My GM car dealership called Saturday to point out (as if I didn't know) that my Cadillac has over 124,000 miles and 'is there anything we can say to convince you to purchase a new car today?' I don't think so, at least not a new Cadillac. Will Cadillac even be around when it reaches 124,000 miles? This sad state has been blamed mostly on lack of innovation, unions, poor production practices, and more. But only Al Ries (Mr. Positioning himself) has made a point of suggesting perhaps, poor brand strategy may have played a role. Here's an excerpt from his article in Ad Age 12.2.08: It seems to me that the fundamental nature of Detroit's Japanese competition is its ability to build brands. Toyota stands for reliability, Scion for youth, Prius for hybrid, Lexus for luxury.
But what does Saturn stand for? Or Chevrolet? Or Pontiac? Or Buick? Or Cadillac?
It's not for lack of trying. In 2007, the U.S. automobile industry spent $4.6 billion on advertising. That's 3.3% of total U.S advertising spending and 5.9% of total U.S. network TV spending.
For all that money, you might think the U.S. automobile industry would have done a lot of brand building. Take Gillette, which over the years has marketed seven different brands:
Gillette blue blades
Trac II, the two-blade razor
Atra, the adjustable two-blade razor
Sensor, the shock-absorbent razor
Good News, the disposable razor
Mach3, the three-blade razor
Fusion, the five-blade razor
Gillette has an astounding 71% of the world's wet-shaving market, and multiple brands, in my opinion, are the primary reason.
The difference between Gillette and General Motors is that each of the seven Gillette brands stands for something specific and each of the eight General Motors brands does not.
Although I may be biased, he has a point. Better attention to differentiating the brands in its portfolio may have avoided some of the mess. Reis suggests a portfolio built around product differences, rather than, well rather than whatever it is that they did end up trying to differentiate. A four cylinder Cadillac simply doesn't make sense. Reis maintains that the brand portfolio has been so devalued, that GM should simply start over.
Do you agree?
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19 comments:
I agree that GM has done a terrible job in differentiating the Cadillac amongst other cars. Most people think of big cars and baby boomers when they think of a Cadillac. GM needs to take a look at the success of Toyota and their positioning of the Lexus, Prius, and Scion. Toyota definitely has a target consumer for each of their lines. This is an opportunity for them to rebuild their brand image.
How about redesigning cars around how people actually use them? Many people use their cars as mobile offices, but there are no places to stash laptops or have a convenient workspace inside of a car. Another car could be set up entirely around entertainment, with video / music / internet capabilities. Also, GM has plenty of opportunity to extend their OnStar services, which is one of the most profitable areas of the business for several years now.
I agree with Ries that domestic auto makers have not done a good job over the past few decades to truly build brand equity. I find it interesting that some of the Big 3 have been looking to the past as a way to try and revitalize their brands, from Dodge coming out with a new Charger to Pontiac reintroducing the GTO. These companies realize that many consumers have positive memories of those classic "American muscle cars." However, given the recent activity in the industry, it could be said that these companies may actually be putting these solid brand names at risk. With that said, now may be the best time for auto makers to start fresh. It would certainly give them the opportunity to revitalize the industry.
I blame this crisis more on aspects of the corporate strategy such as innovation and labor rather than on their brands. Society has changed since the US auto makers were successful, and their corporate strategy hasn't changed with this.
I think the brands that are in the US auto makers portfolio are too valuable to just start again from scratch. While the brands are in crisis due to a host of reasons, they can be revised with the correct positioning and products that deliver on this. The brands that cannot be repositioned should be sold or discontinued.
One thing remains certain, GM needs to do the opposite of what they have previously done. I think a focus on quality across the board is necessary. Beyond that I agree that differentiation with a focus on the specific car brands would be a good way to reinvent their brands. I don't know that they will have success with the Cadillac and other current brands necessarily so they may need to start again but the kind of investment would be hefty. I hate to say it but I don't know that they will be able to recover... at least not quickly. Marketing definitely needs to take some of the blame in the failure of the Big 3.
I think that Ries is correct in saying that GM has dropped the ball when it comes to differentiating themselves. I don't think I know enough about the industry to say if they should completely start over, however, I think that it is obvious that GM needs to come to a decision on how each brand will be positioned.
I feel that Saturn never had a strong positioning, although brands like Cadillac did at one time. My Grandfather thought Cadillac was the ultimate status symbol and it stood for luxury. Since then, Cadillac's lack of innovation has caused brands like BMW and Lexus to leave them in the dust.
