Category: Automotive

We've all seen glossy advertising campaigns that seem a world away from the reality of the product.

But for Volvo, marketing must reflect what is actually happening inside the company.

“I think one of the major things is marketing cannot be about making stories. It has to be genuine and real. So you need to actually, do change, not say you are changing,” Bjorn Annwall, the car company's senior vice president of strategy, brand and retail, told CNBC's Willem Marx.

The car manufacturer organizes the Volvo Ocean Race, a round-the-world sailing contest, and this year used the event to collect data on the concentration of harmful microplastic in the sea in different parts of the world.

“Rather than just show the Volvo name in conjunction with a race like that, you make something meaningful about it… We focused in on the problem with plastic and micro plastics in the ocean and then we start(ed) to think about how can we affect this, from a Volvo perspective, and say how can we design cars with a higher content of recycled plastics?” The company is aiming for 25 percent of the plastic in its cars to be recycled by 2025.

CNBC
Volvo's Senior Vice President Strategy, Brand and Retail Bjorn Annwall (left), speaks to CNBC's Willem Marx

Marketing that has a higher purpose has been fashionable for some time (a laundry detergent campaign might encourage men in the developing world to do their share of household chores, for example), but Annwall said that such initiatives must be led by a company.

“If you're (doing) purpose-based marketing, that's kind of fake, that's icing on the cake. The cake has to be about purpose and then marketing is just the icing on that cake on how you convey that and how you interact with your consumers,” he said.

While Volvo, like others, is shifting more of its marketing spend away from TV and towards digital and direct communication, it is also likely to increase what it does in PR. “The real breakthrough is not going to be a marketing mix question,” Annwall said. “(It) is going to be the messages that you're sending. A: are they relevant? And B: are they genuine? Are you really making changes that you're stating you're making and how you make that credible?”

“You talk to journalists, you talk to the society around you and what you do and you get the message to the consumer through that way, which you don't have to pay anything for,” he added.

Trump’s latest threats will be even more disruptive to Europe's autos, Volvo Cars CEO says
5:18 AM ET Fri, 31 Aug 2018 | 02:05

Moving away from big car events, such as the Geneva Motor Show, to find new ways of communicating with consumers is another method Annwall endorses. “Why stand in a crammed hall together with all the competitors shouting when you can have a more intimate relationship and discussion with the relevant journalist at home?”

Volvo is trying to move the perception of its brand as simply about safety to one that is more premium. “There are other aspects around safety that we are focused more on, without giving up safety. We are a brand for people who care about people. As we move into premium, we do that in a way that is not an exclusive bling extrovert type of premium, but rather an inclusive type of premium, understated, refined,” he said.

To that end, Volvo has launched the XC40, which is “furthest away from what people would traditionally would think about Volvo,” to a “slightly more edgy, slightly more chic-y” model, according to Annwall, that is aimed at a younger audience, with a $600-a-month subscription option. In May, the company announced expanded production of the XC40 after selling almost 80,000 vehicles and said that 90 percent of those subscribing were new to Volvo.

Volvo
Volvo's hybrid cars. The XC40, aimed at a younger audience, is in the center

This is set to continue. By 2025, Volvo expects 50 percent of cars coming off its production line to be sold via subscription. “Their car is going from (an) investment (of) capital goods in to a consumption per month and that consumption we call, really, is the freedom to move, which is really the beauty of a car. You can move wherever you want, whenever you want, but it has, of course, to be in a sustainable, personal and safe way,” Volvo President and Chief Executive Hakan Samuelsson told CNBC. The company is also working on a model that could drive itself in most environments, expected to be on sale within three years.

New, Scandinavian-focused designs have helped the company double car production in less than a decade, and Chief Design Officer Thomas Ingenlath said inspiration can come from outside the industry.

“The car industry should not detach itself from the other areas where people live in. The development of a phone industry. The development of furniture. We are a little less focused around everything that is around (the) car and a bit more everything that is around, you know, people,” he told CNBC.

Volvo is facing potentially bigger concerns, however. It announced a 29 percent increase in operating profit in the second quarter of 2018 to 4.2 billion Swedish crowns ($474 million), but delayed a planned initial public offering (IPO) because of rising trade tariffs, it said last week.