What Is This Vehicle Supposed to Change For Our Brand?

Wolfgang Philipp: In the boardroom, the business case is tight. The numbers are barely making it across the line. But in the room, something else is happening. Everyone feels it. This vehicle is not just another program. It’s not built to fill a gap in the portfolio or optimize volume. People are arguing for it, not because it’s safe, but because it matters.

If we build it, the brand moves. And the real question becomes, „how can we make it happen?“ Felix, can you relate to this question?

Felix Kilbertus: Oh, absolutely. Wolfgang, good to talk about this because this is an important question. This is a question about change and the impact of change on a brand. And this is really the question that we want to talk about in today’s episode.

What is this vehicle supposed to change for our brand?

Wolfgang Philipp: Often the situation is the contrary, right? So that it’s just the bread and butter model that has to be realized and put into production but sometimes there are real passionate projects the whole momentum shifts that people are starting to work overnight to realize a vehicle like this whereas in the other the people are probably less passionate it’s it’s a whole different story right?

Felix Kilbertus: Good point. I think what you’re describing is a moment of decision but In a way, it’s almost like the Hollywood movie version of a boardroom decision. You know, everyone is happy. Everyone’s motivated. It’s clear. We’re going to do it. And, you know, it feels like Tom Cruise is walking out of that meeting and, you know, walking into the sunset.

So that happens, at least in my experience. But it’s kind of the exception because most of the time a board meets or any decision makers need to sit down is because a decision needs to be made because it’s not so clear because not everyone will be agreeing because some numbers will point this way, some numbers will point another way. There’s pros and cons.

So the reason why the board meets is to make a decision. So something needs to be decided and usually these are difficult decisions. But the question is: „What is this vehicle supposed to change?“

If we want to analyze it a little bit, it is about do we need change at all? What do we need change from? So I would start thinking about this in three layers, actually. One is, do we need change at all? And if yes, how are we going to go about this change? And then the third part is really, how do we measure these things? And how do we define success and failure in these questions?

And so the big question for me is actually, let’s start really with the beginning. So there’s the one extreme case where everything is clear. The product is super successful. No change is needed. That’s kind of one very rare situation. I would argue it’s also not a real scenario because something’s always changing. Time does not stand still. People don’t stand still. Technology doesn’t stand. But let’s just assume that one that’s one bookend. The other bookend is there’s nothing at all. So there’s no brand yet. So the question doesn’t get asked because you need to create everything. So somewhere in between these two questions, we need to tackle this issue of change.

Wolfgang Philipp: Yes. And I would even go one step further back. Why do we want change? So what is the driver behind it? Most of the time it’s we need growth. We want to have volume, market share, market driven. The other kind of change we want to talk about today is a brand driven change.

So what do we want as a brand or what do we need to build as a brand? And those are completely two different topics. And it also leads to your questions, right? So do we need to change the brand? Do we need to change the performance of the brand? Do we face declining market share? Tons of questions and a big rabbit hole.

Felix Kilbertus: Exactly. Let’s jump in like brave rabbits that we are.

Wolfgang Philipp: And find the snake.

Felix Kilbertus: Well, in some movies, the rabbit is more dangerous than the snake. So as you described, there’s change where you have something that you want to keep. So you’re basically in a constructive environment where you say, we have a successful brand. This product will help us to go up in terms of, let’s say, excitement, in terms of brand positioning. So you need to do something better than before, more of something, seduce new customers.

So that’s one, the up scenario. There’s also the scenario where you say, we have a very strong brand, but there are a number of customers we simply don’t reach because we’re operating in a price segment where large numbers of customers can’t have access to. So we’re going down market.

Classic example for a successful down market movement was Mercedes-Benz going into the Baby-Benz, as it was called in the 1980s, the 190. And then later on going down into the B class, A class segment, and also going down all the way into urban and new mobility solution with the Smart. And this is an example that I quite like because the brand comes from a position of strength, old money, real luxury, inventor of the automobile, goes down market and then goes down market and goes down market again until someone must have decided, well, this is a product we believe in. We’ll invest X hundreds of millions into this segment, but it’s no longer a fit for a brand. So Mercedes-Benz board at some point very clearly said, this is the end of our brand. This is the beginning of a new brand.

