The Homa Files

TakeAway:  Owning a Rolls-Royce is an undisputed symbol of wealth…and many would argue that the brand’s exclusivity is consumers’ primary motivation for purchasing and re-purchasing its cars.  Rolls Royce has decided to test the loyalty of its existing consumer base by offering a lower-priced version of its car and thus making the car attainable by a larger portion of society. Will this strategy backfire and alienate its existing loyal consumer base?

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Excerpted from WSJ, “Rolls-Royce Unveils its Economy Car” By  Vanessa Fuhrmans, September 17, 2009

… Rolls-Royce Motor Cars’ answer to the worst downturn in decades: Its new Ghost model, to be had for a mere $245,000 … Though the Ghost has the same hand-crafted interiors and famous grill, the sleeker and slightly shorter model costs about one-third less than the $380,000 starting price of the British car maker’s flagship Phantom.  As more people globally can afford a Rolls, though, the company faces a delicate balancing act: boosting sales while not diluting the brand’s exclusive cachet …

The Ghost’s launch comes at a critical time. Rolls-Royce sold a record 1,212 Phantoms last year. But as the economic downturn caught up with even the superrich, sales plunged 34% in the first half of this year, tarnishing what had been a bright spot for its German parent, BMW AG.  Meanwhile, Rolls faces growing competition for the lower rung of the upper crust from Bentley … Bentley sales have risen 10-fold … The success of Bentley’s Continental model (priced between $150,000 and $200,000) underscored the market to be had in the niche above Porsche and Mercedes-Benz but below Rolls-Royce …. 

The Ghost appears to be hitting the mark: Some 1,200 potential buyers have signaled “strong interest” or pledged to order one, about the same number of total Phantoms sold last year, the company said.  As the economy recovers, the car maker says it expects to sell at least 2,000 annually, boosting its total production nearly threefold.  The company has gone to great lengths to preserve the model’s Rolls-Royce quintessence, yet at a downsized price … Rolls-Royce … said 85% of the people who have expressed interest in the Ghost have never owned a Rolls, uncommon among Phantom owners. 

Edit by TJS

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Full Article
http://online.wsj.com/article/SB125312564687516787.html#mod=todays_us_nonsub_marketplace

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This entry was posted on October 9, 2009 at 7:45 am and is filed under Mktg - Product Line Mgnt, Mktg - Segmentation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.