power of the 505.

* 1989--"Family Safety" stressing the use safety of a 505 station wagon.

Peugeot's advertising shows a tension between promoting advantages of comfort and performance recognized in Europe and the image of a luxury car. From the mid-1970s to mid-1980s, Peugeot abandoned its identity as a maker of comfortable cars for one with luxury marques and the lifestyle of upscale socialites. New executives adopted the predominant approach to a marketing strategy in the U.S.: extolling the performance advantages of the 505. The clarity of Peugeot's identity as a maker of comfortable family cars was, however, diffused with its identity as a maker of powerful cars that won races.