Gm Warms Up The Branding Iron
In its heyday half a century ago, when Alfred P. Sloan Jr. strove to build "a car for every purse and purpose," General Motors Corp. created some of the strongest brand names in the industry. Back then, if you said the word "Pontiac," any consumer in the country could tell you what kind of person drove it. But decades of fuzzy marketing and lookalike models from competing GM divisions have blurred those brands.
Now, in an attempt to once again create strong identities for its dozens of cars, trucks, and minivans, GM is moving to adopt the same brand-management techniques used to sell cornflakes and toothpaste. The move was initiated by former GM chairman and retired Procter & Gamble Co. chief, John G. Smale, who brought in Ronald L. Zarrella, then No.2 at Bausch & Lomb Inc., in late 1994. Under Zarrella, a single executive is now a brand's internal champion, with responsibility for all its marketing.
That's hardly a radical move. The shift simply brings GM in line with practices adopted long ago by other U.S. companies, even as pioneers of the approach, such as P&G, move away from it. Still, you can't run until you can walk--and brand experts say the belated foray into modern marketing marks a giant step forward for GM. "It's a very good idea that's long overdue," says Gary M. Stibel, head of New England Consulting Group.
While marketing is only part of the problem, GM has paid heavily for its negligence. Its U.S. market share has been declining for decades. Since 1991 alone, it has fallen from 35% to less than 32%. And nowhere has the price been higher than in the key market for midsize sedans. While Ford sports four entries in the segment, Honda three, and Toyota just one, GM offers up a dozen. Too many indistinct, often aging models targeted at the same customer took a toll: General Motor's midsize sales rose just 4.5% in the last five years, while the category overall grew by more than 14%.
Now, though, GM has to get things right. The company is slated to replace one-fourth of its auto lineup over the coming year. New models will include five midsize sedans and five minivans. If GM can't forge distinct identities for its flurry of models, it could flounder just as the market is slowing. Brand management will be "critical," says Lehman Brothers analyst Joseph S. Phillippi, "to make sure all these models aren't getting lost in the clutter."
SEA CHANGE. How does the concept translate at a car company? For starters, GM's brand managers will work closely with the engineering teams on new-model designs, to ensure they're giving customers what they want. That sounds like Marketing 101, but GM has traditionally been run by executives more interested in accounting than marketing. Engineers, focused on juicing-up performance to beat rivals, dominated on the design floor. "The cornerstone of brand management is to stop chasing your competition and start chasing your customer," says auto consultant John Wolkonowicz, of Arthur D. Little Inc. "GM has gotten the message."
The new system will also create much needed accountability. That's a big change from the old days, when dozens of managers in marketing, sales, and planning would each do part of the job of bringing out a new car--and each of them might work on many models. Although a car's image might have been blurry, or have changed every year, no one was held responsible when it sold poorly.
Now, each of GM's 40-plus brands--one for every line of cars and trucks GM sells in the U.S.--operates as a separate business. The brand managers, several of whom have two brands, have full responsibility for marketing their vehicles, including advertising, pricing, and promotions. And paychecks are now directly linked to their model's performance.
To put the new methods into practice, Zarrella has named 35 brand managers since last October, including six outsiders from packaged-goods companies such as Ralcorp, Nabisco, and Procter & Gamble. "They're bringing in wonderful ideas from outside," says Lynn C. Myers, a Pontiac marketing manager. For example, Jeffrey B. Cohen, a former Nabisco marketer now handling the GMC Jimmy sport utility is using classic packaged-good tactics. He's reaching out to upscale women by doing charity tie-ins with lifestyle maven Martha Stewart.
OPTION CONTROL. The shift is also helping GM do a better job in manufacturing. James W. Bunnell, brand manager for the Pontiac Sunfire, and Steven W. Wagg, brand manager for its sister car, the Chevrolet Cavalier, realized that most customers buy only a few popular combinations of features and options. Yet GM's plants in Lordstown, Ohio, and Ramos Arripe, Mexico, were building lots of variations, increasing costs and complicating manufacturing. The brand managers are working with the plants to streamline.
Even GM's crosstown rivals think that the auto giant is onto something. For years, Chrysler Corp. and Ford Motor Co. have been stronger marketers than GM, nurturing or rebuilding brand names like Jeep and Mustang. Ford insiders say its board was so impressed by GM's blueprint that it directed Ford managers to follow suit.
But GM still faces the difficult long-term task of clearly defining and differentiating between its myriad look-alike brands. Zarrella has asked the brand managers to distill their brands' key attributes or personality into a succinct message; Grand Prix brand manager William C. Heugh is taking his midsize car back to its sporty, macho roots with ads once again touting a wide-track stance. But other brands are still struggling to find their identities. So far, Chevrolet's midsize Cavalier, Malibu, and Lumina sedans sound remarkably alike.
There are other pitfalls, as well. GM's six marketing divisions, such as Cadillac and Chevrolet, must ensure that their own umbrella brand images don't become muddled. And GM could have trouble hanging on to its outside brand managers if the job doesn't live up to its billing; already one is leaving.
There's also the risk that competing brand managers could end up brawling among themselves as they vie for management attention and marketing dollars. Ironically, such concerns led P&G itself to abandon brand management eight years ago. Deciding that its system was pitting brands like Camay and Ivory soaps against one another, P&G switched to "category management" in which managers oversaw whole product categories. Zarrella says the company's dealer structure made that impractical for GM.
CADDY SHY. General Motors' first real test of the new approach comes this fall with the launch of the '97 models. Nowhere is the need for positioning more crucial than at Cadillac, which will debut its Catera entry-level luxury sedan. Brand manager David G. Nottoli rejiggered Cadillac's traditional "wreath and crest" emblem. He took one of the six birds facing left, turned it around, colored it red, and made it a cartoon mascot in a play to attract baby boomers. His aim? To project an irreverent image intended to show that the Catera is far removed from the stodgy Cadillac of old.
Will that be enough? Critics point out that GM's brand managers have had little influence beyond advertising so far. The new cars have been in the works for years, while most brand managers have only been on the job since last October. "There's a huge amount of cynicism out there that this is old wine in new bottles," says Deborah Mitchell, a Stanford University marketing professor who has worked as a GM consultant.
GM managers concede that they remain years from their final goal, which is to have the brand managers intimately involved in the design of new cars right from the beginning. "Obviously, they weren't in on the ground floor of those vehicles" being launched this fall, says GM Chairman Jack Smith.
And given GM's variety of models, brand management may simply be an attempt to turn a vice--too many models--into a virtue. If brand managers can create distinct identities for each of GM's midsize cars, for example, Zarrella figures that the array of offerings can satisfy more customers than rivals such as the Ford Taurus and the Honda Accord, which must be all things to all people. "If we do this right, no other automobile manufacturer will be able to compete with us," he says.
Still, critics point out that many of the cars offered by General Motors really are too alike--and that what the Detroit giant needs is not better advertising but to cut back on the plethora of models. Proper brand management will probably make it clear which of the company's many models ought to be retired. "We do have too many models and vehicle lines," Zarrella said early last year, shortly after his arrival. The result could be an array of well-defined brands that even Alfred Sloan would be proud of.