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GM LEARNS TO LOVE AN OUTSIDER
Last fall, when General Motors Corp. brass began looking for an outsider to become the No.1 carmaker's top marketing honcho, dismay spread among the ranks. Without auto industry experience, argued GMers, nobody could possibly fathom the intricacies of selling cars. So in November, when the company tapped Bausch & Lomb President Ronald L. Zarrella for the job, his background in underwear manufacturing and contact-lens sales prompted Motown wags to wager he would quickly wash out of GM's hidebound, politics-ridden culture.
Surprise, surprise. Seven months after coming on board, the 45-year-old executive's marketing horse sense and extroverted personality have forged alliances and won over skeptics--at least among GM's top ranks. "He has survived the GM immune system," marvels John D. Rock, Oldsmobile's general manager. With backing from GM President John F. Smith Jr., a fellow East Coaster, Zarrella is feeling secure enough to take some unpopular stances: In early June, his opposition helped ax Cadillac's plans to sell a luxury sport-utility vehicle.
BIG DROP. Now comes the real gear-grinder: sorting out GM's muddled and overlapping brands. In several months, Zarrella will begin naming new "brand managers" to help sharpen GM's confused marketing. He also will have to winnow too-similar cars and trucks out of GM's lineup. But cutting models is an explosive decision: Dealers and marketers must suddenly survive with fewer to sell. Zarrella concedes the difficulties but says: "We think we can do more volume with fewer entries."
One of Zarrella's priorities is Cadillac, where 1995 sales are down 28%. Zarrella rejected simply slapping a Cadillac crest on one of GM's big Jeep-like trucks. Not doing so is a risky strategy: Companies from Mercedes to Lexus are racing to come out with fancy trucks. But he thinks the luxury-truck field already is getting crowded and wants Cadillac to focus on making its cars more competitive with foreign rivals'. The first step will come next year with the new Catera, which is based on a European model and is aimed at younger, hipper buyers.
Zarrella's broad perspective is helping to win over many GMers. He was trained as an engineer at Worcester Polytechnic Institute in Massachusetts and began his career as a manufacturing expert at Playtex FP Group Inc. Tapped as management timber, he did stints in sales and marketing, then ran the company's Australian division before taking a job at Bausch & Lomb Inc. There, he aggressively pushed overseas sales, and became president in 1993.
Now, the biggest cloud hanging over Zarrella may relate to Bausch & Lomb. The Securities & Exchange Commission has been investigating an alleged effort there to boost results in late 1993 by forcing distributors to take huge contact-lens shipments--while secretly assuring many that they didn't have to pay for them until they were sold. So far, no one has been charged with wrongdoing. Zarrella concedes he approved the move, intended to clear out slow-selling inventory, but says it was poorly executed. Bausch & Lomb has said it inappropriately booked some revenues, but both it and Zarrella say the amount was immaterial to 1993 results.
Meanwhile, Zarrella's experience with brands such as Ray-Ban sunglasses colors his approach to cars. For starters, he is pushing GM to spread advertising budgets more evenly over the life of a car model, rather than spending a huge amount at introduction, as the company now usually does. He also has decided that it's easier to rehabilitate venerable product names than to start over from scratch. This winter, Rock proposed dropping the Cutlass moniker from the 1996 replacement model, but Zarrella nixed the idea.
Zarrella enjoys cars (he sold his stable of BMWs when he joined GM), but his personal interests range wide. He loves fine wines and is an avid angler. In college, he captained the golf squad, and he still plays occasionally. There hasn't been much time for that recently, however, what with shuttling to Rochester, N.Y., on weekends so his 9-year-old daughter could finish the school year before he moved his family west.
As he settles in, Zarrella admits the new alliances he has made at GM will be sorely tested as he pushes for change. "I doubt if I've won over all the skeptics," he concedes. Not yet, anyway.
RONALD L. ZARRELLA
BORN Waterbury, Conn., Oct. 12, 1949.
EDUCATION BS engineering, Worcester Polytechnic Institute, 1971; MBA, New York University, 1978.
EXPERIENCE At Playtex, he rose to general manager of Australian operations before moving to Bausch & Lomb, where he eventually became president and CEO. He left to take GM's top marketing job last November.
PERSONAL Wine collecting, sailing, golf, fishing.
ETC. Zarrella was a devoted driver of BMWs but had to switch to GM models.By David Woodruff in Detroit, with Mark Maremont in Boston