Tag Archives for " ADVERTISING "

9 Marketing lessons from GM — Will a $30 billion bailout buy them some focus?

images

The top guns of the American auto industry parked their private jets, piled into their big, luxury hybreds, and headed back to Washington last week. The goal: 50 billion dollars in loans, credit and other forms of bailout money. The second installment of what one reporter called, “a long term payment plan in $35 billion installments.”

There’s no doubt GM’s failure would a terrible economic blow. Those jobs would be sorely missed, but would anyone miss the mediocre brands that GM’s been consistently producing for the last 35 years?

I don’t think so. Other than some loyal Chevy truck fans, consumers won’t miss a beat.

GM’s business problems are far reaching and complex. The Wall Street Journal says “it’s a bloated organization with too many dealers and too many factories producing too many cars for the marketplace.” (GM has 7000 dealers in the U.S. Toyota outsells them with just 1500.) The company is burning through cash faster than a Suburban sucks gas — $75 million a day, according to one account. Turning that land yacht around is is going to be much harder than anyone’s predicting. As one consultant said… “Even with a generous series of government loans, GM is likely to go bankrupt within the next two years.”

Let’s face it. GM has been losing ground slowly but surely since muscle cars were killed by the oil embargo of the 1970’s. If congress looks at the situation from a marketing standpoint, they wouldn’t cough up a dime.

According to Automobile magazine, “it’s been 50 years since GM built a car that was the standard of the industry in any category.” Overall, GM products have been poor in all respects, from design and driveability to safety and fuel efficiency.

I believe that GM’s quality issues and their current financial crisis is a direct reflection Alfred P. Sloan’s famous, flawed strategy of “a car for every purse and purpose.” Sorry, but quantity over quality just doesn’t work in the modern automotive industry.

GM’s business model for the past 30 years has been built around the assumption that they can keep making money off products that are unremarkable, at best. But even when you’re as big as GM, you can’t be all things to all people. Over time, that lack of focus is going to kill you.

Look at GM’s track record in the small-car market. First they had the Chevette and the notorious Vega, a car reknown for being the first aluminum block engine ever produced… (not exactly the type of innovation that propels a company into a new era.)

While Honda, Toyota and Nissan were dominating that market in the 80’s, GM introduced The X-cars… the Citation, Omega, Phoenix and Skylark. Yikes! Those weren’t economy cars, they were just awful, underpowered sedans.

GM fumbled around for 20 years trying to build a small car under the wrong brand: Cadillac. Remember the Cimmeron? It’s on Time Magazine’s list of the worst cars ever built. And the Catera, “the caddy that zigs.” The advertising was unbelievable and the product, unbelievably bad. For consumers, a small, sporty Cadillac just doesn’t compute.

Then there was Saturn, GM’s great hope of 1990. Nothing in the history of GM could match the enormity of this brand’s launch. They built a state-of-the-art manufacturing plant in Springhill Tennessee. They opened a new dealer network and adopted innovative new marketing and customer service programs, including a policy of “no haggle pricing.” To their credit, they did everything differently in order to compete with the Japanese.

Despite the plastic body panels, Saturn succeeded for a while. The cars were affordable, and they even won some industry accolades in the subcompact category. Unfortunately, GM starved that division of cash, kept them from launching new products for 10 years, and now is contemplating a shutdown of that brand.

So they can’t compete in the small car market. But what about GM’s bread and butter categories, like vanilla-flavored sedans? Unfortunately, they’ve even been losing on that front as well. The Ford Taurus was the best-selling car in the country for years, followed by the domestically produced Toyota Camry. In the meantime, The Oldsmobile brand limped along for years before GM execs finally pulled the plug in 1999. They tried all sorts of marketing ploys to save it, including more than a dozen different slogans for the brand over a 15 year period. They did everything BUT build a car that appealed to anyone.

GM missed the boat entirely on the minivan craze, and they were slow to market with their SUVs. (But no one will deny the success of the Suburban.) GM actually had the lead in green technology in the late 90’s with the EV1 electric car, but they pulled the plug on that for short-term financial reasons. Now, while the Toyota Prius flies out of showrooms, GM’s playing catch-up yet again with the Chevy Volt. The volt is not a hybred. It’s actually an electric car, leaps ahead of Toyota in the green car game. It plugs in and it looks racy too, but it might be too late to the starting line.

Clearly, GM has been all over the place strategically. Now it looks like the bailout will force them to focus their efforts a bit. There’s already talk of paring the product line-up, and in the recent Senate hearings GM execs said their new strategy is “to focus available resources and growth strategies on the companies profitable operations.”

I guess that means four core brands… Chevy, Buick, GMC and Cadillac. And potentially four more marketing failures: Pontiac, Saab, Saturn and the king of them all, Hummer. (Don’t even get me started on that.)

