General Motors is throwing down the gauntlet. It's planning a major advertising blitz starting Sept. 14 to persuade consumers who haven't looked at GM cars in years to consider its products and compare them to the competition. The campaign will start with new Chairman Ed Whitacre Jr. pitching the new GM in the way that former Chrysler Chairman Lee Iacocca did for his company in the 1980s.
Whitacre is the former AT&T (T) chairman and CEO who was installed as GM chairman in July by the Treasury Dept. His ads will run for just a short period before GM starts plugging its four brands—Buick, Cadillac, Chevrolet, and GMC—with a campaign themed "May the Best Car Win." In those ads GM will compare its newer models to competing Japanese and German cars, even showing attributes such as pricing, fuel economy, and the warranty to prove its cars are better buys.
GM won't stop there. The campaign also offers consumers a buyback guarantee. Anyone who buys a car can return it within 60 days and get his or her money back. The idea, says Vice-Chairman Robert A. Lutz, is to get consumers to see that GM's new models stack up favorably against the competition, and that there's no risk to giving them a try.
"We are really in a position today where anyone can say that we are as good or better than anyone else," Lutz said in a conference call with reporters. "We have to close this monumental chasm between the product lineup and the public's perception of the product lineup."
Whitacre is a plain-speaking Texan who leads a tough new board of directors that has been scrutinizing everything from GM's sale of its European Opel unit to how long it takes to get new models to market. Lutz said Whitacre will start off the ads saying, "When they asked me to take the job, I too had my doubts." Then Whitacre adds that now that he's gotten inside the company, met the employees, and reviewed the products, "I believe these are some of the best cars and trucks in the world."
GM asked Whitacre to appear in the ads because he is an outsider. He also speaks with a Texas drawl and walks with a slight limp, which Lutz says gives him the look of an aging cowboy. When GM showed the ads to consumers in prescreening events, viewers said they trusted Whitacre. "People said he sounds very sincere," Lutz says. "Central casting could not have done better."
When he takes the screen, Whitacre will be the fourth auto executive to do so. Former Chrysler CEO Dieter Zetsche appeared in the Dr. Z ads, which got Chrysler some buzz but didn't help sales much. Ford (F) family scion William C. Ford Jr. did the same several years ago, but he wasn't forceful enough, says Daniel Gorrell, principal of Autostrategem, a marketing consulting firm in North Tustin, Calif.
Most famously, Lee Iacocca appeared successfully in Chrysler's ads, which worked because he was a big-name personality, Lutz said. In this case, GM just wanted someone new to Detroit to appear in the ads to lend credibility. "Product spokespersons like Iacocca are necessary when you need style over substance, when you need the cult of personality to overcome the weakness of the product," Lutz said.
Will the gambit work for Whitacre and GM? "We'll have to see how he comes across onscreen," Gorrell says. "How persuasive is any [chairman]? I have my doubts."
GM's comparison ads may have more of an impact. Many consumers don't even know that the company has strong models coming out, Gorrell says. Those who do may have less to worry about buying one now.
In one ad, GM will feature the new Chevrolet Equinox SUV beside a competing Honda (HMC) CR-V. The commercial will show that the Equinox has a longer warranty and better highway fuel economy. Even more brazen, GM will compare the Buick LaCrosse sedan to a Lexus ES 350. Its highway fuel economy is 30 miles per gallon to the ES 350's 27 mpg. The warranty is five years and 100,000 miles for the engine and transmission, compared with six years and 70,000 for the Lexus. And the Buick is about $1,000 cheaper.
Analysts think the campaign could work. "Consumers watching this ad campaign will be intrigued because of GM's bold statement of confidence in its vehicles," says Jeremy Anwyl, CEO of Edmunds.com. "The risk that GM has in buyers returning its vehicles will be very minimal."
If a consumer brings the car back before the 60 days are up, the dealer will buy it back and sell it on the used lot. GM will have to eat the difference. Consumers have to be current on their payments to bring the car back and they can't drive more than 4,000 miles in those two months. Certain buyers won't respond to the ads, but anyone who doesn't hate GM brands might give it a look, Gorrell says. "This is for people who are on the fence, not dyed-in-the-wool Chevy haters," he says.
Winning over consumers will be a huge challenge. Not only are sales and market share down, so is consideration for its brands. Cadillac is arguably GM's strongest brand, and only 2.1% of shoppers on Edmunds.com looked at the brand in July. That's down from 4.3% of shoppers in January 2008, according to Edmunds.
Brands in Front
GM may be bragging about its cars, but once the ads featuring Whitacre are done, none of them will talk about General Motors, Lutz says. It's the last thing the company wants to advertise after going through bankruptcy and getting an unpopular government bailout. Lutz said GM's research shows that most consumers don't associate Buick, Chevy, Cadillac, and GMC with GM: "The brands are exonerated from this unfortunate financial occurrence."
The company won't restrain its spending either. Lutz said that he and CEO Frederick A. Henderson met recently with Whitacre in San Antonio, where the chairman lives. He asked them how they would counter consumer perception. When they described the plan but fretted that funding was limited, he told them, "Spend it," Lutz says. So GM has upped its budget. Measured as a share of advertising compared to the company's market share, GM is buying a bigger voice than the company has ever purchased. Its market share is 19.4% so far this year, down from 21.6% last year. Whitacre has said internally that he wants to see positive sales results in three months or there will be consequences for executives.
Given the depth of GM's brand troubles, if Whitacre is serious about sacking executives, then some may not be around to see if the plan works. It takes years to repair car brands. But the new program could be a good first step. "It's a bit novel," Gorrell says. "This is the kind of trust-creating mechanism that they need."