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GM States Its Case. But Better Marketing and Backing The Right Horses Could Help.

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December 05, 2005

GM States Its Case. But Better Marketing and Backing The Right Horses Could Help.

David Kiley

In Today’s Wall Street Journal, General Motors chairman and CEO G. Richard Wagoner Jr. pleads his case for why GM is losing so much money. He makes many relevant points with which I am already familiar, and he ignores some big ones too.

It’s true, as Wagoner says, that the Japanese companies manipulate the yen against the U.S. dollar to help maintain a profit and cost advantage over the Big Three. It’s also true that healthcare and pension costs GM has to pay relative to the Japanese and Koreans is also a disadvantage.

But it’s also true that Wagoner’s predecessors, but also GM in Wagoner’s time, have not only coddled the United Auto Workers union to the point where they have the best, most obscene healthcare package perhaps in the world, but they have also consistently backed political candidates at the highest level who are clearly opposed to reforming U.S. healthcare in a way that will help make GM and the U.S. as a whole more competitive with the rest of the world. GM’s political action committee backed Bush-Cheney in 2000 and 2004. To be fair, the GM PAC backs both Democrats and Republicans. But Bush-Cheney are anti national healthcare reform and have no intention of ever intervening in the U.S. dollar the way the Japanese manipulate the Yen, nor do they have any inclination to hold the Japanese accountable for what Wagoner suggests is unfair. In fact, the Bush Administration, nor the Republican leadership in COngress, has expressed not the slightest concern about whether GM or Ford go Chapter 11. Could it be that they resent all the PAC money that the UAW sends to Democreats?

While the GM PAC did not send any money to Al Gore in 2000, or John Kerry last year, it is interesting that the FEC website indicates a handful of contributions to Sen. Hillary Rodham Clinton’s “Friends of Hillary” fund. And Hillary is the goddess of national healthcare reform. Hedging their bets? Maybe. But don’t get too excited. There are also ten contributions to Tom Delay.

Now, one of the big problems facing GM (and this is where marketing comes in) is that the company has fostered an institutional disconnect between product design, marketing and corporate policy about such things as alternative fuels and safety. GM does a great deal in fuel economy and safety, to be sure. But it hasn’t been orchestrated with the company’s marketing machine in a way that makes any of its brands stand for anything clear. Toyota backed hybrid development. And no matter how you feel about the efficacy of hybrid engineering, it has stamped Toyota as the green company in the minds of consumers. Neither GM nor any of its brands resonate with the public in the areas of fuel economy, environmentalism or safety. And most of its brands—Chevy, Buick, Pontiac, Saab and Saturn—have had their marketing strategies shifted around so much year to year that few members of the buying public know what those brands stand for. That’s not the case with Toyota, Honda, Nissan, BMW, Mazda, Porsche and a few others. Toyota (green and quality). Honda (green, quality and great engines). Nissan (design). BMW (performance cool). Porsche (iconic sports cars). Mazda (Japanese performance, fun-to-drive). Pontiac? Buick? Saab? Chevy cars? Saturn?

Wagoner runs a sales and distribution company. If one day he decides he really runs a marketing company, then perhaps GM can work toward achieving what has eluded it for the last thirty years. Too many people just can’t find a good, compelling reason, other than a cut-rate price, to buy a GM product. And that's not a good plan for making money.

08:50 PM

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December 5, 2005

GM States Its Case

by David Kiley/Business Week

But Better Marketing and Backing The Right Horses Could Help. In Today’s Wall Street Journal, General Motors chairman and CEO G. Richard Wagoner Jr. pleads his case for why GM is los... [Read More]

Tracked on December 9, 2005 12:48 AM

From the marketing perspective that you point out, I fully agree. GM has literally created a cognative disconnect from brand recognition to company loyalty. You think of any of the GM brands-and nothing comes to mind. Yet they can justify spending millions on millions of advertising dollards for commercials and print ads somehow without ever creating a real "brand image".

Think about any advertising you have seen with those cars and nothing is even similar among them all. No common theme, no common punch-line, and most importantly, no common benefit. Dumbfounds even the likes of myself and makes you wonder what is really going on in the offices there.

Posted by: Hutch at December 8, 2005 11:54 AM

I like GM's products and hope they can cut costs to a profitable position. I hope to buy an Envoy one day.

Aging Baby Boomer...