And then there’s one more movement. So we talked about the up movement. We talked about a down movement. There’s also what I would almost say a lateral movement, where you say, we are a great company, we have a great product, but we need to go into a market where quite simply we haven’t been yet. We go to a new continent, we go to a new culture. And those are fundamentally different problems to solve.

Wolfgang Philipp: Yes. What’s the problem of this question? I mean, let’s assume that the driver is, we need to make more money, so we want to increase the market share or increase our prices. So what’s the problem at the beginning of this question?

Felix Kilbertus: I think the problem or where I see the tension is when everyone has a different idea of what the problem is, everyone has different solutions. So every business naturally wants to make as much money as possible. So no one wants to throw money out of the window. But you always need to invest to have something that is so attractive that people want what you do.

So you need to be very clear where you are as a company, in my opinion. Are you producing a product of need? Are you producing a product of want? I would argue that almost all products in the auto industry are now products of want as much as need. So the problem is first of all when you don’t know what this vehicle is supposed to change so I would go almost from a yes/no decision tree in my designer’s mind – but I’m actually almost more curious how you would create a strategic framework where you say, how can we create some sort of like a safety net almost for the development? Where we answer certain questions in a way that all the actors can buy into not only the question but also the answer ideally.

Wolfgang Philipp: The safety net is the brand, the meaning of the brand. As you’ve said with the Mercedes case, they have their brand territory and their core model, basically the S-Class. This is what the brand stands for. And then they had a bottom end and they felt at a certain point, it doesn’t make sense to go any lower.

It was a great discussion with the Baby-Benz: Is this still Mercedes when we do this? As always, the product changes the perception of the brand. So to me, the product is the brand in reality. When the brand is a symbol for something, the theoretical explanation for what we stand for, a mindset, then the product is the reality of this. It makes the brand real. The moment you release a product, you inevitably change the brand if the product is different to what the lineup was before.

That’s why the brand is the safety net – when the brand has a meaning. When the brand is meaningless, you cannot answer this question. What does it do to our brand? You just say, okay, let’s go to that segment. This looks like the most profitable segment. What we see right now with the micro SUVs, it’s not really about the brand. It’s more about the segment. And then you have the danger of creating just another portfolio filler. And you have another product for a super saturated market. As you said, cars are not a product of need anymore. They are a product of want. In the products of want, the brand is the differentiator. And if you don’t know what the brand is about, what your safety net is telling you, then it’s pointless.

Felix Kilbertus: What you just said resonates with me. The idea of the product being the embodiment of the brand out there in reality. So it’s the one thing that is tangible that you can see, and that as designers you need to shape and create and give meaning to and press into form and develop of course.

So I like the idea of the embodiment and I want to take the metaphor a bit further, if you say embodiment as a body body’s age bodies are part of society bodies become stronger or weaker. I like that idea, let me run with this for a second. Because a brand is only as strong as relevant as it remains. So the greatest brand, if there’s no product in the street, you forget about it. People, you know, the historians will remember, the nostalgic car people will remember, there’s always a passionate car meet somewhere that has two of these last remaining, But it’s dead, basically, it’s museum territory.

We’re talking about what does it take to keep a brand relevant? And usually that means a brand needs to constantly be strengthened, even a successful brand, constantly needs to improve because everyone else is improving and it’s kind of human nature to grow and improve and learn from the past. So there’s, I would say, one vector for change is the natural rising sea level of competence of everyone else in every other industry. So the first rule, I would say, there’s absolutely no standing still. You can’t make the same product twice, just like you can’t swim in the same river twice.

Wolfgang Philipp: A perfect example for this is the Golf. It was basically always about the same idea, but the product completely changed over the years. Golf III brought ABS to the masses and then the subsequent model generations, they always brought new inventions that were previously reserved for Mercedes drivers, for S-Class drivers. It was a lot of work to keep the position in its markets, but it had to change a lot for that.

Felix Kilbertus: Great example, but for me it’s an example that is true in this logic until the Generation IV in Europe. One is the promise of the Volkswagen in a contemporary package, mid-70s. Two, move the game onwards, evolutionary. Three, something bigger had to happen. Markets had changed, new players came in, relatively big change. Four, brilliant change, like a lot of things that were relevant, brought a lot of other things downstream as well, like high quality touch surface, precision, gaps that were unheard of in any segment were in the market. But I would argue that from the generation 5, 6, 7 and where we are now, that sort of change brand shaper role that the Golf had has been lost. And you can see it in the numbers, the volume from 1, 2, 3, 4, 5 has continuously gone down since certainly since the fourth generation, because the relationship between the brand and the product has changed. It wasn’t the key product anymore, certainly not in the non-European markets.

