„Reinvention of GM“- why not earlier? The filing for bankruptcy of GM can serve as a future case study of big time branding failures.

While the media landscape generally traces the General Motors disaster back to tangible factors such as the failure to build cars of contemporary taste (small and fuel-efficient) or too high labour costs (aren’t they even higher in Germany?), one view is generally neglected: the failure to build brands, rather than merely automobiles.

Once upon a time, GM successfully catered to the needs and wants of the American car buyer: well distinguished sub brands that made it possible, and desirable, for customers to easily upgrade their style, changing to other brands within its portfolio. You could start by a smaller model such as a Pontiac and, in line with the notion of the American dream, just get a Cadillac once your in your career skyrockets - no need to end your love affair with Detroit. In their book “the 22 immutable laws of marketing”, Ries and Trout argue that the law of the category indicates that every category will divide into smaller subcategories, requiring that every brand shall be treated with caution in order not to lose focus. GM started with a single model, then divided into eight sub brands (Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, Saab, Saturn) which then line-extended in pursuit of gains in (short term) market share. Cadillac, for instance, has diluted the power of its “luxury” brand with low-end models such as the Cimarron or the Catera. All of GMs sub brands ended up going after everything- while ultimately standing for nothing. They jeopardized and lost the most valuable asset they could have: their position in the mind of the consumer. For instance, what is the most advertised GM brand, Chevrolet today? The answer would be quite difficult: It is “a large, small, cheap, expensive automobile or truck”, as Al Ries notes in the Ries Report. None of the new models could be nurtured in a way to have a strong and distinctive positioning but rather gave room to a vast, confusing overall brand architecture. GM provides a vivid example of teh risk of a so called house of brands strategy: Over time their once uniquely positioned brands became more and more similar. In a bid to increase efficiency, the company came to sell essentially the same car under different brand names. As a result, GM brands not only lost its meaning, but also competed with each other, the company became forced to divide the resources, and the portfolio lost ground to the competition

Interestingly, Ford realized this flaw earlier and cut their portfolio from 97 models to merely 40 within the last two years, in order to gain more brand focus and synergize with the 80/20 rule- that 20% of their products account for 80% of the gross profit anyway. Consequently, Ford did not have to go on government life support, which could be viewed as one of the major reasons for its (relative) success during the last months. GM, on the other hand, had its back broken by the acceptance of the bailout money. In a category that is so much determined by brand image and emotional touch points, nobody wants to buy from a ailing automobile manufacturer. Hence, the loss of equity resulting from the bailout is worth much more than the actual money itself. And the indirect consequences of the crisis are even more severe: government and the public have taken the legitimacy of the company’s only solution to the crisis: marketing and communication. With everyone of the former management still present (except Wagoner of course) and without the possibility to market effectively, making over the corporate image and ultimately driving more people to buy its brand seems virtually impossible. The perception of the brand in the consumer's mind seems too much damaged. Interestingly, GM now at least chose to jump on the band wagon of a more focused brand portfolio through the reinvention of GM- less brands with more focus. However, whether the company can rise from the dead with this measure remains highly questionable. Even generally futile marketing moves are worthless, when not timed accurately.

Francesco Wesel MA
Integrated Marketing Communication
www.francescowesel.com
www.brandnewtimes.blogspot.com