GM has been the subject of many business school cases focused on their inability to recognize market changes and adapt their company to meet the challenge of both a new consumer and foreign imports. But, it seems that the new CEO, Ed Whitacre thinks the problems can be fixed with a new marketing chief. He removed chief marketing officer Susan Docherty, who had been put in the position only 5-months ago, and hired Joel Ewanick, who lead a very clever marketing campaign for Hyundai.
GM has been increasing sales but losing market share and Whitacre seems intend to build share back for the company. A great goal. However, I am not sure that I have found anyone who has backed off of buying a GM car because someone else had a more clever ad campaign. Whitacre, who grew up in the telecom industry, seems to think that people choose cars the way they choose wireless plans. This is a guy who continues to live in Texas and has little or no knowledge or understanding of GM or the car industry. He is impatient. Impatience with a company like GM could be expected, but change at GM is hard--it's a huge "battleship" that has been built and reinforced over generations. Change is difficult.
One of the things we always warn students and clients is to not look at other companies and try to imitate their marketing efforts. Imitation is not a strategy. Differentiation is strategy. Ewanick did wonders with Hyundai, but he had a lot to work with. He will have far less to work with at GM. I don't know Docherty and do not know what she did or did not do to warrant this removal, but can you really expect marketing to help sell a car that few people really believe in?
Marketing and branding can do a lot, but the prerequisite is a good product with a value proposition that resonates with the needs and interests of customers. GM does not measure up on either of these counts. Good luck to the new head of marketing. My advice while working for Whitacre--rent, don't buy.
Showing posts with label GM. Show all posts
Showing posts with label GM. Show all posts
Thursday, May 6, 2010
Friday, April 30, 2010
GM, Ford, Chrysler, Toyota, Oh My!!
GM announced this week that they were paying back the government's load early. It almost sounded like they have made so much money lately that they have enough cash on hand to give back the money. Problem is, this was just a major public relations stunt by the company. The money given back is our money that was never used. It was kept in reserves. One has to wonder whether or not GM really was that desperate for money or that they did not know how to operate without the money for all the luxuries they were used to in their executive suit. I still think this is a loser company with limited brand value and no credibility. Their recent move to try to scam the public proves it. Senator Durbin even said that this was tantamount to a shell game. GM claims to be making a profit, which is likely is. They have cut so much cost from their system that any sales now will add profits.
Ford, on the other hand, seems to be doing well. Their sales are up in real terms and they are gaining market share--not just getting back what they had. Ford took a gamble several years ago to move toward environmentally friendly cars. William Ford was the CEO at the time and the board actually threatened him to back off the "environmental nonsense". Detroit has never really understood or appreciated more environmentally friendly cars. They always seem to serve the market and never try to lead or hit the leading edge of change--they have left that to the Japanese and Germans.
Ford has well designed cars, they are operating efficiently and they are also the only US car company that did not take government money, which I believe has endeared them to many consumers.
Chrysler is done--stick a fork in it. This is a company with no focus, no brand value and no strategy. They are sucking up cash and losing market share while the other companies have their best months in years. When you loose 8% share while others are increasing sales by 15-18% in a given month, something is very wrong. Say goodbye to our loan. Chrysler will be a footnote in history, alongside Studabaker, DeSota, and other companies that have failed in the past.
Toyota is having great sales, thanks to 0% interest for 5-years. They have to move 2010 inventory and also stimulate the 2011 sales since inventory has started piling up on the dealer lots. Some people have joked that we now know what it takes to convince someone to drive a "death trap". I don't see it that way. The sales incentives were expected, given the situation and the need to clear inventory. I think what we are seeing is deep loyalty and belief in Toyota. The company has lead for so long in price-quality that it has build some inertia in its brand. If there are new problems in new cars being bought, then we will see real brand erosion and long-term problems for the company
Ford, on the other hand, seems to be doing well. Their sales are up in real terms and they are gaining market share--not just getting back what they had. Ford took a gamble several years ago to move toward environmentally friendly cars. William Ford was the CEO at the time and the board actually threatened him to back off the "environmental nonsense". Detroit has never really understood or appreciated more environmentally friendly cars. They always seem to serve the market and never try to lead or hit the leading edge of change--they have left that to the Japanese and Germans.
Ford has well designed cars, they are operating efficiently and they are also the only US car company that did not take government money, which I believe has endeared them to many consumers.
Chrysler is done--stick a fork in it. This is a company with no focus, no brand value and no strategy. They are sucking up cash and losing market share while the other companies have their best months in years. When you loose 8% share while others are increasing sales by 15-18% in a given month, something is very wrong. Say goodbye to our loan. Chrysler will be a footnote in history, alongside Studabaker, DeSota, and other companies that have failed in the past.
Toyota is having great sales, thanks to 0% interest for 5-years. They have to move 2010 inventory and also stimulate the 2011 sales since inventory has started piling up on the dealer lots. Some people have joked that we now know what it takes to convince someone to drive a "death trap". I don't see it that way. The sales incentives were expected, given the situation and the need to clear inventory. I think what we are seeing is deep loyalty and belief in Toyota. The company has lead for so long in price-quality that it has build some inertia in its brand. If there are new problems in new cars being bought, then we will see real brand erosion and long-term problems for the company
Thursday, March 4, 2010
Could Toyota Damage Other Japanese Brands?
