1. Cadillac Market Insights February 2, 2016
Prepared for Carat
New York

2. Topics for Today Redefining Luxury: What A Recent KBB Study Revealed
Where is Cadillac in the Market Place Today?
Showcasing Cadillac on KBB.com
Johan led Infiniti’s naming strategy….

3. KBB’s Insights Tools provide unique perspective
Clients Analytics Studies
Luxury Study conducted from May 6 – June 9, 2015; gathered 2,254 survey responses;
Just one example of many studies we conduct on a regular basis
Long-Term Brand “Stories”
Every brand has a story, with successes and failures, wins and losses
What can be learned from a look back at those ups and downs?
Kelley Blue Book BrandWatch Consumer Perception Tracking Study (2007-Present)
Ongoing survey-based tracker among new car shoppers on the KBB.com website
3,000 interviews per quarter, detailing consideration for and consumer perceptions of all major models on eleven core decision factors

4. What is a Luxury Vehicle?
As Defined by the KBB.com Shopper
KBB Luxury Study
Conducted May-June, 2015

5. Consumers are Redefining Luxury
‘Luxury’ is redefined as perceived value, increased practicality1
Luxury is no longer an object IT IS AN EXPERIENCE2
BENEFITS OF OWNERSHIP often include3:
✓ Longer warranties
✓ Free scheduled maintenance programs
✓ Upgraded treatment at service departments including loaner cars
Why has luxury been redefined?
One influencing factor is the wider economic climate. When so many people have felt the full force of the global recession on household budgets, whether through unemployment, pay freezes, zero-hour contracts or escalating household bills, there is perhaps an inevitable impact on the way they view luxury.
James Murphy, editorial director of Future Foundation, says: "The level of economic growth we enjoyed in the UK from 1993 to 2008 is still broken. There’s a debate taking place about what is an appropriate way to live, given these troubled ­economic conditions. In such circumstances, it becomes simply not cool to parade and show off opulent ownership of wealth.
The germans are doing this so you should too
Cadillac photo courtesy of Steve Siler
1: Forbes “How the Uncertain Economy is Changing the Definition of Luxury”,
2: Marketing Magazine, “The Rise of Discreet Luxury and a New Consumer Elite”,
3: Forbes, “Movin’ On Up: Cars That Draw the Most First-Time Luxury Buyers”,

6. ‘Luxury’ is redefined as perceived value, increased practicality1
Luxury brands addressing price-point with ENTRY-LEVEL LUXURY VEHICLES
Examples:
Audi A3
Mercedes CLA
Volvo S60
Luxury
Audi A3, $29,900
Mercedes CLA, $29,900
Volvo S60, $33,750
Sampling Info:
A total of 2254 survey responses were gathered
Field dates: May 6 – June 9, 2015
Non-Luxury
Price points are blurry
Why has luxury been redefined?
One influencing factor is the wider economic climate. When so many people have felt the full force of the global recession on household budgets, whether through unemployment, pay freezes, zero-hour contracts or escalating household bills, there is perhaps an inevitable impact on the way they view luxury.
James Murphy, editorial director of Future Foundation, says: "The level of economic growth we enjoyed in the UK from 1993 to 2008 is still broken. There’s a debate taking place about what is an appropriate way to live, given these troubled ­economic conditions. In such circumstances, it becomes simply not cool to parade and show off opulent ownership of wealth.
Value prop – pricing pressure to create a diff value prop
Luxury is moving downstream; pricepoint near non-luxury price point
1: Forbes “How the Uncertain Economy is Changing the Definition of Luxury”,
2: Marketing Magazine, “The Rise of Discreet Luxury and a New Consumer Elite”,
3: Forbes, “Movin’ On Up: Cars That Draw the Most First-Time Luxury Buyers”,

7. Consumers are Blurring the Line of “Luxury”
78%
This provides an opportunity to appeal to a broad audience
Luxury Shoppers
Are Considering
Both a Luxury and Non-Luxury Vehicle
Q: Which of the following options are you most likely to consider for your next vehicle?
Q: Please select up to 2 vehicle segments you are considering for your next vehicle purchase.
Q: How would you classify the following brands: non-luxury, luxury, or something in between (premium)?
Source: KBB.com Luxury Study; N Luxury Shoppers = 311

