Case Study

In the $1970$s and $1980$s$,$ Cadillac had some of the most loyal customers in the industry. To an entire generation of car buyers, the name Cadillac defined $$The Standard of the World.$$ Cadillac$$s share of the luxury car market reached a whopping $51$ percent in $1976,$ and based on market share and sales, the brand$$s future looked rosy. However, measures of customer equity would have painted a bleaker picture. Cadillac customers were getting older $($average age $60),$ and average customer lifetime value was falling. Many Cadillac buyers were on their last cars. Thus, although Cadillac$$s market share was good, its customer equity was not.

Compare this with BMW$.$ Its more youthful and vigorous image didn$$t win BMW the early market share war. However, it did win BMW younger customers $($average age about $40)$ with higher customer lifetime values. The result: In the years that followed, BMW$$s market share and profits soared while Cadillac$$s fortunes eroded badly. BMW overtook Cadillac in the $1980$s$.$ In the years that followed, Cadillac struggled to make the Caddy cool again with edgier, high$-$performance designs that target a younger generation of consumers. More recently, the brand has emphasized marketing pitches based on performance and design, attributes that position it more effectively against the likes of BMW and Audi. It is focusing on high$-$design luxury SUVs and crossovers, and GM recently announced that $$Cadillac will lead the company to an all$-$electric future$$ with its first fully electric vehicle. As a result, although it still lags other luxury brands, Cadillac$$s share of the luxury car market has rebounded modestly in recent years. The moral: Marketers should care not just about current sales and market share. Customer lifetime value and customer equity are the name of the game.

After reading this article, please answer the following questions and post your answer below the topic $$Week $2$ participation$$ in the discussion forum:

Why BMW overtook Cadillac in the $1980$s$?$

For marketers, which one is important, current sales? Market shares? Customer lifetime value? Customer equity? why?

Please provide three suggestions on future development for Cadillac.