Wolfgang Philipp: Yes, the Golf was always the core product, but there were other strong products added to the line. When the Golf IV was released, there was no Tiguan or some other SUV derivative of the same segment. So that’s the first point.

And the second is the technology has peaked at a certain level. Today, innovation is not as significant as it was in the 90s. So the ABS was a big step in the car and the ESP was a big step in the car. Airbags, air conditioning and the like. Today it’s standard. Every basic car has all of that. We are in an era where technology can no longer differentiate brands. Features can no longer differentiate brands. We’ve discussed this in the last episode with the why. The why has shifted. Just like the Beetle got problems because of his why that was outdated, the Golf is now declining because his why is outdating. It’s still relevant to a large extent, but not to this enormous extent that it was.

Felix Kilbertus: Fair points. I think that’s another episode I’d love to go into. Are we living in a period of fast technological change or slow technological change? Because arguably, there’s a certain standstill. And you can see it also quite simply by looking at all the vehicles in the street. When you look at a Golf from 25 years ago, something built in 2001, it does not look as old as a 25-year-old vehicle next to a Golf I. So there’s certainly a maturity in the product, but there’s also a sort of resistance to change.

One of my thoughts along these lines could be because we live in a moment where I think there’s a lot of anxiety, a lot of uncertainty, especially in the last 10 years or so, that we are less willing to give vehicles or products a role to really shift a brand. So we’re a very defensive industry at the moment. I like the question, „What is this vehicle supposed to change for brand?“ And I would argue in many cases, the answer is, well, let’s just make sure that it fulfills our brand promise and we not lose anything. It’s a very defensive moment at the moment. I can’t think of many products at the moment where I see a strong mission of change.

Wolfgang Philipp: No, what we are experiencing right now is that all the brands or other manufacturers, they are increasing their portfolios. They are adding more models. And this leads to a point where every model in the market has at least one counterpart, one exact counterpart.

Felix Kilbertus: Very true, but I would challenge that in a sense that I think we’ve seen peak growth, peak portfolio in many ways for a number of reasons. One reason is, as you said, there’s too many products from too many brands in the same segment. I have this memory of traffic light, three cars, same silhouettes, slightly different colors, mid-sized SUVs, and one was a Mercedes, one was a Citroën, and one was a Porsche. They all were mid-sized SUVs. And I was like, oh, wow, 50 years ago, and I’m not a nostalgic person, but 50 years ago, a traffic light, a Mercedes, a Citroën and a Porsche, that’s the beginning of a joke because you have three completely different characters. So I agree with you. The product has become the problem for the brand and the brand has become the problem for many products in their mission statement.

Wolfgang Philipp: The product always influences their perception of a brand and vice versa. And the brand also influences their communication and vice versa. And so they’re all mutually dependent. And this is why this question is as important as the one of the last episode, but now on the product level. Because it’s asking, „What is the car really about? What are we trying to achieve with this particular model? And what do we try to change? What is the momentum of the car?“

Felix Kilbertus: At the moment, I would say big picture, I think we see two completely different things happening at the same time. So we see an incoming reduction in lineups. Think of the case of Ford, for example. Ford lost almost all their iconic passenger car model positions. The Fiesta is gone, the Focus is gone, the Mondeo is gone, and many others are gone. And that’s just Europe. So there’s definitely a reduction because the market just simply doesn’t have eternal interest in these segments and these names. You could say the same thing for Fiat, for example. Fiat has lost a lot of central brand positions. I know that they’re working on replacing some of them, but they’ve lost a lot of it. If you travel back in time 50 years ago, Fiat had a position for every idea, for every person, for every budget in every country almost. And Ferrari had four models. Now it’s the opposite. Fiat has four models and Ferrari has 15, 16 models catering to very different cases.