8. Shoppers classified the following brands based on “Non-Luxury”, “Luxury” or “Something in between (Premium)”
Non-Luxury
Premium
Luxury
Luxury shoppers consider Buick a non-luxury brand; BMW and Alfa moved down market from luxury to premium
Luxury shopper sees Buick as non-luxury; Luxury shoppers only then they shift BMW and Alfa into premium
Q:How would you classify the following brands: non-luxury, luxury, or something in between ('premium')?
Luxury Study N = 974

9. Cadillac is Well Positioned to Appeal to Luxury and Non-Luxury Shoppers
Alfa Romeo
Cadillac
Lincoln
BMW
Audi
Tesla
Land Rover
Infiniti
Porsche
Aston Martin
LEXUS
Jaguar
Maserati
Mercedes-Benz 85 75 65 55 80 70 60
KIA
Buick
Volvo
Acura
Rolls-Royce 10 20 30 40 50 60 70 80 90
100
Non-Luxury
Premium
Luxury
Audi, BMW and Cadillac have moved downmarket; MB has as well but brand equity is strong enough to whether the perception
Non-Luxury
Premium
Luxury
Source: Luxury Study
Thurstone Scaling, N = 2245
Q: How would you classify the following brands: non-luxury, luxury, or something in between ('premium')?
Q: Based on the exercise you just performed, if the "premium" category didn't exist, and you had to place all of the vehicles you identified as "premium" into either the non-luxury or luxury buckets, where would you place them?

10. Premium Brand Pricing Bridges Luxury and Non-Luxury, Appealing to a Broad Range of Shoppers
Where Shoppers Build and Price Models By Designated Brand Class
$22k
$36k
$29k
938,449 Non-Luxury Shoppers
$60k
$47k
$35k
126,584 Premium Shoppers
$73k
$56k
$38k
143,086
Luxury Shoppers
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Behavioral data – people pricing on the site; where they are actually pricing data on the website; removed exotics from this; this is a quarterly look;
In Thousands of Dollars
Source: KBB.com Omniture New Car Fair Purchase Price Analysis

11. Cadillac’s Market Position
BrandWatch Perspective

12. Cadillac: Journey Through Eras
2004: Cadillac XLR-V debuts
2004: Cadillac CTS-V introduced, competes with M and AMG
1999: Cadillac Escalade built in response to Lincoln Navigator
Early 1970’s: Cadillac cars reach new lengths, with some 1970s models growing almost 2 inches longer than previous iterations
1915: Cadillac creates a V8 with 70 horsepower, allowing Cadillac vehicles to travel faster than most cars of its day
2006: Cadillac STS-V debuts
2003: Cadillac CTS introduced, RWD with Manual offered
1980s-1990’s: Cadillac models shrink, improving fuel economy and handling, small models such as the Cimarron are also introduced
: Cadillac races Northstar Le Mans Prototypes
Early 1900s: Cadillac builds vehicles with a focus on style and luxury
1930s: Cadillac creates cars with V12 and V16 engines, offering power and luxury
ESTABLISHING LUXURY ERA
PERFORMANCE ERA
Since inception, Cadillac’s focus has been on providing classy road comfort
Cadillac’s evolutionary period, developing performance becomes a major focus

13. DEFINING RELEVANCE ERA
Cadillac:
2010: Cadillac SRX
re-designed
2011: Cadillac CTS-V Coupe
2012: Cadillac ATS introduced
2014: Cadillac CTS US Car of the Year
2015: Cadillac Escalade
re-designed
2013: Cadillac Cue system introduced
2016: Cadillac CT6 launched, adding a new top range vehicle
2008: Cadillac CTS US Car of the Year
2014: Cadillac CTS
re-designed
2008: Cadillac CTS Coupe
2017: Cadillac XT5 launches, replacing SRX
2007: Cadillac Escalade re-designed
2015: Cadillac “Dare Greatly” campaign launched
2015: Cadillac moves marketing to New York
PERFORMANCE ERA
DEFINING RELEVANCE ERA
Consideration is a trend line.
Cadillac’s evolutionary period, developing performance becomes a major focus
Cadillac aims to reimagine the brand, downplaying associations with Detroit

14. Purchase Motivations are both Practical and Emotional

15. BrandWatch Blends Consumer Wants with Needs
“Needs” tend to be practical and are very important to all shoppers
“Wants” tend to be emotional and are very important at purchase
EMOTIONAL
PRACTICAL
Ruggedness
Reputation
Safety
Durability/reliability
Fuel Efficiency
Driving Comfort
Driving Performance
Interior Layout
Technology
Exterior Styling
Prestige/
sophistication
Affordability
STRADDLES BOTH
Formatting for charts
Remove “almost” from practical line
“wants” = not closer to purchase, but “very important at purchase”; “Wants” tend to be more influential
Source: BrandWatch 2015 Q2
Principal Components Analysis, N = 3047
Q: Please review the list below and rate how important each of the factors are to you in deciding on your next new car.

