Branding and the Demise of GM

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So the impossible finally happened. Not only did Chrysler bite the dust last month, but now General Motors—the symbol of American industry—files for Chapter 11 protection. How could this happen??

Well, the media is full of reasons and the auto execs are full of excuses and the UAW is quick to blame. However, let’s stop blaming the mistakes of the past on what’s happening today. Sure some of the cars they produced in the 70’s and 80’s made you wonder what they were thinking (or not thinking!). But frankly, I believe that many of these companies’ autos stack up quite favorably with all the imports (even if most are made in Tennessee and Ohio). The Malibu’s, the Jeeps, the Sebrings, the Envoy’s are pretty comparable to the Camry’s, Accords, and the Altima’s according to Consumer Reports Auto buying guide. So what’s the problem?

I know I am biased, but I believe it all comes down to the lack of solid branding and marketing by the Big 3 year after year. They have been so entrenched in their thinking and so biased in their execution—especially in media—that most of the buying public really has no preference or relationship (positive, that is) with these companies or their brands anymore. I challenge you to give me what brands like, Cobalt, Legend, G6, Enclave, Traverse, MKZ, or Caliber stand for—or even who makes them.
The car companies have gotten so enthralled with “dealer incentives”, "$ off factory invoice", and “employee pricing” that they forgot that the consumer wants to know why they should consider the car in the first place. I look at how Lexus and Hyundai put themselves on the map and wonder why didn’t the “Big 3” just try to emulate what they were doing? I see some cars on the road with model names that I never heard of until I’m sitting in my dentist’s office and pick up some obscure lifestyle magazine and see a big four-color ad featuring this unknown model.

The re-introduction of the Ford Thunderbird a few years ago was heralded as a marketing success so they did what any other ignorant business leader would do—they stopped marketing it! Not long after, the model was discontinued due to “lack of consumer demand”. Consumers have so many choices; a brand can’t hide and expect the demand to suddenly appear. The companies—and their ad agencies—have been criticized consistently for their lack of creativity and marketing innovation. Yet, they keep doing so much more of the same things; I have to question their motivation.

It’s all about leadership. Lee Iaccoca in his new book, “Where Have All The Leaders Gone?” asks: “Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. Who would have believed that there could ever be a time when 'The Big Three' referred to Japanese car companies? How did this happen, and more important, what are we going to do about it?”

So now the government, the unions, and an Italian car company that failed in the US a long time ago are taking over. I hope they do their homework and maybe read what Peter Drucker said a long time ago: “Because the purpose of a business enterprise is to make a profit, a company has two—and only these two—functions—Innovation and Marketing. Innovation and Marketing produce results. All the rest are just expenses.”

It’s time for the car companies to look at what Wal-Mart, Costco, Apple, and
Southwest Airlines have done in marketing to the same customers who would buy their cars. What’s branding got to do with it?? Everything.

IKEA--WHAT AN IDEA!

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Like many other Tampa Bay residents, I was excited to learn a while back that IKEA was opening its first store in the area this month. Unlike most of the others, however, I wasn’t just excited about the exciting merchandise, the great prices, the fantastic displays, the outstanding sales help, or the delicious Swedish meatballs. Rather, as observer of the retail scene, I was glad that I don’t have to go to New Jersey or Cincinnati to take a look at what this retail innovator is doing appeal to its customers. One of my students in my graduate marketing classes at Schiller International University gave me a special invitation to the pre-grand opening preview this past weekend so I could take a look before the crowds started camping out for the early bird grand opening. (Yes, they even have a customer friendly sign outside the front door on camping suggestions and rules.)

Once inside, I realized again why this chain defies the doldrums that face all retailers—and especially furniture stores—these days by posting over a 7% sales increase last fiscal year bring their sales to over 21.2 Billion Euro annually. They have figured out how to not only make shopping fun, but also convenient for their customers. Walking through the over 350,000 square foot store, I couldn’t help repeating the same phrase at every corner: “What a great idea!” (I stopped counting at 30 repetitions) as I would see yet another innovation in merchandising, displays, or signage. To the point, where I said to my family: “They should call this place IDEA instead of IKEA.” It is one great consumer convenience concept after another and the prices just seem to be outstanding as well. Sales help??. Of course, this is a pre-opening, but from the over 50 parking lot attendants to the myriad of smiling, helpful yellow shirts in the store, it sure beat the vulture-like sales people in most furniture outlets these days.

I took the time to ask several associates about how they liked the store. The response was always “This is a great company.” They were as excited as we were with the store—and it wasn’t just because they were just some of the 400 lucky people who were selected to work there out of over 2500 applicants. This is a brand that gets it and has been getting it in Europe for decades and here in the US for just a few years. They have a reason for being (consider today’s shopping patterns for furniture). They compete on value, not just price. (Wal-mart prices with Rooms-to-Go value.) They’re convenient. (I thought the small space rooms were especially timely and easy to shop for today’s downsizing population.) And, finally, they make it fun to shop. Not just the magicians and balloon artists for the grand opening, but the whole experience from the store maps to the kids activities to the wonderful lunch buffet (loved those meatballs), this is a great place to spend a Saturday.

They get it. And if more retailers would take a few hours out of their slumping stores and visit the IKEA near them, they would see that retail can be fun—and profitable.


Shoppers filled the new IKEA even before the Grand Opening--and it was fun.

#10 WAY TO IMPROVE YOUR BUSINESS

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Look for a summary of all 10 Ways to Improve your Business in next month's issue of RETAIL AD WORLD in Ken's regular column The Marketing Edge

Don't forget the Global Retail Marketing Association's annual summit at St. Petersburg Beach's Don CeSar Hotel on April 23-25. Get inspired and in tune with what you need to know to be successful. Go to www.globalretailmarketing.com.