What I’m trying to say is that there’s two completely different dynamics. Certain brands are at the end of the expansion phase. Some brands have already had to radically reduce. And I think you see another thing that is linked to a lot of these is the Chinese logic. For many of the Chinese OEMs and Chinese domestic market players, they have a very expansionist policy of really producing many models, producing also many brands and see what sticks. So you also see an inflation of brands. And I think we are at the moment where we probably see the limit of all of these expansions. We probably also see the limit of all these contractions. But it’s very important to really now re-evaluate what is the brand to product path and what is the product to brand path.

Wolfgang Philipp: Ford is a special example because they always had this split strategy with Europe and the US. So they had a completely different lineup in the US and in Europe. And I’d even say there would be a great demand for the Fiesta if it was still available. But there were many shifts that led to their decision to stop the production of it. Now they are trying to go back to where they were.

My impression is that models like the Fiesta or the Panda, the small one back then, not the current version, which is a segment higher – those cars, they have their business case and they have their demand in the market. But we have the emission regulations that were increasing and asked for higher standards or led to higher price points. What I imagine is that the business case said people wouldn’t buy the car, but then the prices of the whole industry increased dramatically in the last five years. And today the business case would look different.

Felix Kilbertus: What is interesting is that we see product-driven growth, especially from the new Chinese brands, newish, because some of them have been around for quite a while. And I think there’s a certain repeat because the successful products very quickly either anchor a brand, become brands.

Think of the story of Volkswagen. We were just talking about the Golf. It all started with one strong product that happened to work in surprising amounts of countries. You know, the Beetle was a successful product worldwide. It remained in production in South America forever. It never made it to China, interestingly. I wonder what would have happened with the Beetle in China. But China started later and they started with the tech generation 2.0.

Wolfgang Philipp: The Santana.

Felix Kilbertus: Exactly. So the question is almost like, „What do we let go of as a brand position? How brave can we be so that we can recreate fewer, more meaningful things?“ And that’s the big question, because for me, brand is not holding on to everything from the past and keeping every model plate alive. Definitely products have a life cycle and sometimes the idea is no longer good enough.

Wolfgang Philipp: I’d argue that the era of product led brand growth, or that you have a product first and then it shapes the brand – it’s over because the markets are saturated and nobody’s waiting for another model in the market. Unless it’s really a game changer and the last game changer that comes to mind would be the Tesla. The first electric car that works without sacrifices and it’s a fully fledged car.

So why bring in the hundredth model of an EV in the same segment and hope for the best? So now the brand is the driver and the brand is the safety net that you know what you are about. And if you don’t know what you’re about, then you’re just filling the portfolio or you’re just filling the market, but who will say, yes, this is for me, a brand I don’t know what it is about and a product that doesn’t have a clear message?

Felix Kilbertus: I think this is completely true for legacy brands in a conservative market. So the perfect example for me, Renault, Renault 5 Electric, conservative market Europe, legacy brand Renault, relevant product with a very clear brand and product brand decision comes to the market quite successful one of the best-selling electric cars. But why did they make this decision? It’s because they realized well in our conservative market this is worth something at the same time the opposite is true as well there is a number of no-name brands unknown brands that bring certain cars to the market and they become a brand quite quickly because people vote with their wallet and they walk into the dealerships.

And unknown brands, people are relatively brave if there’s a real value proposition to be done so it is a moment where as a brand you need to ask yourself are you a legacy brand yes or no and I think a lot of brands haven’t asked themselves that question. I’ll give you one example like a brand that has been is neither old nor new. There’s certain brands that are very old, of course in Mercedes no one questions the legacy of the brand, they invented the automobile in many ways but there are brands that are somewhere in the middle.

Let’s imagine a brand that is relatively new, let’s think of Mazda for example or Toyota or Nissan. Most of these brands are between 70 to 80 to 90 years old. They’ve been around when many other existing brands were already there, so a lot of these brands tend to see themselves as young brands and then they’re all of a sudden confronted with very young brands that are basically unknown. And most brands with the exception of Mercedes and a few really old brands have this dilemma. „What is our heritage? Is it heritage that is strong enough? Is it heritage that is even relevant for future customers?“ Because if I need to sell a Renault in China, no one knows what an R5 is. Or you could probably now extend it to many things. Many people will not know what a Volkswagen Beetle is.

Wolfgang Philipp: Heritage is only part of the DNA. And even a newcomer has a strong DNA if they have a strong why, as we discussed in the first episode, when you know what the brand is about, then it doesn’t matter if it’s a legacy brand or a newcomer brand.

