General Motors Hits the Brakes
Struggling auto manufacturer General Motors announced a number of measures last week designed to steer the auto giant away from impending brand and market disasters.
JPMorgan called Merrill Lynch’s fears that GM will file for bankruptcy overblown, but predicted GM will burn through $18 billion in 2008 and 2009. GM issued statements regarding its liquidity and its plans.
According to our Customer Loyalty Engagement Index, GM ranks last in this year’s poll, 13 out of 13. And because these metrics and rankings correlate very highly with sales and profitability, that’s not a good place to be. It says a lot about your brand when relative newcomers Kia (12) and Hyundai (9) rate higher than a 100 year old American company.
GM is no longer an iconic American brand. It once stood for all that was good and right with America. The brands resonated with meaning and values that every car buyer understood. The difficulty is that GM’s roster of brands has come to mean nothing to the American consumer. Doubt me? OK, here’s a little game we play called “Brand Associations.” Try it with your friends or colleagues.
We’ll name a brand, and you say the first thing that comes to mind. Easy, right? Here are some recent (and typical) responses:
Mercedes = luxury.
BMW = engineering.
Toyota = hybrid.
Kia = cheap.
GM = Uhhhhh….
That, my friends, is the sound of a brand dying.
It’s not that GM cars are any worse than Toyotas or Hondas. From a rational perspective, in all likelihood they are as good as those cars. It wasn’t that the “product” wasn’t satisfying them. It was. To a point. So, so much for all those “satisfaction” awards. Those were all based on rational aspects of the product.
Most everything consumer engage with, remain loyal to, and actually buy is more emotionally based. Currently we peg the decision process to have an emotional-rational ratio of 70:30. And when it comes to cars, maybe 80:20.
Yes, today the ever rising price of gas is on everyone’s mind. But that’s only one rational aspect of the purchase cycle. When it comes to looking at GM, the cars are, well, just cars. GM has turned into the “ACME Auto Company” of the 21st century, and while that may be appealing for Wylie Coyote, it isn’t enough for the car-buying public. And the outcome isn’t a laughing matter.
We’re not the only ones who have suggested this is a problem. Over the years, analysts have also suggested cutting or selling some of the model lines. Most frequently mentioned are Buick (down 21% this year so far) or Saturn (-19%), selling or even perhaps jettisoning them like GM did with Oldsmobile in 2004.
GM is already contemplating the sale of its Hummer brand. At an average of 8 MPG, they just aren’t appealing to consumers facing $4+ per gallon gas. But you didn’t need to have done predictive, loyalty research to know that.
We’ve often wondered what kind of research GM was doing that led them to the decisions they’ve made over recent years. Particularly the ones that had to do with how they positioned their brands in the minds of the car-buying public. Certainly none of it was loyalty or engagement based. And none of it was leading-indicator research either, or they would have seen a lot of this coming.
The difficulty, of course, is it’s likely that the research they were conducting was lagging-indicator stuff. That’s the research version of driving your car at 65 MPH on the Interstate using just your rear view mirror to steer the car. Or in this case, the car brands. Everyone—especially car manufacturers—ought to know that facing forward, toward the windshield, is the way to go on this one.
Consider this quote from Charles Kettering, an engineer, the inventor of the electric starter and a former GM Research Director:
“When I was research head of General Motors and wanted a problem solved, I’d place a table outside the meeting room with a sign: LEAVE SLIDE RULES HERE. If I didn’t do that, I’d find some engineer reaching for his slide rule. Then he’d be on his feet saying, ”Boss you can’t do that.””
One has a feeling they could use the emotional version of those slide rules right about now.
Robert Passikoff, Ph.D. is founder and president of Brand Keys.
