The front page of today's WSJ journal had a graphic breaking down the market share of each of GM's eight brands:
When looking at the market share numbers for each brand it's important to realize that not all market share data is created equal, I.e. a Cadillac sale is a higher margin, higher dollar sale than the typical Chevy sale. Another way to look at GM's brand portfolio is to consider how valuable each brand is in terms of how consumers view them, in addition to medium to long-term potential of each of the brands. GM's thought process towards its brands should revolve around the brands that are most likely to help invigorate the company in the future, as those are the brands that can generate the higher dollar, higher margin sales the company needs to survive.
The graphic is part of a larger discussion around the steps GM is taking to cut costs, raise capital, etc, etc, with some of the proposed solutions including massive layoffs and shuttering (or selling) some of their brands.
A couple of ideas for GM:
Kill Buck ASAP : if GM is to survive it has to look to the future and focus on cultivating brands that resonate with the 18-45 crowd, and if any brand is the antithesis of that it's Buick. The "brand resonance" that Buick has with the majority of the population is that of a "stodgy Grandma car"; even if those individuals are indeed grandparents (if my own mother is any indication). For Buick to survive it would have to build cars that are very competitive with vehicles like the Acura TL and Infinity G37, and if GM were to build such a car it would make more sense to sell it under the Cadillac brand than Buick. Overall I just don't see the point in having a poorly regarded near-luxury brand in the GM brand portfolio, when a lot of potential Buick customers could be directed towards Cadillac and the brand has little long-term potential.
While rehabilitating a brand is always possible GM simply can't afford to invest the resources right now.
Finally they should stop wasting money paying Tiger Woods to endorse a brand that the demographic Tiger appeals to wouldn't be caught dead in; Tiger should be endorsing Cadillacs not Buicks. I seriously doubt the people who view the commercials even believe Tiger would drive a Buick if GM wasn't paying him to do so, so it make more sense to have him endorse a vehicle young people would actually drive.
Restructure the overall product mix : a lot of the product duplication/replication across brands is completely pointless, there is no point in wasting money creating Saturn Roadsters, Saturn and Pontiac SUVs, etc. Changing around the product mix will not only cut down on the cross-brand sales cannibalization, but will save money and engineering resources that can be directed elsewhere. For instance Saturn should only sell small cars, no SUVs, no roadsters, while Pontiac should only sell sporty alternatives to boring mid-sized family cars, along with the Pontiac Roadster. Instead of selling eight versions of the same car, GM should minimize product duplication as much as possible and focus each brand on a particular market segment.
Saturn: GM either needs to make the investments necessary to re-create the Saturn brand equity of old or they need to kill off the brand, because recapturing the old Saturn magic will make GM money (especially as small cars become more popular) while the current situation merely wastes it. The time is ripe for GM to capture the growing enthusiasm around small cars by repositioning Saturn as a quirky car maker of old, rather than just Chevy Jr./another duplicate GM brand.
Saab: The Company made a good first step at revitalizing the brand with the recent 9-3, they just need to keep it up and make turning Saab into a bona-fide Audi/BMW fighter their #1 goal. However the Saab situation is similar to Saturn: either make the necessary investment to fix the brand or just sell it off to someone who can. It would be interesting to see what a company like BMW, Honda, Subaru or VW would do with the Saab brand, or even to see what would happen if the Saab jetfighter company were to take back control of the company.
Study Toyota/Lexus's brand strategies aimed at young people : Toyota’s Scion brand was the company’s response to an aging customer base, and the fact that younger buyers weren’t as interested in Toyotas as they had been in the past. The Lexus IS was launched with a similar goal: bring younger people into the fold via selling them a car that appeals to their sensibilities. One way for GM (or Detroit for that matter) to become relevant to young car buyers again, is to study the ways in which Toyota was able to reach out to young consumers and sell them cars that didn’t remind them of their parents.
Overall the key is for GM to offer a younger hipper product that resonates with buyers, rather than their current strategy of trying to sell the current products (that young buyers have rejected) via young celebrity endorsers and marginally clever marketing.
While these ideas would represent a good start for GM perhaps an even larger problem is the sheer number of brands GM has to manage, because it's hard enough for a company to turn around one brand let alone as many as eight. Perhaps the real solution is for GM to commit to only managing 4-5 brands domestically; meaning on top of killing off Buick and selling Hummer they would need to shed 1-2 additional brands as well. It might be wise for them to sell Saab and shutter either Pontiac or Saturn, leaving behind Cadillac, Chevy, GMC and either Pontiac or Saturn.
At the end of the day GM has a ton of branding issues that can't be fixed overnight, however if GM abandons their old ways of brand management and makes a few hard sacrifices the company can indeed survive.
Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; furthermore he apologizes to any Grandmothers insulted by his discussion of Buick.