It doesn’t matter because it gives you the momentum. My point is that when you enter a market, you have to know what you are about to be successful. Yes, you can go the value route, most bang for the buck, but then you are in the race to the bottom. There are no winners in the race to the bottom. Then you have to relaunch this model every year to keep it updated and now with a bigger screen and 500 euro less and whatever you add to that. It doesn’t make the cut just because it’s one feature ahead of the hundreds of other models in the market.

Felix Kilbertus: I completely take that and I think this is a recipe that worked in a continuously growing market. So think of the US post-war, the market expanded so quickly that – it’s not entirely true – but having products that were slightly better the next year would sell. I mean, there were the brands that didn’t keep up, fell behind. But since the pie was getting bigger, your slice in absolute numbers automatically got bigger.

But we’re not in that sort of market anymore. That was the situation in China until basically last year. But it’s no longer the case in most markets. So we’re in a situation, where that question, what does our vehicle do for our brand, becomes quite critical because there will be fewer products per brand, in the future. So each product needs to have a clearer mission than ever before. That means clearer design, clearer positioning and also means going away from positions that are no longer interesting for the brand. Too many products, too weak, is not good for the brand anyway.

Wolfgang Philipp: Yeah, this is the point of a brand in the first place – to have a certain meaning and to symbolize something. And when you are everything and everywhere, it becomes meaningless.

Felix Kilbertus: Very good point. So I think the question is, though, how do you measure this sort of success? Because I almost want to challenge you now because when I think of a very successful brand – and arguably it’s the most successful brand in the history of the car – Toyota, they do exactly at first glance in any case, as you described, they work for everybody.

I think they’re on every single market on the planet with probably the exception of North Korea and they have something to offer for everybody and yet they manage to really be an extremely powerful brand catering to an extremely loyal customer group but they do things very differently in each segment and in each market and for each customer group.

Wolfgang Philipp: Yes, at first they do everything different, but they have a strong meaning in a sense that you know what you get when you buy a Toyota. You know that there is quality. It’s not for extroverted people who want to show off. This is the car, but it’s not the naked product, it has a certain mindset to it. And Toyota is, for me, a showcase for this, how a brand can have a meaning that holds everything together. And it doesn’t become obvious on the surface for someone who is just seeing one car. But I’d argue that the people who buy a Toyota, they know very much so why they do this.

Felix Kilbertus: Very good. I would agree with you that in this case, it’s a fantastic example of the safety net idea of the brand. Because you can be almost – and I think that’s what Toyota has been successfully doing in these last years – they’ve pushed the boundaries of expression because they had such a strong safety net. So you can take risks in one area, design expression, product categories, because your brand promises are quite clear and quite strong.

Wolfgang Philipp: Regarding the design, I’m not convinced what Toyota is doing, but you have this strong identity in a car. And the Toyota way that was so successful in the last decades, I’d argue that they have to readjust in the future. Especially now that the quality is becoming better, that manufacturers start to produce their cars with third-party suppliers and quality is less important than it was 20 years ago.

Probably the why of Toyota is shifting right now, or it has to shift because every Chinese manufacturer can produce a perfectly fine, high-quality car. And even the Koreans who followed in this wake of quality.

So Hyundai and KIA said we can do the same for a better price. And now are followed by the Chinese manufacturers. You cannot differentiate products based on features anymore. It doesn’t matter because people don’t notice a difference. People who knew why they bought a Toyota 10 years ago, they probably don’t know it when they buy their next Corolla – when there’s another vehicle with a similar quality now at the same price or lower price.

Felix Kilbertus: I think Toyota is in a different position than almost any other companies because they have such a clear quality and reliability reputation. And yes, certain companies are close. Certain companies have really caught up quite quickly. Hyundai Group is a great example.

I’m not so sure yet whether we can already make that call for the majority of the Chinese OEMs because time will tell quite literally how long, how many hundreds of thousands, if not millions of kilometers these products will last. Maybe also consumer behavior has changed in certain markets. Cars don’t get used for as long.