Posted by: Dale Loflin at December 9, 2005 07:51 AM

Well said, Hutch. They are still focused on the same things that preoccupied GM in the 1950s: selling a car based on an annual model change and campaigns that push, push, push. GM still hasn’t discovered the difference between marketing and selling—and the brand method has little opportunity at that company ever since it abandoned its “brand managers” some years ago. Not that they were real brand managers: it was merely a way for GM to pay lip service to the fact it possesses trade marks, and to tell people that it would not design cars as similar as the Cimarron and Cavalier any more. No real branding actually took place.

Posted by: Jack Yan at January 2, 2006 12:57 AM

author, david, you wouldn't happen to be another american, worried about his/her job, yet driving some foreign car, trying to use this article to heal the domestic guilt wounds???

if people are going to post here, including the author, let's keep it real and share what you own today.

proud domestic ford explorer and a mercury monterey owners.

Posted by: whoopdaddy at January 9, 2006 09:29 PM

I think that GM and the others should get rid of alot of the vehicles they sell (stop production) because like GM they have to many cars to chose from if they would concentrate on a few cars ( around 10 models) then that would be better.

Example: GM sells the same truck as Chevy, just with a different label, so why not have GM sell the truck and chevy sell only cars? that way you are not selling two of the same vehicles at two different dealers that are competing for your money.

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Posted by: K.Rajkumar at December 1, 2006 04:03 AM

My name is Adam Carrington. On 09/06/06 I bought an 05 grand prix with 27000 miles on it from Mike Haggerty Pontiac. Basically since then I've had it for only 5-7 days and it's been at their shop ever since. On November 18th I sent a letter to GM corporation. Here's a copy of it:

My name is Adam Carrington. I have a 97 Grand Prix. It was my first car and I loved it so I decided to get another one. I bought an 05 Grand Prix on 09/06/06 from Mike Haggerty Pontiac in Chicago. The car had a few minor cosmetic defects that I wanted fixed before I took it home. I didn’t actually take the car home until the 18th of September. I noticed that as soon as I put a cd in the cd player it was making a strange noise. I didn’t think anything of it at first but I drove home and turned the ignition off and the buzzing noise could still be heard and it was very loud. I thought it would stop when the car settled so I just went in the house and went to bed. I had to work the next day and to my surprise the car was still making the buzzing noise. Needless to say I took the car back and it went into the service shop on the 27th of September. Since then they’ve given me numerous deadlines as to when the car would be ready. I have had to cancel 3 out of town trips so far because the loaner, which I had to ask for, can’t be taken out of state. I have been very patient but this is ridiculous. No one can give me any answers about the car and no one knows what’s wrong with it. I'm paying my second car note on a car I have only had for seven days! When I call the service shop no one can answer my questions. I wrote the corporation on the website about 3 to 4 weeks ago (10/25/06) and still haven’t been replied to. Now someone from Detroit is here but the problem still isn’t fixed and I still have no answers. It’s like I’m just being ignored. I thought I was going to be a loyal customer but after being treated like this I don’t want anything else to do with a GM anything. Tomorrow I will even be canceling my GM credit card, which I was going to use to buy another GM vehicle. Now all I can do is complain to anybody and everybody who will listen. It’s gotten to the point where I don’t even want the car anymore. I haven’t even been offered anything for my inconvenience. I guess it’s my fault for having too much faith in your company. Maybe someone will read and reply to this letter this time. If not I guess I’ll just keep on sending them to papers, posting it on websites, and telling my grand prix club members about how I was treated

Since then I gotten in touch with customer service at GM on 11/29/06 and she said she'd get back in touch with me the next day but I had to call her on 12/04/06 to find out that there was still no progress on this car. They did finally send me a reply to my email on 12/03/06 that just said they told my concerns to the customer service rep. Now they're saying they won't do anything until the engineer comes out again to look at it on 12/12/06.

My question is how can I go about getting my money back because the salesman showed me a carfax printout on the car that said it was clean. So he sold me a car by showing me the wrong information. I never would have bought it if I knew it had electrical problems. T hat haven't even tried to offer me any type of compensation. I did get them to give me a loaner (an bland looking basic G6 cheapest model on the line)! With this kind of customer appreciation the low prices won't amount to much.

Posted by: Adam Carrington at December 15, 2006 04:01 AM

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