Advertise, Advertise, Advertise

An economic downturn brings opportunity for those who are willing to take a leap of faith and who have a cash cow they can use to buy advertising when times get tough.  When you go looking for success stories - or survival stories - from the Great Depression, you read that there are a number of examples of brands becoming successful through the trying times. 
The most widely quoted are Chevrolet cars, Camel cigarettes and Procter & Gamble.  Each of these relied heavily on advertising because they realized that they needed advertising to create and maintain brand loyalty.

In 2008, Dave Chase wrote "How brands thrived during the Great Depression", and provided a good rundown on these three:

• Procter & Gamble. To this day, P&G maintains a philosophy of not reducing advertising budgets during times of recession, and the company certainly did not make any such reduction during the Depression. It's not a coincidence that P&G has made progress during every one of the major recessions. While competitors cut ad budgets, P&G increased its spending. While the Depression caused problems for many, P&G came out of it unscathed. Radio took P&G's message into more homes than ever, and P&G became a pioneer in effective use of that medium, including its role in creating the notion of soap operas.
• Chevrolet. During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and, by 1931, Chevrolet took the lead in its field. It is believed that Ford's weaker balance sheet entering the Depression rendered it unable to respond to Chevrolet.
• Camel Cigarettes. In 1920, Camel was the top-selling tobacco product. American Tobacco Co. then struck back with the Lucky Strike brand, and by 1929 Lucky had overtaken Camel as the No. 1 brand. Two years later, in the heart of the Depression, Chesterfield also overtook Camel. Camel countered with a dramatic increase in ad spend and, by doing so, demonstrated the power of advertising during depressed times. By 1935, it was back on top.

Advertising Lesson #5 from the Great Depression: Advertise ... Hard.

This is my final installment on Depression Marketing.  Hope you enjoyed it, and found it uplifting.

The beginning of the end for Buick

Months ago I blogged about the lunacy of GM killing off the Pontiac brand. Pontiac is (was, or more appropriately, should have been) a fun, sporty, and slightly upscale (from Chevy) brand that would appeal to a younger car buyer.

News comes now that GM is setting up to roll out a Buick (which, with its average age of buyer at nearly dead (a.k.a. 65)), which is smaller and targetted at younger buyers. What's a younger buyer in that model? 64? 60? Holy moly ... they mean someone who is 30ish and still has a pulse. Perhaps, someone who would have bought a PONTIAC. ARGGGHHHHHHhhhhhhhhh. Now GM is setting out to dumb down the Buick brand in order to make it appeal to a group of people to whom it won't appeal.

But wait, there's more. They are planning on basing a new Buick on the Chevy Aveo. Don't they remember what happened when they based a Cadillac on a Chevy Citation?

• Read more about this fancy new Buick (please read with thick sarcasm) on CBC.ca.
• Remember the Cadillac Cimarron at any of a million sites or so out there reminding each of us to never, ever make the same mistake that GM is about to make AGAIN. If you don't believe me, then check in with TIME, who classified the Cadillac Cimarron as one of the 5o worst cars of all time.

GM's blaming the unions and pensions? What the???

I just heard that GM is blaming the unions and their ridiculous pensions for their failures. Why don't they haul their brand managers out and flog them!

They should consider cutting their brands. That will help them focus their efforts, cut their costs ... and save themselves from failure.

Another bad move by GM?

Yesterday GM announced that they are going to axe the Pontiac brand.
My guess is that it won't take long for two things to happen:

• GM will notice that it no longer has a "sporty" line.
  
• GM will increase the line-up of Chevrolet cars to compensate for not having the crazy variety of vehicles they currently sell.

That is to say that the Chevy line (entry-level family cars) will suddenly have more sporty cars. Existing models will be supplemented with new models. The Buick line (um ... upscale family? ... really, what does Buick stand for? ... what the hell are they thinking with keeping that alive?) will suddenly have more sporty cars. The Buick line-up will get bigger. The Cadillac line (snobby luxury, which is just what it ought to be) will have cheaper sporty cars added to it, perhaps as an "entry level Caddy" (anyone remember the Cimarron? Watch for an instant replay). In every case my money would be on GM growing the line-up of each of these brands. In the end, they won't narrow their focus and win the markets. They will extend these brands to death.

GM has lost touch with their brands. I don't think they need to cut their sub-brands as dramatically as they need to cut hard at the models in each of those sub-brands. What they should do is carefully and tightly define what each of their main sub-brands is all about, then hack out everything in the brand line that isn't inside the very tight definition of that brand.

GM needs to apply the "Keep it Simple Stupid" principles. There are two things that really define a company. The first is the brand - what does the company stand for and how do they support that on a daily basis. The second is the basic business strategy - cost leadership, segmentation, or differentiation.

At this point, I'd recommend that the GM management team should read:

• 22 Immutable Laws Of Branding by Al Ries, and
• Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael Porter.