And I think there’s also a shift in the electric powertrain and the expectations. Certainly in China, cars have become, I would argue, artificially cheap. Therefore, people keep them for small amounts of time. Therefore, the value of used cars have dropped. So it is a different situation where I’m curious also to understand how does Toyota react to that? Do they leverage their traditional strength of saying like, well, we’ve seen this for so many decades. We believe that this is our way. We will build a new loyal customer base that goes against the throwaway culture almost of certain new typologies. But yeah, you’re right. It is an interesting, critical moment.

Wolfgang Philipp: The strength of Toyota is the Japanese culture. The mindset of giving the very best to the customer and not failing the customer. And you always know this is the idea behind every product they do. It would hurt themselves if their product failed. And this is something that gives me as a customer a completely different picture of a car when I buy it than when I bought just a cheap car or just an average model.

This is on a surface level to me, the strength of all Japanese brands. The problem of Toyota is that it would have to go deeper, because there are also the many other Japanese brands who can rely on the same cultural perception. Just like Made in Germany also has a certain connotation to it. This helped our brands for decades to thrive in the market because Mercedes-Benz, it’s the best or nothing. And you know what it is about and you know what you get. But the moment we’re now in when features can no longer differentiate brands, then it’s really interesting because it’s shifting the perception of brands. And suddenly you have brands that can challenge these old connotations and say we can win a test against a Mercedes. And then it becomes very interesting what the brand is about.

Felix Kilbertus: It is interesting when you say like brand perception has changes, of course, over time. So to bring it back to this question, like what is the role of the product in shifting it?

First of all, yes, you need to decide who you are as a brand. We differentiate it between the legacy brand, the upstart brand, the brand that is not particularly well-defined, that needs to become more well-defined. I think the product can help. There are a couple of historical examples for that. We haven’t really talked about many examples of the startup company that defines itself through a new product, but also mediocre companies, so to speak, or undefined companies that get a push from a series of strong products.

I think it’s very often the idea of the brand shaper as a product that is maybe the most classic example of where this discussion happens in the company. When you’re faced with this question, „What is the vehicle supposed to change in our brand for our brand?“

As you described in the beginning, this moment in the boardroom where you say, like, everyone is agreeing on this, this is most likely a brand shaper. And sometimes you take these decisions to shape your brand by investing money. You’re not even quite sure whether it will pay back immediately in this product, but you will get positive benefits for your brand.

I’d be curious from your point of view, how do you explain this mechanism? Because as a designer going to art school, not knowing much about numbers, it’s a bit of a mystery. How do you measure the transfer, the positive transfer of a successful product into the brand? And how do you then convince your partners that it’s worth working extra hard to make this into a positive cycle?

Wolfgang Philipp: Like most things in marketing, you either have those metrics that are easily to track but not really useful. Or you have those metrics that are hard to track and are really useful.

When we have this brand shaper, it aligns the team. And I think this is the core of the feeling we described at the beginning in the boardroom. When like-minded people are in the same place and they feel the same, they want the same, then they are super aligned and they are ready to give everything to make that happen. Then it’s more than the sum of its parts because when everybody gives their very, very best and everybody’s trying to make things work out no matter what.

This is like the Tesla situation when Elon Musk sits on the factory floor and tries to make it happen and it didn’t happen that the last 500 trials, but he’s still there and he’s working overnight and he’s doing this. Some normal person who’s working 40 hours a week would never do this. And then the product wouldn’t be here or it would be at a different level and the reaction in the market would be completely different.

So the metrics, you probably cannot measure it in numbers, but you cannot underestimate the result of this because when everyone’s aligned and fully motivated then we talk about a completely different product and this is what we need today in the market. We have enough models, we have more than enough brands. People are looking for something special. The car is the second most expensive product after buying a house. You don’t just buy a car by running by a car store and then you say, „Okay, today it’s 500 euro less, let’s take it.“ This is a long decision, it’s a very long decision cycle, and when you know what the brand is about, you feel an emotion, you identify with the brand – it’s a completely different story to buy. Who goes to the car dealer and says „What models do you have and what what would you recommend for me?“

Felix Kilbertus: Well not so much now and also maybe not in a European context where people are quite constrained economically, but also in terms of space and energy costs and insurance costs and so on.

There are traditionally some markets that are a lot more spontaneous, like the North American market is famous for people walking into a dealership, driving off with the keys. Also very expensive vehicles, by the way. So it’s not a myth. A lot of cars really shift because it’s a given. You know, a car is a more essential purchase, perhaps. And in many parts of North America, you can’t get anywhere without a car. So the barrier is weaker because it’s not as economically constrained in most cases as in Europe.

