Harvard Business Online
How GM's Chairman Aims to Please
Lee Iacocca did it. Dieter Zetsche of Daimler Chrysler tried it. Now Ed Whitacre, General Motors' new chairman, has become his company's television advertising spokesperson.
There are five reasons why this campaign makes sense (and three big reasons why it doesn't!). First the positives. By being the frontman, Whitacre is:
Taking charge. GM is now largely owned by taxpayers. GM advertising is being paid for by you and me. Whitacre was appointed by the government. The ad shows he's not in hiding. He's stepping up to take responsibility.
Boosting internal morale. The boss is on the front line, pushing the product with passion and energy. Whitacre's plain speaking style probably goes over well with dealers and salespeople on showroom floors. Indeed, the ads are shot in dealer showrooms.
Rebuilding consumer trust. Whitacre is trying to rebuild trust in GM and persuade disillusioned consumers to once again consider GM products and visit GM dealerships. "Put us up against anyone" he says, and "may the best car win."
Offering assurance. To persuade consumers to reconsider GM cars, Whitacre announces a 60 day money-back satisfaction guarantee. This recalls the extra warranties Iacocca touted when Chrysler was last bailed out by the government. In tough times, many consumers are risk averse and welcome satisfaction guarantees and warranties.
Providing a brand umbrella. These GM corporate ads efficiently highlight the four brands—Chevrolet, Cadillac, Buick and GMC—that remain a part of the slimmed-down GM. (How well the Whitacre corporate ads dovetail with brand specific advertising remains to be seen.)
Now for the three problems:
What guarantee? The fine print sets a 4,000 mile limit, the car can't have more than $200 in damage (as assessed by GM), title and registration fees aren't refundable, and you can only return it between 31 and 60 days after purchase. Turns out GM is giving its dealers an extra $500 on each car sold if the buyer waives the satisfaction guarantee. If GM's average vehicle profit is $2500, the $500 waiver bonus suggests GM believes 20% of cars sold might be returned. Not exactly a vote of confidence in the product or the guarantee.
Where's the product? As Whitacre walks the showroom floor, new GM products appear only incidentally in the background. These corporate ads have to be complemented now—not later—with substantial brand- and product-specific advertising.
Who's the hero? Not the product, but Whitacre. He is the focus of the ads. Whitacre is likable and energetic, but he's a big guy wearing a suit. Can he connect with the average consumer, female or male? Can he champion small car design? Given the current public antipathy towards business, using the hero chairman as the company spokesperson seems out of sync with the times.
In Ford's latest ads, the chairman is nowhere to be seen. Riding a wave of good reviews for the Fusion and Focus, Ford is concentrating on generating test drives at dealerships. Supplementing its "Drive One" campaign, emphasizing safety and durability, Ford is now airing 15 second TV ads with new-owner testimonials and giving dealers $20 per test drive to donate to local schools.
While GM has made great strides to get its act together, rationalizing a bloated brand portfolio and cutting the number of models from 48 to 34, the company plans to launch 25 new models between now and 2011. Let's hope that Ed Whitacre can prevent a return to unproductive bloat in the product line, as well as star in taxpayer-funded ads.