Opinion: Who Is MINI’s Real Competition?

Yesterday we shared a story from Advertising Age about how MINI is expanding its Not Normal campaign. According to the AA story, MINI is intensifying their marketing efforts because “competition has started to ding the brand as rivals like Chevy introduce a widening array of small, fuel-efficient cars.” That Chevy they’re referring to is the Chevy Spark, a car which starts at just $12,999. While yes, both cars are small and fuel-efficient, there’s something about this premise doesn’t quite line up for me. Sure, Chevy sold more Sparks in the US in July than MINI sold MINIs, but is MINI really competing with Chevy for the same buyers?

Sure, in the grand sense, everybody is competing with everybody else when it comes to selling Jane Q. Public an automobile. Most people only own one or two cars at a time, so in one respect, all cars compete against all other cars. Yet when it comes to what cars are truly cross-shopped in a significant way, that’s where a brand’s real competitors come into focus. That competition also changes based on the brand’s perception in one market vs. another. So for simplicity’s sake, let’s stick to the US market.

Sometimes the story of MINI’s success in the US market is told as being a story of “small.” While small is a huge part of MINI’s brand, the deeper story of MINI’s US success lay in the MINI being one of the first nice small cars offered here. The term “premium small car” gets used a lot, and MINI is credited with creating this segment out of thin air. It’s not as though there weren’t other small cars being sold in the US market in 2002. Yet sometimes the origins of MINI in the US is told as though MINI defined the small car segment as a whole. This seems to be the basis of Advertising Age‘s point of view, but by a lot of key metrics, it just isn’t true. MINI didn’t bring small to the USA. Instead, MINI made small cool in a way it had never been before. That’s an important distinction that puts cars like the Chevy Spark in a different perspective.

If we hop in The Wayback Machine to 2002, we can take a quick snapshot of what other small cars were available. Toyota had the Echo, which later became the Yaris. GM offered the Chevy Cavalier and Pontiac Sunfire as compact two-doors. VW sold the new Beatle as well as a two-door version of the GTI. Toyota still sold the Celica and that generation of Honda’s Civic Si is thought of by most to be the last “fun” version of that car Honda ever made. A few years on, Scion had their tC, which had basically identical power, torque and weight figures to the Cooper S, and for $8,000 less money. There were others, but you get the idea. While the MINI was definitely smaller overall than most of these cars, it wasn’t by orders of magnitude.

MINI pioneered the idea in America that a small car could be more than just an “econo-box” that got good gas mileage because it was tiny. A MINI wasn’t simply small. It was nice. It was sophisticated. It was a “baby BMW.” It had all sorts of cool design details and came in lots of interesting colors and available options. It also had creature comfort features and premium components like Xenon headlights that simply weren’t available on other small cars at the time. Most of all, unlike most of the small economy cars that came before it, the MINI was fun as hell to drive. Lesser talked about, the MINI was also safe in a way few small cars before it had been. The R50/R53 had a 4-star frontal offset crash rating. The R56 later bumped that up to a 5-star rating. Small was cool and safe in America for the first time ever.

So let’s skip forward to this past July, when the sales of the Chevy Spark outpaced sales of the MINI Cooper/S. Does this make the Chevy Spark a major MINI contender? I say no. There are a lot of cars that outsold MINI last month. Furthermore, the Spark starts at $12,999, and the MINI Cooper starts at $19,700. I find it incredibly unlikely that these two cars were seriously cross-shopped on any factor besides price. When you’ve got a nearly $7,000 price differential, you don’t have the same customers. That is to say, when price is the only thing that really matters, lower will always win.

Also, this entire argument that Chevy sales numbers equal competition falls apart upon looking at MINI’s other (and in my opinion, more direct) rivals. Let’s look at VW, for example. VW USA sold 2,666 Golfs in July of this year, compared to 2,485 MINI Cooper/S sales (which was a record for MINI USA, by the way). Those sales for VW were actually down -33.5% over 2012. The new, new Beetle sold even better in July, with 2,715 units of the hardtop coupe alone going out the door. These cars are much more comparably priced to the MINI, and have been on the market just as long. Thing is, these VWs have always outsold MINI on volume. So has pretty much everybody else. Sales numbers are not a new threat for MINI. In fact, MINI’s never been the segment leader when you look at truly comparable cars. However MINI does continue to sell cars pretty much as fast as they can build them. There comes a point for a small automaker where only so much demand can be serviced, but back to that notion of competition.

Truth is, MINIs are cross-shopped with all sorts of different cars. From Toyota Prius hybrids to Porsche 911s. The diversity of the MINI lineup lets people come to the brand for a lot of different reasons, and for a lot of different needs. I would posit, however, that any shopper who first drove a MINI Cooper at their local dealer, then went across town and bought a Chevy Spark wasn’t ever serious about the MINI in the first place. Furthermore, there’s nothing wrong with that. Maybe they just didn’t like it. Or maybe they will aspire to a MINI someday when they can better afford one. Nothing wrong there either.

So all of this is to say that while Advertising Age has done a great job capturing the cross-section of MINI’s marketing efforts (clever outdoor advertising, more fun PR stunts, more TV commercial presence, leveraging the owner community), I think they’ve failed to really capture MINI’s competitive landscape. Sure, there are a few more small cars on the market, but when it comes to “nice” small cars, I don’t personally see a lot more competition than has really existed all along. That people seem to forget about the VW GTI is perhaps a brand failing on VW’s part. The more recent newcomer, the Fiat 500, hasn’t been selling well at all (and they’re all but giving them away here in Chicago), so its actual threat to MINI seems minimal.

In my opinion, MINI’s brand and marketing challenges have always been grounded more in awareness. While the Mini brand had a worldwide heritage presence, very few people knew the MINI brand when it came back to America at the turn of this century. Most Americans just didn’t have a history with the car or a clear sense of what the MINI has to offer. This led to a world of misconceptions that all of us earlier MINI owners encountered every time we’d stop to get gas.

“Is that thing electric?”
“I would have bought a Cooper Mini, but I’m not going to pay $40,000 for one.”

At present, MINI still struggles with brand and model awareness in the market at large. Dealer sources often tell us that people come in thinking the Coupe has a power folding roof and asking if the Countryman comes in a convertible. It’s almost like most people hear about the brand by rumor, and without talking to any actual owners. Meanwhile in the corner of the dealership is a Paceman they’ve never even heard of. What MINI has the opportunity to do here through the Not Normal campaign as well as through expansions in to targeted TV commercials, is to simply make more people aware that MINI is an established brand with a lot to offer. MINI will do this indirectly, of course, through things like the Not Normal campaign. They have to paint MINI as remarkable, to apply naked Seth Godin theology to the problem. The job of any one of these advertising efforts is, more or less, to simply get people to MINI’s website or into the dealership. At that point they can learn the ins and outs of the model lineup. In the meantime, MINI will continue to win sales — not on “small” and definitely not on “cheap” — Chevy can have those sales. Those were never really MINI customers in the first place. The opportunity, on the other hand, is to go find those MINI fans in the marketplace who simply don’t know yet that they’re MINI fans.

Let’s open this up. Who do YOU think are MINI’s real competitors? What did you cross shop and why did you choose MINI?