Kelly Blue Book Market Intelligence indicates that Toyota owners are shifting their car-buying interest to Ford and Korean automakers Kia and Hyundai, and away from not only Toyota, but also from other Japanese brands, including Honda and Nissan. This suggests that Toyota was not only a brand in and of itself, but also was the "Japanese car category".
Category is more important than individual brands. We think category before product brand. The leader in the category sets the standards against which all others in the category are judged. A funny thing happens, according to research. When competitors attack the category leader, it often helps to reinforce all the good things that led to its leadership position in the first place. But, when the category leader fails, it can damage others without clear brand preference attributes other than they are members of a desired category.
We are now seeing a very interesting situation arise. Since Toyota was the first and most prominent brand amongst the Japanese car manufacturers, it became not only a brand, but also the standard-barer for all Japanese made cars. All other Japanese cars--Nissan, Honda, Mazda, etc.--were judged against Toyota, but also were defined by it. They lived under Toyota's umbrella. When Toyota's metaphorical umbrella began to fold, the other Japanese car makers started to get wet. In other words, a significant number of Honda buyers select that car because it is a Japanese brand. Toyota build the Japanese brand, defined and lead in its key attributes of quality and reliability, and may be helping to damage the category now.
We are still seeing sales of other Japanese cars increase, but that is because there is market share to be gained by everyone at the expense of Toyota. But, the Blue Book analysis shows that Toyota's aura was big and may have encompassed the entire category of Japanese cars. So, Toyota's problems created a crack for all cars from that country--they were somehow lumped together, just like consumers got used to talking about the problems in "Detroit". Ford is still trying to distance itself from that category. It helped itself when it did not take federal bail-out money. GM and Ford have shown good increases in sales recently. People may be reconsidering a US-car category and Ford's success could be lifting even GM, even though the public is still not sold yet on GM's future.
We are witnessing an interesting situation of demand elasticity that is not related to price as much as it is related to perceived value of a category. Market demand for cars has a lot segmentation appeal and category attributes. Some people look for a car, but most people decide they want to look at European cars, or Japanese cars, or US cars. One might think that other Japanese makers would benefit, but they are getting hurt by category linkage.
At the same time, we see stories that Toyota is succeeding in getting its loyal customers to friend the company's Facebook site and to tout the car brand in social media. These are attempts by advertising and PR firms to drum up support and hopefully create a ground-swell--sort of like a political campaign. The problem is that Toyota is leading what happened in the last election. No Republican could win because Bush had damaged the brand and category. A similar situation could be at work in the market, with other Japanese manufacturers getting hurt for things that had nothing to do with. Toyota is rapidly becoming the Japanese car category George Bush.
Category is more important than individual brands. We think category before product brand. The leader in the category sets the standards against which all others in the category are judged. A funny thing happens, according to research. When competitors attack the category leader, it often helps to reinforce all the good things that led to its leadership position in the first place. But, when the category leader fails, it can damage others without clear brand preference attributes other than they are members of a desired category.
We are now seeing a very interesting situation arise. Since Toyota was the first and most prominent brand amongst the Japanese car manufacturers, it became not only a brand, but also the standard-barer for all Japanese made cars. All other Japanese cars--Nissan, Honda, Mazda, etc.--were judged against Toyota, but also were defined by it. They lived under Toyota's umbrella. When Toyota's metaphorical umbrella began to fold, the other Japanese car makers started to get wet. In other words, a significant number of Honda buyers select that car because it is a Japanese brand. Toyota build the Japanese brand, defined and lead in its key attributes of quality and reliability, and may be helping to damage the category now.
We are still seeing sales of other Japanese cars increase, but that is because there is market share to be gained by everyone at the expense of Toyota. But, the Blue Book analysis shows that Toyota's aura was big and may have encompassed the entire category of Japanese cars. So, Toyota's problems created a crack for all cars from that country--they were somehow lumped together, just like consumers got used to talking about the problems in "Detroit". Ford is still trying to distance itself from that category. It helped itself when it did not take federal bail-out money. GM and Ford have shown good increases in sales recently. People may be reconsidering a US-car category and Ford's success could be lifting even GM, even though the public is still not sold yet on GM's future.
We are witnessing an interesting situation of demand elasticity that is not related to price as much as it is related to perceived value of a category. Market demand for cars has a lot segmentation appeal and category attributes. Some people look for a car, but most people decide they want to look at European cars, or Japanese cars, or US cars. One might think that other Japanese makers would benefit, but they are getting hurt by category linkage.
At the same time, we see stories that Toyota is succeeding in getting its loyal customers to friend the company's Facebook site and to tout the car brand in social media. These are attempts by advertising and PR firms to drum up support and hopefully create a ground-swell--sort of like a political campaign. The problem is that Toyota is leading what happened in the last election. No Republican could win because Bush had damaged the brand and category. A similar situation could be at work in the market, with other Japanese manufacturers getting hurt for things that had nothing to do with. Toyota is rapidly becoming the Japanese car category George Bush.
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