Thursday, March 24, 2005
GM Woes
I've written in the past of the declining fortunes of the Big 3/Three (now sort of 2, since Chrysler Group is really a German company). GM's marketshare has gone from the high 30's since I started working in the car business (80's) to the mid 20's today. All along, bonuses and salaries have been meted out on a regular basis. Makes you wonder...
Based on some of the research we've done over the past few years, the only way the domestics have stayed in the game is through liberal incentives and the fortune of a huge dealerbody that is constantly scrambling to move the metal out of inventory with huge incentives and massive ad budgets. Without car dealers, there would not be newspapers as we know them today...they fund most of the classified...and therefore, the newspapers.
Bob Lutz admitted that it may be necessary for GM to eliminate another brand. That was quickly ameliorated the following day by Mark LaNeve...but the cat was out of the proverbial bag. If Oldsmobile can die, so can Buick, Pontiac, GMC and/or Saturn. Or Saab. Same goes for Mercury and Jaguar on the Ford side. No, I'm not saying they are going to die...but the finance guys will soon make the determination without bothering to consult my blog for advice. It will be a cold, hard decision...just like Oldsmobile. Detroit needs a strong GM, Ford and Chrysler. And the stockholders and retirees have to be wondering about their pensions and health benefits. See the recent Detroit newspaper articles in the News and Free Press.
What About The Executives?
What strikes me as odd is this...GM has lost the marketshare of a company like Toyota in the U.S. (or Honda, let's say) in the last 15 years...about 10 points...in consumer speak, that's about 1.6 million sales.
Mr. Stempel paid the price in the early 90s...but so what? The path down continues. Others have tried to stem the tide and one sees occassional profits but one number doesn't lie. Take a look at the chart in the Detroit News article. In 1990, GM has 35.2% of the U.S. Market. Today, it's 25%. And that's with a lot of incentives. If you take away the incentives...sales plummet further and more plants have to be closed. If you maintain them losses continue. Not a good picture. The only way out of that hole is product. Let's hope that GM has a marketing and product strategy that begins to address segment losses to the "imports." In my opinion it starts with leadership at the top. Here's hoping the next generation of GM execs has solutions other than incentives.
Based on some of the research we've done over the past few years, the only way the domestics have stayed in the game is through liberal incentives and the fortune of a huge dealerbody that is constantly scrambling to move the metal out of inventory with huge incentives and massive ad budgets. Without car dealers, there would not be newspapers as we know them today...they fund most of the classified...and therefore, the newspapers.
Bob Lutz admitted that it may be necessary for GM to eliminate another brand. That was quickly ameliorated the following day by Mark LaNeve...but the cat was out of the proverbial bag. If Oldsmobile can die, so can Buick, Pontiac, GMC and/or Saturn. Or Saab. Same goes for Mercury and Jaguar on the Ford side. No, I'm not saying they are going to die...but the finance guys will soon make the determination without bothering to consult my blog for advice. It will be a cold, hard decision...just like Oldsmobile. Detroit needs a strong GM, Ford and Chrysler. And the stockholders and retirees have to be wondering about their pensions and health benefits. See the recent Detroit newspaper articles in the News and Free Press.
What About The Executives?
What strikes me as odd is this...GM has lost the marketshare of a company like Toyota in the U.S. (or Honda, let's say) in the last 15 years...about 10 points...in consumer speak, that's about 1.6 million sales.
In sales dollars that's 1.6 million units in lost sales times an avg $25,000 sticker price. Or about $40 billion in sales. Staggering.
Mr. Stempel paid the price in the early 90s...but so what? The path down continues. Others have tried to stem the tide and one sees occassional profits but one number doesn't lie. Take a look at the chart in the Detroit News article. In 1990, GM has 35.2% of the U.S. Market. Today, it's 25%. And that's with a lot of incentives. If you take away the incentives...sales plummet further and more plants have to be closed. If you maintain them losses continue. Not a good picture. The only way out of that hole is product. Let's hope that GM has a marketing and product strategy that begins to address segment losses to the "imports." In my opinion it starts with leadership at the top. Here's hoping the next generation of GM execs has solutions other than incentives.
Sunday, March 13, 2005
What Makes A Great Brand - On A Personal Level
As a life-long marketing guy, I've spent the better part of my career trying to help create and advertise 'great' brands. But sometimes, rather than read the textbooks, it's worthwhile to look at yourself in a mirror and ask..."why do I consume what I consume?" What do I think is a great brand? Especially...in my business of choice -- the car business.
What has made the greatest impression on me? What influences my buying choices? Sadly, for those of us in the ad world...it's never the ads. In fact, the ads that work the best, are the ones that present the product's unique identity in its best light. I remember a video on Dr. Porsche. Impressive...another one on Porsche's racing heritage. Ok...so I'm arguing against myself. I think my point here is -- the ad can only bring out a product's unique qualities. It can't make product what it isn't. Find the essence...and present it. If there's no essence...run for the hills.
My Favorite Automotive Brands/Products
Porsche (I prefer this site to Porsche's site...you'll see why)
Those who know me well, are aware of my porsche affliction. That, given a choice, I'll look first at a Porsche, because I love them. Why? My father had them. That alone doesn't explain it, of course. He also had a Bonneville...and I'm not afflicted with Pontiacs. Porsche has a rich heritage, and as a little boy, growing up in Germany, we used to watch the 24 hours of LeMans. And we rooted for the little German company, going up against Ferrari and Ford. We admired the longevity of the little cars and their ability to win endurance races. It was the ethos of the company. Racing improves the breed. Sadly...Porsche has taken a step back from racing and I worry that this will lead to more silly products...like the Cayenne. To me, Porsche will always be a sports car company and anything that departs from that central product concept is a dilution to the core brand.