Even with the forced focus on just four brands, GM will have a difficult time turning a profit. According to Automobile Magazine, the Cadillac CTS is actually one of GM’s small glimmers of hope for something better down the road. “It’s not relevant at $60k, but it’s a reminder that GM knows how to build a very special automobile. It’s the pride of Lansing Michigan and proof positive that GM has a lively pulse.”

Hmmmm. How can a car be “not relevant” in the market, but hopeful? And why does the mainstream press assume that GM will suddenly “start building fuel efficient cars that people want to buy” as soon as this bailout comes through? They haven’t done it yet. And no marketing blitz or government bailout can turn a lousy product into a branding success.

There’s an old saying in advertising circles… “great advertising just kills a bad product faster.” Sadly, GM’s history is littered with products that died fast, deserving deaths.

15 Four secret ingredients of all successful brands.

 

(What you can learn from a healthy bowl of cereal and a two-buck burrito.)

Branding is a popular topic in the business press these days. Unfortunately, case studies about Coca-Cola, Nike and Virgin, make is sound like Branding is a discipline reserved for the Fortune 500 companies and globe-trotting billionaires.

Let me set the record straight on that: It’s entirely possible to build a successful brand without a million-dollar marketing budget or a cadre of high-paid consultants. Many small-business owners do it intuitively. They build a successful business, step by step, and over time a great brand develops.

It does not happen the other way around. You can’t just come up with a nice name a great logo and expect the brand to suddenly succeed. Without a good, solid business operation, you can’t have a great brand.

If you look, you can find plenty of inspiring brands in everyday places. Like the breakfast table and the local Mexican restaurant. Because the fact is, branding is not exclusive to big business. In addition to the multi-national brands that have become household names, there are successful regional brands and millions of small but prosperous local brands. Conversely, many big, international companies don’t adhere to any principles of Branding. It can go both ways.

This isn’t the Harvard Business Review, but if you deconstruct it, you’ll see that all successful brands share four important things:

Relevance.

Credibility.

Differentiation.

Consistency.

Forget about Proctor & Gamble for a minute and consider the small businesses in your town that have a loyal following. What makes them successful? What have the owners done that turned their typical small business into a successful local brand?

In Bend, Oregon there’s a tremendously popular restaurant named, simply, “Taco Stand.”It’s the best Mexican food in town, and it costs next to nothing. It’s so cheap it’s almost embarrassing. Taco Stand’s in a terrible location next to a laundry mat. It’s not open for dinner. They have no web presence or advertising budget. And yet, it’s a successful little brand, doing much better than many high-end restaurants downtown.

Taco Stand has all four ingredients of a tasty brand, with a bit of Tabasco thrown in for good measure. It has always been relevant to young people living the ski bum life who can’t afford fifteen bucks for lunch. And since our building boom crashed, a cheap lunch at Taco Stand has become cool to a lot more people. Like Walmart… hard times equal increased relevance.

For Taco Stand, differentiation and credibility stem from the genuine quality of the food and the loyal, locals-only reputation.If there were an insider’s guide to Bend dining, Taco Stand would be top of the list. And consistency… you’re never going to walk into Taco Stand and find they’ve changed the menu on you. They do simple Mexican fare, and that’s that.

But, you say, “my business is a lot more complex than that. We have a sales force and a supply chain to deal with.” It doesn’t matter. You still need the same four ingredients. Leave one out and you can have a successful business, but not an enduring brand.

Differentiation and credibility used to be easy for big corporations. They could launch a new brand with a massive tv campaign, effectively differentiating their product on nothing but advertising creativity and pretty packaging. And the television presence alone equaled credibility.

Smart Start brand case study on brandingKellog’s tried this recently with a new brand of cereal called Smart Start. Great name. Great-tasting product. And an old-school, Fortune-500 style marketing effort. Lots of full page, full color ads in smart magazines like Shape and Parenting.

My kids like Smart Start, but they’re not the target market. It’s an adult cereal, promoted on its nutritional virtues. Too bad. As it turns out, Smart Start isn’t as nutritious as it’s cracked up to be.It’s loaded with sugar… 14 grams of high fructose corn syrup. That’s more than Fruit Loops, Cocoa Puffs or Cap’n Crunch.

I’ll bet Smart Start doesn’t have the staying power of Cap’nCrunch — my childhood favorite. Because in this day and age, consumers are too smart for Smart Start. When the word gets out, the brand’s going to have a substantial credibility issue on their hands.

Kellog’s will probably fight it with the old line-extension strategy trick. Rather than addressing the underlying weakness of the product, they’ll just keep launching new flavors of Smart Start and new spin-offs. (They already have several variations.) But in the process, the brand will lose another key ingredient… consistency.

So Smart Start’s credibility is questionable. The brand’s consistency is debatable with all the line extensions. And relevance is dwindling as more people find out about its nutritional shortcomings.