Then again, I think it's too late. Maybe they should be reading What Color Is Your Parachute? by Richard Bolles.

Look out GM & Chrysler ... Here comes China

In a video story by on CNN.com today, they tell an interesting story about China's roaring fast development of an electric car industry. It makes sense:

• They have the cash to do it,
• It is a top-down government mandate to do it, and
  
• They need to make their own cities cleaner, so they need to do it.
  

Will they have viable and cheap electric cars to market before the fools in Detroit manage to figure out their own brands and models? Not likely.

Saving the company. Slashing GM's Brands and Sub-brands.

The Chevrolet line goes from the Aveo (starting at about $12k), to the Malibu ($26k+), to the Express passenger van ($33k+), to Avalanche truck ($36k+), to the Corvette ($106k+). Also, you'll find some really ugly things in there too like the "HHR" and the "HHR Panel" ($19k+). Remind me again ... what does the Chevy brand stand for?

If I were in GM's shoes, I'd redefine each of my master brands with a big butcher knife. I'd be really clear about what each of them mean. Then I'd cut the snot out of their sub-brands that don't support that. For instance:

• Chevrolet = Affordable cars, whether you're a young kid buying a first car, or a family buying a practical car.
• Axe the Avalance truck, HHR, Equinox, Traverse, Cargo Van, Passenger Vans, Suburban, Tahoe, Colorado, Silverado, Avalanche, Equinox, Traverse, and ...
• I might be left with the Cobalt, the Aveo, the Malibu, and the Impala. I might include one family-sized SUV/ Crossover, like a modified Trailblazer, or a redesigned (and good) mini-van that could reasonably compete against the Honda Odyssey, Toyota Sienna, and the Kia Sedona (I don't think GM even makes a mini-van anymore. All you'd have to do is look at any school drop-off zone between 8:30 and 9:00am to get an understanding of the importance of a mini-van).
  
• I'd cut down the options on those - for instance the Cobalt would only come in a 4 door model. (The two door model would only be available as a Pontiac ... and Pontiac would only sell the two door model.)
  
• I may even axe the legendary Corvette. At a minimum I'd change it dramatically so that it fit into the brand mold of "affordable". It might be sporty and affordable, which would mean dumbing it down a lot. Alternatively, I might toss it over to the Cadillac label.

Chevrolet would drop from a confusing 32 vehicle line-up to a sensible 5 to 7 vehicle line.

Let's pick apart the Pontiacs. They currently have 12 models.

• Pontiac - Sporty fun, performance cars.
• Axe the G3, the Vibe, the G5 Coupe (too similar to the G6 coupe), the G6 Sedan, Torrent (an SUV in the Pontiac line - blech),
• You'd be left with the G8 (a sporty sedan), G6 Convertible, G6 Coupe, and the Solstice. I'm on the fence on an SUV/Crossover on this line. Maybe the Torrent could make sense, but not in its current format.

Pontiac had 12 models ... now they have 4 or 5.

The 3 Buick's would die. Why bother with them. 3 models down to zero!

Cadillac currently has 14 models. 14! Are they nuts. What is a Cadillac when you have 14 versions of the darn thing.

• Cadillac - "You've made it." People will notice you've made it.
  
• Axe the SRX Crossover (it's just ugly and isn't premium enough), the Esclade EXT (buy a truck if you want a truck), the Esclade (which competes with the Esclade ESV), the DTS (it competes against the better looking STS, and isn't premium enough), the XLR convertible (don't worry, there's another model that will be kept)
  
• Keep the STS V6 only ($47k+), the CTS-V ($60k+), the STS -V ($84k+), maybe the Escalade ESV & Hybrid (SUVs) ($65k), and the convertible XLR-V ($106k+)
• I might even swap the Corvette into the Cadillac line up and dump the XLR line.
  

Cadillac would drop from 14 models to 5 or 6.

A quick slash at their other brands ...

• GMC = Trucks. They currently have 21 different models. I'd slash that to 7 or 8, including: a large passenger van, a cargo van, a smallish SUV, a large SUV, a small pickup, a mid-size pickup, and a large pickup. There may be more options in this line, including 2 or 4 door cabs on the larger truck.
• Hummer = GONE. (3 models down to 0)
  
• Saab = GONE. (6 models down to 0)
  
• Saturn = Technology leader. The brand would become the "Smart" or "Mini" for GM. They currently have 8 vehicles. That would be slashed to 2 to 3, along the lines of a 2-seat zippy fun electric commuter, a 4-seat zippy fun hybrid, and a flying car (just kidding on that one ... but if GM wanted to play, Saturn would be the "play" brand).
  

