Lotus Elise: Steve talks about marketing the Elise in America

From: Steve Brightman <Steve.Brightman@dalsemi.com>
Subject: US Elise - marketing perspective (long)
Date: Thu, 9 Apr 1998 14:40:29 -0500

Since people keep insisting on revealing to the list what I do for a
living I thought it might be fun to put my job knowledge to work on the subject of the federal Elise.

How would I market the Elise in the US, or indeed would I recommend that Lotus even try this? First, we have to establish a frame of reference. Depending on who you talk to, or who you believe or even when you talk to them we have heard basically two reasons why the Elise is not already here:

1. Lotus doesn't have enough capacity to satisfy worldwide demand so why bother trying to add the US market?

2. Not enough people would buy the Elise to justify the cost of federalizing it. Only "enthusiasts" would like it as is, and we are too few in number to be economically viable. To make it appeal to the US market it has to be moved upscale.

Let's look at number one. If true then I would have to agree with Lotus, no sense in creating a great demand if you can't deliver, however to a degree it is good marketing to keep demand slightly ahead of supply. Also, recent developments in the Asian economy and reports here that Elises are readily available in mainland Europe suggests this may no longer be a valid argument.

Now on to number two. Let's say we buy into this hypothesis, how do we proceed? Here's what I propose:

Introduce two models of the Elise to the US market. The first, we'll call it "S" for Sport (not to be confused with the sport model in the UK) is basically the same as the present Elise, being modified to the minmum degree necessary for federal certification (new engine with OBDII, bumpers etc). The second, we'll call "LX" (for luxury or whatever) while basically the same car (i.e. same certification) has additional creature comforts. Things like full carpeting, radio + CD player, A/C, cup (mousse?) holders, manicure tray etc.

The "S" model is priced at cost or even slightly less. The financial impact of this will be miniscule (remember Lotus says very few will buy it). The advantages of this are as follows: The press can road test the car and continue to rave about how great it is. All the members of the Lotus Internet Mail List will rush out and buy one, thus putting a fair number on the street for all to see and drool over, thus bringing traffic into your friendly neighborhood Lotus Dealer showroom. The Lotus dealers can advertise this nice attractive price (well below the Z3, Boxster, SLK) to entice customers into the showroom ("loss leader") whereupon they can engage in the great American pastime of "bait and switch."

The "LX" model contains a significantly higher price tag as befits the higher trim level and kicks in a nice profit to Lotus thus repaying the cost of federalization and then continuing to bring in further profits to Lotus. Of course all these bloated, cossetted American consumers, intitially attracted by the low price will realise when it's time to make a purchase they just cannot live without the "hair and nails" accessories.

So what do you think? Is this a solution to keep all of us happy and help Lotus make a profit?

We should consider some risk factors. What if Lotus sells a bunch of "S" models and very few "LX" ? How could that happen if only a few "enthusiasts" would like such a car? I'm reminded of some comments Peter Warr made to me at the autocross at LOG17. He said this is exactly what Lotus said when the federal Europa was being considered. What they didn't count on was the constant stream of new devotees to the marque which complement us old farts. At the very least it would teach Lotus the meaning of the term "price elasticity." And of course it proves that "Lotus Assertion #2" (see above) was completely in error. If this is the case then Lotus would just have to raise the price to a more profitable level, but by then we would all have our cars at the "bargain" price!.

So how about it Lotus?

Comments anyone?

Steve Brightman

Daring to be different - Lotus on the Interstate - Amiga on the Internet

amigasteve@freewheeling.com LotusSteve@csi.com