I still own a Porsche catalog from the early 70s. I recall going to a dealer with my dad and getting it...maybe around 1972-3. I used to page through it and think...one day. When I finally got the first 911 (an 87 black coupe) it made me smile to just get in the car. I even bought an '87 catalog...AFTER buying the car. When I was at Ross Roy, we used to talk about the importance of the "catalog." I still have those brochures to this day. They have spelling mistakes in them...but I still love them.
Will my next car be a 911 (actually, 911 is not the correct factory nomenclature...the new 911 is actually the 997)? I currently drive a C4...great car but rear seats getting tight for the growing boys. And the cost...ouchies. By the way, I drive the C4 in spite of poor dealer service. So...a brand can overcome poor service...but I don't recommend it.
The brand has endured...the shape of the 911 is unforgettable. Can you think of another car with that unmistakeable shape? I can. But first...my favorite Porsches...
911S
1977 Turbo
Jeep
My wife loves Jeeps. She just wants one. And fundamentally...it's about the rugged sense of durability. Sure, they don't have the greatest JD Power scores on reliability. But we're talking 1 foot snow and if she needs to be somewhere, she knows a Jeep will likely get her there.
The Wrangler is a direct descendant of WWII...a symbol of what made America great. Now, it's Chrysler's job not to screw it up. The core success of the Jeep, in my opinion, is still 4WD, go anywhere capability. I've heard some talk at DCX that they need to "extend the brand." Ok...I'm all for that...just make sure the core is 4WD durability. In fact, if I were DCX I'd make darn sure I get the next govt. contract...Hummer is starting to steal your thunder. Favorite Jeeps?
WWII GP
Ferrari
Ok...so...who doesn't want a Ferrari? But it's easy to say it's a great brand and forget all the high performance brands that have died or are on life support in the meantime...Maserati, Lamborghini, Lotus, Jaguar...the heap is large. Only Ferrari continues as an icon.
Since I can remember, Ferrari means performance. Why? They race...their marketing budget is racing. You have to admire that...really. Ferraris that affected me? See below...two that I remember with great fondness...the 512 BB and the "Daytona."
The 512BB 1976-81
365GTB "Daytona" 69-73
More on great brands when I have some more time...
What has made the greatest impression on me? What influences my buying choices? Sadly, for those of us in the ad world...it's never the ads. In fact, the ads that work the best, are the ones that present the product's unique identity in its best light. I remember a video on Dr. Porsche. Impressive...another one on Porsche's racing heritage. Ok...so I'm arguing against myself. I think my point here is -- the ad can only bring out a product's unique qualities. It can't make product what it isn't. Find the essence...and present it. If there's no essence...run for the hills.
My Favorite Automotive Brands/Products
Porsche (I prefer this site to Porsche's site...you'll see why)
Those who know me well, are aware of my porsche affliction. That, given a choice, I'll look first at a Porsche, because I love them. Why? My father had them. That alone doesn't explain it, of course. He also had a Bonneville...and I'm not afflicted with Pontiacs. Porsche has a rich heritage, and as a little boy, growing up in Germany, we used to watch the 24 hours of LeMans. And we rooted for the little German company, going up against Ferrari and Ford. We admired the longevity of the little cars and their ability to win endurance races. It was the ethos of the company. Racing improves the breed. Sadly...Porsche has taken a step back from racing and I worry that this will lead to more silly products...like the Cayenne. To me, Porsche will always be a sports car company and anything that departs from that central product concept is a dilution to the core brand.
I still own a Porsche catalog from the early 70s. I recall going to a dealer with my dad and getting it...maybe around 1972-3. I used to page through it and think...one day. When I finally got the first 911 (an 87 black coupe) it made me smile to just get in the car. I even bought an '87 catalog...AFTER buying the car. When I was at Ross Roy, we used to talk about the importance of the "catalog." I still have those brochures to this day. They have spelling mistakes in them...but I still love them.
Will my next car be a 911 (actually, 911 is not the correct factory nomenclature...the new 911 is actually the 997)? I currently drive a C4...great car but rear seats getting tight for the growing boys. And the cost...ouchies. By the way, I drive the C4 in spite of poor dealer service. So...a brand can overcome poor service...but I don't recommend it.
The brand has endured...the shape of the 911 is unforgettable. Can you think of another car with that unmistakeable shape? I can. But first...my favorite Porsches...
911S
1977 Turbo
Jeep
My wife loves Jeeps. She just wants one. And fundamentally...it's about the rugged sense of durability. Sure, they don't have the greatest JD Power scores on reliability. But we're talking 1 foot snow and if she needs to be somewhere, she knows a Jeep will likely get her there.
The Wrangler is a direct descendant of WWII...a symbol of what made America great. Now, it's Chrysler's job not to screw it up. The core success of the Jeep, in my opinion, is still 4WD, go anywhere capability. I've heard some talk at DCX that they need to "extend the brand." Ok...I'm all for that...just make sure the core is 4WD durability. In fact, if I were DCX I'd make darn sure I get the next govt. contract...Hummer is starting to steal your thunder. Favorite Jeeps?
WWII GP
Ferrari
Ok...so...who doesn't want a Ferrari? But it's easy to say it's a great brand and forget all the high performance brands that have died or are on life support in the meantime...Maserati, Lamborghini, Lotus, Jaguar...the heap is large. Only Ferrari continues as an icon.
Since I can remember, Ferrari means performance. Why? They race...their marketing budget is racing. You have to admire that...really. Ferraris that affected me? See below...two that I remember with great fondness...the 512 BB and the "Daytona."
The 512BB 1976-81
365GTB "Daytona" 69-73
More on great brands when I have some more time...