16. Practical Factors are Table Stakes, Emotional Factors are Difference Makers
Rating ★
Italian
Location
Romantic
Italian image restaurant is cut off

17. Perceptions of Cadillac are Middle of the Road
Trended Cadillac Ratings vs. Luxury Competitors
Acura; Audi; BMW; Buick; Cadillac; Infiniti; Jaguar; LR; Lexus; Lincoln; Maserati; MB; Porsche; Tesla; Volvo
Cadillac PRACTICAL Factor Ratings
Cadillac EMOTIONAL Factor Rating
Acura; Audi; BMW; Buick; Cadillac; Infiniti; Jaguar; LR; Lexus; Lincoln; Maserati; MB; Porsche; Tesla; Volvo
Source: BrandWatch 2014 Q1 – 2015 Q3
N = 16854
Q: Please rate each of the following vehicles with respect to [factor].

18. Cadillac is not bad, but not outstanding either
Highly Practical
Highly Emotional

19. Cadillac: Selected BrandWatch Factor Ratings
Driving Performance (E)
Exterior Styling (E)
Prestige/Sophistication (E)
Reputation (E/P)
Consideration is above average, but nothing stands out for this brand
Source: KBB BrandWatch

20. Durability/Reliability (P)
Cadillac: Selected BrandWatch Factor Ratings
Affordability (P)
Driving Comfort (P/E)
Durability/Reliability (P)
Interior Layout (E)
Source: KBB BrandWatch

21. Audi: Journey Through Eras
1995: Audi nomenclature changes to a letter and number as is the case today
2005: Audi LED DRL introduced, a major styling development that is iconic for the brand
1989: Report with findings places acceleration blame on drivers is published; brand begins path to recovery
Audi campaigns in Le Mans
1986: Audi 5000 Unintended Acceleration on 60 Minutes, hurts Audi’s credibility and sales tremendously
2006: Audi’s high performance halo R8 is introduced
1985 – Audi introduces the Audi Quattro rally car, the Quattro system helps Audi become a dominant force in the WRC. Quattro also comes to define performance for Audi.
1990 – Audi competes in DTM (German Touring Car Masters) racing series
1989 – Audi wins WRC mfg title
DECLINE AND RECOVERY ERA
PERFORMANCE ERA
Decline and recovery era – “The Unintended Era”; “The LED/Performance Era”
Audi’s period of decline due to scandal, sales decline 84% between 1985 and 1991*
Audi competes in motorsport, begins to rebuild product and brand credibility
Nomenclature change in 1995 and continued emphasis on performance help to evolve the brand
*source:

22. 1999 -2014 Audi campaigns in Le Mans
2013: Audi A3 sedan
2015: Audi R8
re-design
2010: Audi A8 L is made for China market
2011: Audi Q3 is introduced, the compact SUV segment is warming up
2009: Audi R8 used in The Wolverine movie
2015: Audi A4 re-design
2010: Audi A7
2008: Audi A4
re-design
2009: Audi Q5
STYLE ERA
The brand receives styling acclaim and revolutionizes the way the industry designs headlights

23. Driving Performance (E)
Audi: Selected BrandWatch Factor Ratings
Driving Performance (E)
Exterior Styling (E)
Audi built its brand on emotional factors of style and performance
Prestige/Sophistication (E)
Source: KBB BrandWatch

24. BMW:
2013: Debut of the BMW 6 Series Gran Coupe
2014: Debut of the BMW 4 Series Gran Coupe
2013: Debut i3
2007: Debut of the BMW X6
2012– DTM: BMW wins mfr championship
2014: Debut of the BMW 3 Series Gran Turismo
2015: BMW wins Int. Engine of Year
2014: Debut: i8
2013: Debut of 3 Series Gran Turismo
2012: BMW has 2 engines in Wards 2012 Top 10 Engine Awards
2010: Debut: X1
2014: BMW i3 Green Car of the Year Award
2015: BMW i8 Green Car of the Year Award
DISRUPTOR ERA
Traditional vehicle segments are challenged by the introduction of BMW’s new vehicle types starting with the X6 in 2007
1980