I predict the brand will eventually die out because it doesn’t live up to the promises of its marketing. But even if it dies, Kellogs might consider Smart Start a branding success. Maybe it’s done well enough. Maybe Kellogs can chalk up a good profit with new brands that have short life cycles. It’s a big company, with big resources. They can just move on and do it all again.

Smaller companies don’t have that luxury. You can’t afford to launch a new brand under false pretenses of any kind. Credibility too hard to come by, under the best of circumstances.

What do you suppose would happen to Taco Stand if they suddenly started marketing “healthy” burritos without changing the way they cook. It’d be a recipe for branding disaster. Relevance and credibility would be the first to go, followed shortly by consistency. After that, no amount of differentiation would help. It would end up like so many other restaurants that just come and go, leaving a bad taste in everyone’s mouth.

 

5 How to differentiate your small business.

There are more than 20 million businesses registered in America, but only 17,000 are what the Department of Labor calls “large” businesses. So forget about the giant brands like Microsoft, GM and Nike. Let’s look at how you can differentiate yourself from the millions of small businesses that don’t succeed.

the E Myth on the Brand Insight Blog top 100 branding blogThis is about small business branding. The single biggest challenge is that most businesses are started by technicians. They’re not branding experts, marketing gurus or even professional managers. They’re skilled specialists. (Think about all the painters, lawyers, programmers and copywriters who hang up a shingle.)

These technicians make the fatal assumption that because they understand the technical work of a business, they understand the business itself. And that’s just not true.That’s the crux of The E Myth, by Michael Gerber. If you have a business, or are planning to go into business of any kind, buy that book and refer to it constantly.

Architects are a good example. Just because you can design great buildings doesn’t mean you can run a great architecture firm. Talent, by itself, isn’t a differentiator.

You see it in professional spin-offs all the time… Two or three key architects in an established firm leave with a few clients, just knowing they can do it better on their own. But they start a company that’s cut from the exact same cloth as the last place they worked. They use the same accounting software, the same processes, the same fee structure, and even the same spiel in their pitches. The only thing that’s changed is the location and the letterhead.

So why are they surprised when they run into the same challenges and problems that their former firm experienced? All they have is a me-too firm based on a fundamentally flawed model of other me-too firms.

No matter what line of work you’re in, a great way to differentiate yourself is to adopt a business model that doesn’t fit the conventional mold of your industry. Here are a few examples from big business:

southwest airlines branding brand insight blog• Herb Kelleher started Southwest airlines with an idea on a napkin… discard the airline industry’s old hub-and-spoke model and discount fares dramatically.

• Ray Kroc threw out the conventions of the restaurant business and introduced assembly line production at McDonalds.

McDonalds and small business branding • Jeff Bezos, founder of Amazon.com, started selling books out of his garage, proved all the naysayers wrong and built the world’s largest on-line retailer.

Those companies were built on a proprietary system of doing business that differentiated them from the competition. For Ray Kroc it wasn’t the hamburgers, it was how the hamburgers were made. It’s what Gerber refers to as a business format franchise.

If you’re Joe The Plumber and you want to build a plumbing empire, you have to do a lot more than just fix pipes. You also have to wear the strategist’s hat, the manager’s hat and the entrepreneur’s hat. If that’s not possible, then hire someone to do that thinking and planning with you. Not for you.

Here’s inspiring example of small business branding I’m sure you haven’t heard of:

In 1985 Scott Campbell graduated from Veterinary School and bought a small animal clinic in Portland, Oregon. But instead of spending all his time treating fleas and ticks, he started working on the business. He devised a long-term strategy. He built new business systems and installed computers. He devised new policies. He hired BNResearch to track customer satisfaction. In order to provide a better level of care for pets, he did everything Gerber recommends in The E Myth. Scott Campbell didn’t work in the business, he worked on it. He did market research, he implemented processes and paid attention to his branding. He seldom saw pets after the first year or so.

Campbell’s company, Medical Management Inc, (MMI), took off. When it sold to Mars, Inc. in 2008 there were over 500 Banfield Pet Hospitals worldwide, each doing approximately $2.5 million a year. I’m quite sure that makes Scott Cambell the wealthiest veterinarian in history.

The point is, if you want your business to pay off, do something different! Being good isn’t enough. You also have to be good in different ways. You can’t differentiate yourself if there’s nothing different about the way you’re doing business.

Thirty years ago you could differentiate your business simply by doing better advertising than the competition. But that’s not enough anymore. You also need something genuinely, substantially better to put in your ads.

It’s tough to be different, especially for a service business. But that’s actually good news! If it were easy, all your competitors would be unique and exciting, and you wouldn’t stand a chance. The fact is, you don’t have to do everything well in order to succeed. You just need to do some things differently and some things well. As Gerber puts it, you need to work ON the business as much as you work IN the business.

Looking for more insight on small business branding and marketing? Try this post.