Can Caddy's Driver Make GM Cool?
There is no doubt that Mark LaNeve has earned his stripes as an auto-industry marketer. As head of Cadillac since 2001, he has been a key player in engineering one of the most impressive turnarounds the industry has seen in recent years. Cadillac's rock 'n' roll ad campaigns featuring Led Zeppelin music and showcasing the new generation of tire-burning luxury cars injected energy into a brand that many had written off as sclerotic. And he tirelessly flew to meet with Caddy's 1,500 dealers and convince them the brand wasn't dying.
Now the former University of Virginia linebacker has an even bigger challenge. This month, General Motors Corp. (GM ) promoted LaNeve to head of marketing for all of its brands. His task is daunting. GM's weakest units -- Buick, Pontiac, and Saturn -- are clawing back after years of market-share slide, stagnation, and mismanagement. Any recovery will have to be won in a weakening market: In August, GM'S sales slipped 7%, prompting the company to slow its plants for the fourth quarter to clear out bloated stocks. Market share has fallen to 27.2% from 28% last year. It now takes GM an average of 91 days to move vehicles off dealer lots -- twice what it takes Japanese companies in the U.S. For months, some GM execs wore lapel pins with the number 29, the company's market-share target. But with some analysts predicting a slide to 23% by the end of this decade, those pins are now as current as "Howard Dean for President" buttons.
With all this working against him, can LaNeve make GM's brands cool again? The task is daunting. GM remains strong in trucks, but in recent years the company has not replaced its car models as fast as Toyota (TM ), Honda (HMC ), and others. Now it's trying to catch up, and new vehicles are on the way. LaNeve and his team will have to craft consistently compelling ad campaigns -- traditionally not a GM strength. He has to convince shoppers that the new metal is worth buying without lots of rebate cash. And he will have to work on consumer perception that GM's cars -- despite rising in the ranks of J.D. Power & Associates Inc. quality surveys -- aren't built as well as foreign models with lower scores, such as Volkswagen. "I look at Nissan (NSANY ) five years ago or Hyundai six years ago," LaNeve says. "Turnarounds can come that fast."
LaNeve was helped at Cadillac by respectable new products, such as an Escalade SUV that hit big with the hip-hop crowd and a CTS sedan that impresses even Lexus lovers. He needs the new Pontiacs, Saturns, and Buicks to make marks as well -- and not just in rental-car lots. GM is spending plenty to do it. After shelling out $4.3 billion to develop new Cadillacs, it's dropping $3 billion on Buick and nearly as much on Saturn.
SWERVING BRAND IMAGES
GM has paid a heavy toll for its three-year price war in lost profits and brand image. Consumers are trained to look for GM's deals. The auto maker averages $7,200 a vehicle in total discounts, vs. $5,000 industrywide, says Edmunds.com Inc. That's a 23% discount off sticker prices, compared with 21% at Ford Motor (F ) and 10% for Japanese brands.
LaNeve thinks marketing can make a difference. He wants to offer deals more selectively. "We aren't backing away from using incentives," he says. "But we need to look harder at: 'Are we spending the right way?"' Says Iceology consultant Wesley R. Brown: "The Big Three ads make it sound like a fire sale, so it sounds desperate."
Maintaining a consistent image has been a big problem for GM's car brands. Buick has tried three marketing strategies in six years, employing tactics from talking cows to a series of creepy ads depicting the ghostly image of long-deceased GM designer Harley Earl -- an industry legend with little recognition outside automotive circles. Yet another Buick strategy breaks later this month. Pontiac drew the public scorn of GM Vice-Chairman Robert A. Lutz two years ago with a reality-show style ad campaign featuring young people being surprised by the Pontiac driving experience. Pontiac gets its second strategy in two years this month. And struggling Saturn goes back and forth between selling its no-haggle showroom message and chancy "mood" ads about vehicle design and the free spirit of Saturn buyers. LaNeve says there are no sacred cows among GM's ad agencies, some of which have been on the job for decades.
Earlier this year, GM dismantled the last pieces of an ill-conceived packaged-goods brand-management system installed in the mid-1990s by former GM North America President Ronald Zarella. Under Zarella, advertising focused on specific models like Regal and Grand Prix rather than brands. Market share fell, but LaNeve believes GM's problem brands need clear emotional campaigns that hold up for years. Says a colleague who has endured GM's flailing: "Mark has great instincts...and is in charge of making sure nothing really awful gets on the air anymore."
LaNeve needs to find a logical market niche for each brand to pursue. There, GM has set some ambitious targets. It wants to make Buick a low-priced alternative to Toyota's posh Lexus brand. And Pontiac is to be aimed at buyers who yearn for the performance of a BMW without the hit to the wallet. New cars such as this fall's G6 midsize car and next year's sexy Solstice two-seater will feature tight handling and fast engines to sell the idea. Saturn is moving closer to Honda and Volkswagen, with Euro styling and expensive-looking interiors. "Except for Cadillac, Chevy Truck, and Hummer, all those brands want to be seen differently by consumers than they are today, and that is a lot of change to engineer," says Dan Gorrell of San Diego consultant Strategic Vision.
The toughest part will be getting import shoppers to even take a look. Buick's buyers today are mostly GM loyalists. The same goes for Pontiac, though it has among the youngest buyers of any domestic brand. Saturn's image lures import shoppers, but its best new vehicles are a couple of years away. The vestige of goodwill for Caddy LaNeve had in his old job is in short supply at these other brands. "None has the positive publicity and word of mouth of Cadillac," says analyst Tom Libby of Power Information Network LLC.
LaNeve's task will be downright impossible if the new models don't sizzle. And so far, reception by the national auto press to the new Buick LaCrosse, Pontiac G6, Chevy Cobalt, and GM's new minivans, all debuting this fall, has been tepid. LaNeve looks at the situation like a football coach of a former powerhouse team fighting to regain respect. "GM is the underdog now," he says. "We are the scrapper. That's how I am going into this." It worked at Cadillac. Now, LaNeve needs to make it work for an entire corporation.
By David Welch in Detroit and David Kiley in New York