If GM focused efforts on innovation and positioning, I think that they could have a better share of the auto market.
I think there are so many problems up in Michigan at this point that there is no one clear reason why everything has gotten this bad in the auto industry. I do believe some of the problem has to do with branding. Take your example, the Cadillac. At one point, Cadillac was a major status symbol, but because of poor branding, the brand's equity diminished. Eventually, the Cadillac came back, but I think the brand has been damaged beyond repair in some regards because so many companies with strong branding have taken the place of that particular vehicle.
I think the biggest problem with the auto industry is the unions and poor financial decisions by the leaders of the companies, but I can definitely agree slow sales are in part due to branding problems.
I do agree with the point that Mr. Reis makes. GM is currently having a brand issue as consumers view their vehicles as less reliable then their imported counterparts. With that said, it would behoove GM to revamp their image in hope of rectifying the current image status that they have with American consumers. With an increase in advertising and marketing, there is always an opportunity to change the minds of consumers.
Would the brand positioning matter if GM was the same boring old car? I'd have to say that without product innovation and evolution, there is no hope for new positioning. This is where innovation and branding must work together. Currently GM is spinning its wheels with its advertising dollars. Let's say today, GM repositioned its brands. Any amount of repositioning would not get GM out of this mess.
First step to recovery is admitting the problems. Stop the bleeding and rediculous spending and reinvest in R&D.
Regarding new brands vs. existing brands. I'd sell some of the brands, keep the brands with the most equity, get to know your potential customers and study the brands of Toyota.
Good Luck GM!
American auto companies are guilty of gross incompetence and managerial complacency, as they essentially watched the rest of the world surpass them in innovation and strategic branding. Focusing on only branding or only innovation isn't going to get them very far either; it will take a carefully coordinated joint effort between both elements. The only way I can see the Big 3 becoming competitive again is for them to admit fault for years of inferior cars and to promise to actually create products that are as reliable as foreign models and just as stylish. Though Reis might be accurate in stating that a lack of branding played a role in this mess, it is hardly the whole story. Quality ratings are going to have to improve, or the bailout money they are likely to receive will do nothing more than delay the inevitable.
I do agree. I am personally an automotive enthusiast, and could never see myself buying a GM car. I think the point about branding is spot on, except for cadillac. I think that cadillac may be the only brand in GM's portfolio that actually does stand for something, but I agree that all their other brands do not resonate strongly with consumers. I don't think this is the only, or even primary factor for their failure, but it has certainly played a large part.
Although Al Reis makes a good point that GM has spent unbelievable amounts on marketing and has little brand equity to show for it, I still feel that most of the blame falls on poor innovation. In their attempts to save money and consolidate production lines, many of the different brands of cars are produced with similar frames, interiors and bodies. As a result, the cars began looking and feeling more like each other, which ultimately destroys any brand equity the company was trying to build. Sadly, this is not a new phenomenon with GM, and without a differentiated product it becomes very difficult to have a coherant brand strategy.
I agree with Mr. Ries in that GM has done a poor job developing brands that stand for something. For being one of the largest and most successful companies in history, GM's brands do not have much equity in the minds of consumers. I believe that Americans want to see a commitment to change and innovation before considering a bailout. Perhaps starting fresh with a new branding strategy would be good start.
I agree with Al Ries in that GM has not been able to differentiate its brands in the minds of its consumers. As a student that didnt grow up here, I can easily recognize the differences between Toyota and Lexus, but not between any of GM's brands. Perhaps and the only one is Cadillac and the image associated with it is one of an old luxury car. I think they could differentiate their products by stressing the uniqueness of each car to meet the needs of its specific target because as of now we cant really say who their target is for each brand.
I agree that GM has had done a poor job of differentiating their brands. My family used to buy Fords, but about 8 years ago we switched to Toyota. It was actually a tough decision and we felt a bit like traders, but when purchasing a vehicle you have to go with what is going to provide you with the most value. The Big Three have a long way to go! They need a game changer.
I agree that GM has done a poor job in differentiating nearly all their brands. If you can't be known for quality then differentiate yourself on an aspect that the customer cares about other than quality. I think a lack of innovation is also at fault for the poor performance of GM. I agree that if it were possible GM should start over as Reis mentioned. However, it may be too late for a company that has failed to innovate for much too long
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