The General Motors Branding Lesson

[Newbiewar]

October 08, 2007

The General Motors Branding Lesson

Toyota passed General Motors' seven-decade reign earlier this year as the world's largest car producer by volume. That’s right 70 years of leadership came to an end. Today, Toyota has America’s best selling car, the Camry, and GM is struggling to make dwindling brands, such as Buick and Pontiac, mean something to consumers.

When something like this happens to a company of this stature, it's important to discover why this occurred. These are important lessons as George Santayana warned, "Those who cannot remember the past are condemned to repeat it." What went went wrong with GM? Here’s a detailed analysis.

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.

Like BMW, Toyota pushed one brand in many forms. All of these cars benefited by sharing in one powerful differentiating idea: reliability. And when they went up into the super-premium category, it became a Lexus with all of the "Toyota" identity carefully eliminated. Also, they are quick to invest in new innovations such as the hybrid Prius.

The bottom line is that in the branding business, less is more.

A successful brand has to stand for something. And the more variations to attach to it, the more you risk standing for nothing. This is especially true when what you add actually clashes with your perception. If Altira's Marlboro stands for cowboys out in Marlboro Country, how can it sell Marlboro Menthol or Marlboro Ultra Light cigarettes? Real cowboys don’t smoke Menthols or Ultra Lights.

If Coca-Cola is the company that invented cola and the owner of that special formula, how can it be the "Real Thing" when the company offers a parade of new things including one called "Zero"? Why change that unique formula?

Should Wal-Mart Stores try to sell more up-market products to compete with Target? No, that's not its market.

Should Porsche risk its sports car image by selling SUVs? No, it's an iconic sports car brand.

Should Dell try to sell home electronics to compete with the Japanese and Koreans in this category? No, it sells computers directly to businesses.

Until companies come to grips with the simple fact that they don’t really have an inordinate need to grow, but an inordinate desire to grow (because of Wall Street), bad things will continue to happen. Slowly but surely, brands will lose their meaning as they try to become more.

What is happening to General Motors should be a lesson to all companies no matter how big and powerful they are. You cannot be everything for everybody, and the more you try, the more you risk sinking the ship.

As I say to many senior executives as a reminder of what can happen, put a simple sign on the wall that reads: Remember the Titanic.

[Drew Dowdell]

Did he write this in 2001 and just release it now or what?

GM has some of the strongest and most recognizable brands out there!

Hummer, Cheverolet, Cadillac - all super strong brands, easily identifiable, they may have some product weaknesses here and there but as far as image, they're set.

Saturn,GMC - only slightly less strong as Chevy however they enjoy a nearly cult like following. Denali commands respect. Saturn has overnight transformed their image into an upscale family car.

Buick - Brand in recovery but coming along nicely. Enclave has waiting lists and Lucerne is still outselling Toyota's "better Buick" Avalon.

Pontiac, Saab - Brands that are just starting their recovery, however once the product is there they'll be back.

And as far as holding up Toyota as an example of how to do things..... How'd that Scion brand do last month?

[Camino LS6]

Is there a point in there somewhere?

[Newbiewar]

Did he write this in 2001 and just release it now or what?

GM has some of the strongest and most recognizable brands out there!

Hummer, Cheverolet, Cadillac - all super strong brands, easily identifiable, they may have some product weaknesses here and there but as far as image, they're set.

Saturn,GMC - only slightly less strong as Chevy however they enjoy a nearly cult like following. Denali commands respect. Saturn has overnight transformed their image into an upscale family car.

Buick - Brand in recovery but coming along nicely. Enclave has waiting lists and Lucerne is still outselling Toyota's "better Buick" Avalon.

Pontiac, Saab - Brands that are just starting their recovery, however once the product is there they'll be back.

And as far as holding up Toyota as an example of how to do things..... How'd that Scion brand do last month?

agreed, i read an article about their brands over the weekend... it praised GM over toyota because GM is poised to make massive market share gains with good products, where as toyota has 3 outlets and the vehicle face just gets tiring...

[Newbiewar]

Is there a point in there somewhere?

can someone explain to me why people keep saying toyota is sales leader?

last i checked GM's news articles still say Global leader for the last 7x years...

[Camino LS6]

can someone explain to me why people keep saying toyota is sales leader?

last i checked GM's news articles still say Global leader for the last 7x years...

They say it because they want it to be true. It isn't, at least not yet.

And it won't be true for very long - if it ever happens. The next few years are Toyota's only shot at the #1 title, after that it will be beyond their reach again.

The title will be in contention for a long time to come, and even if Toyota enjoys a brief stay at the top, it will not have a definitive lead anytime soon - if ever.

[Newbiewar]

They say it because they want it to be true. It isn't, at least not yet.

And it won't be true for very long - if it ever happens. The next few years are Toyota's only shot at the #1 title, after that it will be beyond their reach again.

