Chrysler is at it again. The brand, which created the minivan subcategory and has led its evolution, is coming out with a new generation of the minivan, the 2017 Chrysler Pacifica minivan. It is designed to take the minivan to a new level and allow it to take sales away from the SUV subcategory. Chrysler is a great representation of my theory that growth happens (with some exceptions) when you develop must haves that define subcategories instead of relying on “my brand is better than your brand” marketing.
The firm illustrates not only how to create a category and manage it over time, but how to stimulate new growth and protect its position as a subcategory leader by evolving its defining must haves. The 2017 Pacifica will open the eyes of SUV buyers with and astounding 40 new features – all minivan firsts. It has a sculpted exterior with a fast silhouette and sophisticated fluid-like surfacing that is very different from the soccer mom minivan shape we are used to.
It delivers sharply improved performance with respect to power, gas mileage, ride, handling, noise, and vibration. The plug in hybrid version will get 80 miles per gallon in the city. It offers a host of safety and security additions including the new 370 degree surround view camera.
Finally, there are dozens of new features such as the Uconnect Theater entertainment system for passengers and Forward Collision Warning-Plus which applies braking in an emergency. By creating, actively managing and dominating the minivan subcategory, Chrysler has achieved amazing sales and profit performance.
After introducing the minivan as the Dodge Caravan and Plymouth Voyager in November of 1983, sales went from 200,000 the first year to over 500,000 ten years later in the US market (where it stayed until 2000). Chrysler had no competition until 1998 when Toyota and Honda came out with the Sienna and Odyssey. No competition for 15 years!
Even with the entry of Toyota, Honda and eventually others, Chrysler maintained a strong position. Even in 2014, the brand had 49% of the market although the minivan market size had shrunk because of the SUV. The plan is to reverse that subcategory decline with the new Pacifica – to create a renewed subcategory growth spurt some 33 years after the subcategory was created.
The minivan concept was developed in the 70s because research had suggested that a large market would respond to a van that would hold a family, fit into a garage, ride like a car, have a low step-up height for women, have removable seats and have the engine in front to provide protection for the driver in case of an accident.
Despite this evidence, the executives in charge at Ford and Chrysler would not pull the trigger. It was Lee Iacocca who, after being fired from Ford, became CEO of a failing Chrysler in 1979 and said “go,” investing $700 Million in the project. Meanwhile, Chrysler needed a $1.7 Billion loan from the government just to survive.
There are three reasons why Chrysler had the market to itself for so long:
- Competitor car makers had other priorities (like Ford’s Taurus, Toyota’s Lexus, Honda’s Acura and GM’s acquiring of Hughes Aircraft and investment in robots).
- Other firms, especially Ford and GM, were committed to a highly profitable station wagon business and did not want to cannibalize it.
- Chrysler managed the category over time; continuously adding must have innovations to the minivan, thereby making it a moving target. For a competitor to become relevant, it needed to recognize and keep up with the ongoing innovations.
Copying Chrysler’s model was not enough. Chrysler’s must have innovations have continuously transformed the minivan category. Its many minivan firsts included all-wheel drive on a front-wheel platform and child safety locks on sliding doors by 1990; driver-side sliding door and easy-out roller seats by 1995; wireless headphones and LCD screen for in-vehicle entertainment systems and three-zone temperature control by 2000; the Stow-‘n-Go system that hides seats in the second and third rows and the third-row easy-entry system by 2005; and the Swivel ‘n Go seat systems where the second-row seats swivels to face the third row and an integrated child booster seat by 2009.
And now in 2016, the new Pacifica drives right into our hearts. Chrysler is a supreme role model for brands – exemplifying how one can replace brand marketing with the creation and management of subcategories by developing ongoing must have innovations. Its story also serves as a reminder of how difficult it is to seize a new subcategory opportunity in the face of other “sure thing” investments.