Total ... GM started with something around 100 vehicle brands. I'd have them down to about 28. On top of that, each sub-brand would have its own standard power train, and those would at a minimum be hybrids. Power trains could be shared across product lines. For instance the 4-door Chevy Cobalt could use the same power train as the Pontiac G6. GM could limit the engines if necessary to allow the brands to be differentiated.

Recognizing that the dealerships want to be able to sell a variety of different vehicles so that they can attract a variety of customers, there are options available to make things work for them. If you look at how Mini is sold by BMW in Canada, there are many BMW dealers who carve off a piece of their showroom and make it an entirely stand-alone Mini dealership. GM dealers could do a similar thing with their big and ancient showrooms. Throw up some glass walls, and make "boutiques". In a given dealership, one boutique would sell Chevy cars, another would sell GM trucks, and another might sell the Saturn line.

There are lots of advantages to this slash and burn practice:

• Focuses the brand. The general result of focusing the brand is that you end up selling more. So, production may not go down at all. GM's production and sales may actually go up!
  
• Reduces cost dramatically. You don't have to design, engineer, repair, and warranty the dramaticly huge number of product variations. It would be cheaper and easier to build, sell, and service cars. This strategy wouldn't make GM the low cost producer. The reality is that they still have lots of legacy costs, and are competing against startups from Korea and elsewhere with lower cost structures. But, it goes a long way to helping them survive.
  

What do you know, there are Michael Porter's business strategies showing up again. Focus and Cost Leadership.

There you go President Obama. :^)

Saving the company. What should GM do with its Brands and Sub-brands?

• Is the problem with GM that they've screwed themselves over by giving up way too much to their unions over the years? Yes, partly I'm sure it is.
• Is the problem with GM that they're costs are out of line with their selling prices, and consequently they just aren't making a dime on any car they produce? Yes, partly I'm sure it is.
• Is the problem with GM mostly that GM has screwed up their brands? ABSOLUTELY.

Let's look at some of GM's North American brands, and take a shot at what they should mean: (it should be noted that they have several others serving the rest of the world)

• Chevrolet - Affordable cars, whether you're a young person buying a first car, or a family buying a practical car.
  
• Pontiac - Sporty fun, performance cars.
  
• Cadillac - "You've made it." People will notice you've made it.
  
• GMC - Trucks
  
• Buick - Um... what does that stand for? I think it is supposed to come somewhere between the "affordable" and "you've made it" lines.
  
• Hummer - "I'm an idiot" ... whoops I meant to say rough and tough upper class.
  
• Saab - "You've made it ... and you have European taste". (Sounds a lot like Cadillac)
  
• Saturn - Modern, affordable cars for young people or families. (Sounds a lot like Chevrolet)
  

Now, the interesting thing is that when you plug away at each of those brands there are glaring exceptions to how they have managed the sub-brands in each of those products. For instance, the Chevy line has something like 32 vehicles in it. It is like everytime someone from an Executive to a Janitor thought "Hey, what if we made a ...", they went ahead and made it. Think about the expense of designing, producing, and building each one of those models.

Does Chevy stand for an Aveo? It is a cheap "first" car. It would seem to me that Chevy does stand for that. What about a Cobalt? Yes again. A Malibu? Yes - that's a good affordable family car. How about the Cargo Van, Tahoe, Colorado, Silverado, Avalanche, Equinox, Traverse, and ... HHR (yuck). I can't imagine that Chevrolet really stands for any of those.

I'll pick on GM's SUV line-up for a moment. I feel bad doing this ... it is too easy.
Here's what GM makes for SUVs:

• Chevy HHR ($19k+)
• Saturn Vue ($23k+)
• Chevy Equinox ($25k+)
• Pontiac Torrent ($25k+)
• Saturn VUE Hybrid ($28k+)
• Chevy TrailBlazer ($29k+)
• Saturn Outlook ($31k+)
• GMC Envoy ($31k+)
• Hummer H3T ($31k+)
• Buick Enclave ($35k+)
• Chevy Avalanche ($36k+)
• GMC Envoy Denali ($37k+)
• Chevy Tahoe ($37k+)
• GMC Yukon ($38k+)
• Cadillac SRX V6 ($41k+)
• ... Etc. There are 34 of the damn things! Topping out with the Cadillac Escalade Hybrid at $74k+

Pickup trucks? 14 models across their brands.
Crossovers? 13 models.
Vans? 12 models (and you can't tell me that there is any significant difference between the Chevy Savana Passenger 2500 ($30k+) and the Chevy Express Passenger ($30k+)).

And they wonder why they're in trouble.

What should GM do? GM should tightly define each of their brands, and then slash and burn the sub-brands to ensure that the line-up of vehicles closely matches their master brand.

GM's withering ways.

In the good old days - and I am talking about the 1950s here - GM targeted brands to different segments, and it distinguished each of its brands for that purpose. The brands had shared components but completely unique styling. The branding created a clear upgrade path throughout a consumer's life. You'd start with an affordable Chevy, and then as you became more affluent, you'd move to a Pontiac, a Buick, an Oldsmobile, and ultimately a Cadillac.