But I’m fascinated with this idea of like how long it takes to make this product successful and in defining its brand because I can think of very different approaches to this because you mentioned time also. It takes time to shape these things. So when I think of a car that I find a little bit confusing, think of the small BMWs. So think of what is now called the 1 Series. That was born as the 3 Compact. That was a very strange thing. Like, what does the product do for a brand? It found some buyers, but people were very confused. So most brands would have gone and changed the recipe. Not BMW. They proposed the same idea in a slightly different way, added a bit more differentiation, but essentially called it the same way, defined it the same way. That was okay – not particularly great, not particularly bad. And then they tried again a third time and then they shifted a bit more, defined it as their own product and went into the one series position that we know in some way, shape or form to this day.

That decision was made to move downwards, but some companies are very persistent and try one, three, four, five, six times until they get it right. Other companies try, fail and give up and try something completely different. So what I’m trying to say is like this question, „What are we trying to do for a brand?“ Even if you have the same answer, the products and the product approach can still be quite different. Conservative, more adventurous and also more or less consistent.

Wolfgang Philipp: Let’s stay at the 1 Series for a moment, because I’d argue that the Compact was the idea to bring the very essence of BMW with the inline six and rear wheel drive to a new entry level.

And now it’s shifted to a completely different approach. The new 1 Series has a front wheel drive. It has the same architecture as the Mini. There is no longer the differentiation between a pure driver’s car with all the thrills. Now it’s just ticking all the boxes feature-wise on paper but it’s a completely different approach.

And I’d argue it’s not the best direction to do this, because there are many front-wheel drive compact cars in the market. What was the thinking of BMW, what was their answer to „What is this product supposed to change for our brand?“

It might be to win a comparison against Volkswagen’s Golf or some other compact bestsellers that might have the upper hand on paper, but are completely different products.

Felix Kilbertus: It’s a good example of a brand expanding in all directions. You know, at that time, BMW decided, like so many other brands like Mercedes, to go not only up market, but also down market. And the interesting thing is, since BMW is one of the most powerful brands in the world, that sort of approach to go down market doesn’t play well in all markets.

So, for example, in a Chinese context, where BMW is perceived as a premium luxury brand, there is no market for a cheap BMW. Certainly not the way a European would define an entry-level BMW, because you can’t do a low-spec BMW in a Chinese context, because the brand image is so different from what an acceptable entry level potentially could be in other markets. So there’s definitely limits to how far you can walk away from your core, even if you’re a successful brand.

Speaker: Now, looking back over these thoughts, what are the most important insights? What key points can we take away from today’s encounter?

Wolfgang Philipp: The key takeaway is, there’s nobody waiting for another model. So you need to have a reason why you are doing another model, a relaunch or creating a new generation. What is it about? To have impact in the marketplace.

Felix Kilbertus: One key takeaway for me is the distinction between clarity and similarity. Because what you said, for example, that a brand, whether it’s new or heritage, whether it’s a successful brand or an unknown brand, it’s the clarity that makes a difference. And that allows the products to be quite intentionally different.

So clarity does not mean similarity between your product offerings. I think that’s a very powerful idea. And I think that will become increasingly relevant in the future as you need to, of course, define your brand because there’s a lot of competition on the brand level. But you also need to really clearly position the, in my opinion, fewer products that we need to develop in the future. So clarity is not similarity. That was my takeaway from this episode.

Wolfgang Philipp: And clarity is also a key to differentiate brands sharing the same platform. I mean, the reality today is that the use case for the 1 Series probably wasn’t that there is enough profit to bring in the rear-wheel drive layout to the entry segment.

Felix Kilbertus: That’s an amazing keyword, platforms and use cases, because that brings us actually to the next question and the next episode: „Are we creating growth or are we just filling a gap?“

Because this is the big question. Why build a platform if you only have one idea for your product? And how do you develop a platform so that there can be different brand positions, different use cases, maybe even different markets? So good keyword, Wolfgang. And looking forward to the next episode.

Wolfgang Philipp: Yes, I’m very much looking forward to this question. So thank you for listening and talk to you next time.

Felix Kilbertus: Talk to you next time.