Branding and the Demise of GM

Press Play>> now for Ken's welcome message for June 2009, or go to http://www.youtube.com/watch?v=iZP0LfEsrDI now.

So the impossible finally happened. Not only did Chrysler bite the dust last month, but now General Motors—the symbol of American industry—files for Chapter 11 protection. How could this happen??

Well, the media is full of reasons and the auto execs are full of excuses and the UAW is quick to blame. However, let’s stop blaming the mistakes of the past on what’s happening today. Sure some of the cars they produced in the 70’s and 80’s made you wonder what they were thinking (or not thinking!). But frankly, I believe that many of these companies’ autos stack up quite favorably with all the imports (even if most are made in Tennessee and Ohio). The Malibu’s, the Jeeps, the Sebrings, the Envoy’s are pretty comparable to the Camry’s, Accords, and the Altima’s according to Consumer Reports Auto buying guide. So what’s the problem?

I know I am biased, but I believe it all comes down to the lack of solid branding and marketing by the Big 3 year after year. They have been so entrenched in their thinking and so biased in their execution—especially in media—that most of the buying public really has no preference or relationship (positive, that is) with these companies or their brands anymore. I challenge you to give me what brands like, Cobalt, Legend, G6, Enclave, Traverse, MKZ, or Caliber stand for—or even who makes them.
The car companies have gotten so enthralled with “dealer incentives”, "$ off factory invoice", and “employee pricing” that they forgot that the consumer wants to know why they should consider the car in the first place. I look at how Lexus and Hyundai put themselves on the map and wonder why didn’t the “Big 3” just try to emulate what they were doing? I see some cars on the road with model names that I never heard of until I’m sitting in my dentist’s office and pick up some obscure lifestyle magazine and see a big four-color ad featuring this unknown model.

The re-introduction of the Ford Thunderbird a few years ago was heralded as a marketing success so they did what any other ignorant business leader would do—they stopped marketing it! Not long after, the model was discontinued due to “lack of consumer demand”. Consumers have so many choices; a brand can’t hide and expect the demand to suddenly appear. The companies—and their ad agencies—have been criticized consistently for their lack of creativity and marketing innovation. Yet, they keep doing so much more of the same things; I have to question their motivation.

It’s all about leadership. Lee Iaccoca in his new book, “Where Have All The Leaders Gone?” asks: “Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. Who would have believed that there could ever be a time when 'The Big Three' referred to Japanese car companies? How did this happen, and more important, what are we going to do about it?”

So now the government, the unions, and an Italian car company that failed in the US a long time ago are taking over. I hope they do their homework and maybe read what Peter Drucker said a long time ago: “Because the purpose of a business enterprise is to make a profit, a company has two—and only these two—functions—Innovation and Marketing. Innovation and Marketing produce results. All the rest are just expenses.”

It’s time for the car companies to look at what Wal-Mart, Costco, Apple, and
Southwest Airlines have done in marketing to the same customers who would buy their cars. What’s branding got to do with it?? Everything.