General Motors is a company in distress.
For the car buyer in North America, GM makes it nearly impossible to feel they should care about a GM product when it comes time for a new car or truck.
Forbes offers context:
When Alfred Sloan joined GM in 1924 as operating vice president, he inherited what he called an “irrational product line”–one that had no guiding policy for the marketing of its many brands. The company’s only objective was to sell the cars. The brands stole volume from each other and, with the exception of Buick and Cadillac, all lost money.
Sloan immediately realized that GM had too many models and too much duplication and lacked a product policy. In one of the earliest examples of market segmentation, he reduced GM’s offerings to five models, separated them by price grades and emphasized individual brand image to entice customers into the GM family and move them up.
These distinct and strong brands allowed GM to capture more than 57% of the U.S. market by 1955. Aware that pursuing more market share could lead to antitrust actions and the threat of a breakup, GM fatefully shifted its strategy from making better cars to making more and more money from a relatively stable number of sales.
Nothing dramatized this new direction more than the concept of “badge engineering,” or selling identical vehicles under different model names. This invention of GM’s finance staff was a way to increase profits through uniformity, by, among other things, making parts interchangeable. Slowly but surely, the different brands lost the individual personalities that the company had so painstakingly established. At the same time, to improve their numbers (and bonuses), the GM divisions began to push the boundaries of the product policies that defined their brands: Chevrolet went up in price with fancier models, as did Pontiac. Buick and Oldsmobile offered cheaper versions. In time, GM was once again producing multiple cars of different brands that both looked and were priced alike. For GM, it was 1921 all over again, with brands that look alike and are priced alike.
Fortune steps in with a detailed critique of of GM, with one individual describing the company as a sclerotic bureaucracy. Acknowledging that companies in distress are not turned around by cost-cutting alone, this about Rick Wagoner, GM’s CEO:
Acknowledging the risk–”The jury’s out,” he says–Wagoner nonetheless expresses confidence because he believes there is “inherent goodness” in GM’s products that the market will begin to recognize. But he also knows that every car manufacturer has a provincial view of its own prospects: “We’re all guilty,” he says. “We go through our design studio and go, ‘Wow, we’ve got great products. They’re so much better than what we had. This is going to turn things.’ What you forget is that the same discussion is going on in every design studio around the world.” That doesn’t necessarily make you wrong in your expectations, he says. But in the end, it’s “a bet.” And you don’t know–can’t know–whether this time it’s going to bring in the revenue.
One car buff says, “They need irresitability and head-turner [products] and they haven’t had them.”
The inherent goodness in GM’s products… They’re so much better than what we had. This statement by GM’s CEO is the essence of the problem.
GM should instead listen to the words of Scottish poet Robert Burns, and truly see GM products as consumers see them. GM for decades has failed miserably in demonstrating the answer to the implict question behind every automotive purchase: Why should I care about a Chevy? Or a Pontiac? Or a Cadillac?
GM long ago abandoned the distinctive personalities of each of its brands. And because the personality - and clear difference - associated with a Chevrolet or a Buick was abandoned, each blended together into a range of choice devolving into sameness. GM makes it difficult for consumers to pick out a difference that matters. Consumers do not have the time that selection of a GM product requires. GM brands must instead instantly demonstrate their relevancy with a singular difference demonstrating emotional immediacy, one not owned or expressed by competitors.
With the franchisee, labor relations and liquidity problems GM faces, they all pale when compared to the painful lack of differentiated brands rolling off of each GM production line.
The good news is the problem is solvable. But it will take more than advertising.
The CEO of BMW Korea has this to say about branding within the automotive industry:
Tuesday, February 26th, 2008 - 12:22pm |
Automotive + Brand Differentiation + Brand Opportunities |
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