Around the 80s, the GM and its peers screwed up. They decided that they'd fool the idiot consumer and start selling the same car with different labels. The Chevy Citation (my family had one), the Oldsmobile Omega, and the Pontiac Phoenix were all almost identical. Similarly in the mid-90s when GM upgraded its popular Chevy Cavalier model, they introduced the new Cavalier and the Pontiac Sunfire. Again, nearly identical. I had a taxi driver tell me once that his opinion was that GM intended the Cavalier for men, and the Sunfire for women. Whatever, it was still a bad choice to make virtually identical cars.

But, perhaps the best example of GM's worst branding practice was the introduction of the Cimarron. Their hope was that they could attract younger buyers to the Cadillac brand (hmmm ... everything Cadillac doesn't stand for). The Cimarron was based on the same platform as the Chevrolet Cavalier, Buick Skyhawk, Oldsmobile Firenza, Pontiac J2000, etc.. Out of the gate Cadillac only had a four-cylinder engine and minimal styling differences from the considerably cheaper Cavalier. Yet it was almost twice as expensive at the Cavalier!

Has GM learned? Apparently not. All you have to do is look at their line up of SUVs and Trucks to see that they are as confused as ever.

Over the next couple of days I'm going to review the GM brands and suggest a major strategy shift that would lead them back to profitability and success.

(Here's a hint ... Look at the strategy of the 50s to restore their prominence in 2010 and on. Narrow the focus of each brand, and then slash and narrow the focus of each sub-brand.)

What went wrong with the Big 3?

What went wrong with the "Big 3"? If you think of any company being made of three core functions:

1. Marketing - Determining the target market, determining what products the target wants, communication with the target, and ensuring that they live up to their Brand Promises,
2. Finance - Determining how to pay for the inputs, ensuring that the outputs are produced as efficiently as possible, and making sure that there is enough money in the bank to keep things running, and
   
3. Operations - Producing products that meets the needs of the Marketing Team, and doing so in a way to keep the Finance team happy.

Then, where did the Big 3 go wrong?

1. Marketing - They had no Brand Promise. What does GM stand for? Big cars? Little cars? Big trucks? Cheap? Luxury? They are trying to be everything to everyone. Taking on the Luxury German market and the low-cost Kia market. Yuck. Stuck in the middle. They stink, and thier products suck. Why would I buy a "luxury" Cadillac that was based on the same platform as the "work horse" GM truck? The Big 3 lost a grip on who their target market was, what they wanted, and how to reach them.
   
2. Finance - Was no one watching the books? It is disheartening that in light of recent financial scandals like Enron, and with all the subsequent "SOx" and Governance oversight that is supposed to be in place, that NO ONE from these Big 3 was sounding the horn louder and sooner that they were all headed for bankruptcy. Who is at fault here? The Finance teams in these companies should have hit the big red button several years ago. Surely it was evident that costs were spiralling out of control.
   
3. Operations - Are the unions to blame? They clearly need to share the blame. Mind you, some MORON in the Finance department must have agreed to the ridiculous contracts that the unions have negotiated over the years. Also, the MORONS in Marketing continue to get the Operations team to build products that their market might have wanted 3-10 years ago, but doesn't give a rats ass about now. So, as long as the Operations teams are building out the automobiles that they are told to, and doing it under the agreement of the Finance team, I'd have to think that they should carry less of the weight. That said, responsible Unions and Management teams should be constantly working together to figure out the most efficient and practical way to produce.

My verdict ... The auto sector has to be "bailed out" simply to prevent them from bringing down the entire economy. However, conditions on them being allowed to receive bail-outs should include:

• Bail-outs should be either high-interest loans (they are risky after all), or equity
• Executives should be forced to resign (with no golden parachutes) and should be replaced with people with real vision
• Each company and each sub-brand should have to put a REAL marketing plan in place with a real brand position. Overlapping brands should be eliminated. (E.g. Big-ass Chrysler SUVs and Big-ass Jeeps? Big-ass Chrysler cars and Big-ass Dodge Cars? GM, Pontiac, Buick, and Cadillac? GM Trucks, Cadillac SUVs, and Hummer?)

I'm no expert on Finance matters, so I won't comment on those, except to say that the classic Porter strategies state that these companies should either be low-cost, differentiated, or niche. The automobile market is mass-market, so they had better all be thinking Low-Cost. To review ...

Low Cost: The low cost leader gains competitive advantage by being able to produce at the lowest cost. You can sell things for the same price and have more profit, or more cash to do battle with, or win a price war and still make a profit.

There's my rant for today. If you are from one of the Big-3, and want help doing a Brand Audit in order to get on track with your marketing plans, don't hesitate to contact Market GoGo.