25. BMW: Selected BrandWatch Factor Ratings
Driving Performance
Exterior Styling
BMW’s consideration is consistently high but some emotional factors are developing volatility
Prestige/Sophistication

26. Renaming Strategy
Risks & Opportunities

27. Consideration is showing the effects of the name changeover
Infiniti:
Consideration is showing the effects of the name changeover
“G” ERA
“Q and QX” ERA
Competition changes every year, but you control the changes you make

28. The Potential Impact of Transitioning Model Names
When asked, just 40% of consumers associated “Q” with Infiniti nearly 2 years after rebranding
Traffic on KBB fell nearly 50% from its peak
and hasn’t recovered
X, G, Q, F, M, J, E ??
Source: KBB Quick Poll 3/15. Q: When thinking about the luxury vehicle brand Infiniti, which letter resonates most with you when thinking about the carmaker’s current lineup?
*Other letters include (in order of popularity): X, G, F, M, J, E
Quick poll on KBB.com 3/15

29. share of Infiniti used car traffic
Since G was removed from new car traffic, used traffic for G has been increasing…
G now represents
53%
share of Infiniti used car traffic
+18%
Used Car Visits

30. Insights Conclusions

31. Key Takeaways from Topics for Today
Embrace your “premium”-ness
Cadillac is well positioned; act on it!
Take volume from non-luxury and luxury shoppers
Break out of your “average” -ness
Focus on key emotional and practical factors
Solidify and defend strong consideration picture
Support the naming convention campaign
Awareness and associations
Build the bridge between old and new names

32. Showcasing Cadillac on KBB.com
Partners in Messaging

33. Appeal to high-end, non luxury brand shoppers

34. Focus Messaging on Practical and Emotional Factors

35. Build associations through high profile placement

36. Introducing A Unified Experience – NATIVE HOMEPAGE PACKAGE
Drive more attention and boost awareness with native integrations
High-profile package consisting of uniquely integrated sponsorships
Includes prominent native sponsored placement in the Homepage Rotating Content Module and native Owners HP Takeover
Homepage Rotating Content Module is one of KBB.com’s most effective traffic drivers for site content
Homepage Rotating Content Module
Owners Homepage Takeover
Mocks are concept only. Actual design and layout of product is subject to change upon production.

37. NATIVE HOMEPAGE PACKAGE: Homepage Rotating Content Module
Prominent homepage placement within a native site experience
Sponsor owns the third slot in the HP Rotating Content Module and takes over the main header space above when selected
Large sponsor photo
Sponsor copy and link to OEM site with native look and feel 1 2 3 2 1 3
Mocks are concept only. Actual design and layout of product is subject to change upon production.

38. NATIVE HOMEPAGE PACKAGE: Owners Homepage Takeover
Highlight multiple messages to potential shoppers at an early influence point
Native billboard design resembling the Homepage Rotating Content Module and completely owned by OEM – Creative changes based on tab clicked by user
Seamless inclusion of 3 messaging opportunities via tabs
Clickable wallpaper – One creative
MREC included 1 1 3 2 2 4 3 4
Mocks are concept only. Actual design and layout of product is subject to change upon production.

39. Thank You! Attendees: Contributors: Daniel Geiger Tamara Meyer
Director, Advertising & BD
Melissa Couturier
Sales Manager
Rebecca Lindland
Sr. Director, Commercial Insights
Contributors:
Tamara Meyer
Strategic Insights Analyst
Akshay Anand
Manager, Commercial Insights

40. ATPs Shows Hyundai and Kia as Surprising Potential Non-Luxury Conquest Targets
Cadillac ATS
ATP: $40,689
Kia K900
ATP: $54,237
Hyundai Genesis
ATP: $45,699
Cadillac CTS
ATP: $51,778
Hyundai Equus
ATP: $64,442

41. The XT5 Could Conquest VW, Dodge, Ford, and Jeep
VW Touareg
ATP: $48,491
Dodge Durango
ATP: $40,983
Cadillac XT5
MSRP: $38,995
Ford Explorer
ATP: $41,372
Jeep Grand Cherokee
ATP: $41,906

42. M-Class traffic began declining once GLE ads appeared on new car pages
Visits
12/3/15
GLE appeared
on KBB.com