The title will be in contention for a long time to come, and even if Toyota enjoys a brief stay at the top, it will not have a definitive lead anytime soon - if ever.

thats what i'm thinking

they seem to have a pisspoor lineup with a sprint of new cars that got them to the finish line... yet no future planning on how to sustain expected growths.

[Camino LS6]

thats what i'm thinking

they seem to have a pisspoor lineup with a sprint of new cars that got them to the finish line... yet no future planning on how to sustain expected growths.

Yes, and GM is positioned well globally to regain (if necessary) and secure the number 1 spot .

Some members of the press can't see the forest for the trees.

[Drew Dowdell]

You know why Toyota will never win the "branding war"?

Because they will never be able to run a commercial like

[Newbiewar]

You know why Toyota will never win the "branding war"?

Because they will never be able to run a commercial like

GM needs to update that every coupe years and keep it running...

it'd be nice to see some GMT900 silverados

cadillac CTS's

Malibus

G8

Lambda

astra

etc...

toyota has less models globally then GM does in the states...

[Camino LS6]

You know why Toyota will never win the "branding war"?

Because they will never be able to run a commercial like

Best GM ad campaign ever.

[Newbiewar]

Best GM ad campaign ever.

Correct me if i'm wrong...

But dont you mean, Only GM ad campaign ever?

[Drew Dowdell]

Yes, and GM is positioned well globally to regain (if necessary) and secure the number 1 spot .

Some members of the press can't see the forest for the trees.

Cadillac posted a 30% sales jump in Europe.

Astra is the best selling car in Europe.

GM is kicking Toyota's ass all over China.

GM practically owns South America.

Tundra has stalled as more and more problems are found that don't include it's pricing structure.

Scion as a brand fell dramatically this month.

All of Toyota's North American sales are being held up by the Camry, Tundra, Prius, and ES, everything else is dropping.

[Drew Dowdell]

GM needs to update that every coupe years and keep it running...

it'd be nice to see some GMT900 silverados

cadillac CTS's

Malibus

G8

Lambda

astra

etc...

toyota has less models globally then GM does in the states...

I'd make one if I could get video footage of those vehicles.

[Newbiewar]

Cadillac posted a 30% sales jump in Europe.

Astra is the best selling car in Europe.

GM is kicking Toyota's ass all over China.

GM practically owns South America.

Tundra has stalled as more and more problems are found that don't include it's pricing structure.

Scion as a brand fell dramatically this month.

All of Toyota's North American sales are being held up by the Camry, Tundra, Prius, and ES, everything else is dropping.

now all we can do is sit back and wait for the malibu to come in for the kill

and finnally

:camarosmile:

[Z-06]

And only if Japan had an open Market.

Toyota will not have remotest chance. I liked GM's idea of buying into Suzuki unfortunately to shore its NA operation they had to see them. And when GM rebounds, they should buy stakes in Suzuki to about 40-49% (if Japanese governement lets) and then add those numbers in GM, we will see how long Toy will take to be #1. Potentially buying in Suzuki is huge:

1. They know their lil' cars,

2. Their India operation is one of their cash cows and plus a huge market share.

Coming back to the article. I agree it was written way back more like in 1998.

[thegriffon]

agreed, i read an article about their brands over the weekend... it praised GM over toyota because GM is poised to make massive market share gains with good products, where as toyota has 3 outlets and the vehicle face just gets tiring...

Well, three outlets in the US (not counting Hino), but four in Europe, two in most other markets and, let's see, six in Japan.

Toyota's global brands/dealer networks

Netz (JDM-own badging)-progressive, youthful

Toyota Corolla (not just a car, but a whole division which includes Camry)

Toyopet (JDM)-premium, sporting (withdrawn from North America due to shoddy quality)

Toyota-conservative, premium (JDM), catch-all (global)

Lexus-Global luxury

Daihatsu-We do compact/mini-Eurasia (withdrawn from Americas and Australasia), some subcompact and larer models shared with Toyota

Perodua-cheaper versions of Daihatsus (Eurasia)

Hino-commercial vehicles

Scion-youthful (North America).

This doesn't count alliance partners in China building Toyotas under their own brands.

DYK—Honda will add a third brand just for the Chinese market?

—Mazda tried to emulate Toyota's multichannel strategy (with Autozam, efini, and Eunos brands in addition to Mazda) for a few years, and tried launching Eunos as a Lexus rival in some markets before running out of money?

—Honda tried a multichannel strategy at the same time, which it is still unwinding, selling different models (all badged Honda) through separate dealer networks?

[PurdueGuy]

And as far as holding up Toyota as an example of how to do things..... How'd that Scion brand do last month?

Even Toyota doesn't do things like Toyota says businesses should do things. I've seen them contradict their own Toyota Production System mantra so many times in the last handful of years...