Why too many brands is even worse than having too few.
Pointing out that General Motors has a brand management problem is akin to telling your 92-year-old grandmother that she should improve her diet: it's too late, and there are far bigger challenges ahead.
The problems facing the world's biggest car manufacturer are numerous and enormous. There are multibillion-dollar issues associated with labour costs, overheads, supplier problems, dwindling market share, plummeting share price and competition from the Far East. But GM also suffers from one of the most prevalent and destructive brand issues of all: it has too many of them.
If the game of marketing was about owning as many brands as possible, GM would win hands down. It currently owns 12, from Cadillac and Hummer to Saab and Opel - and, lest we or GM forget, Vauxhall. Unfortunately, the overriding rule of brand architecture is that less is very much more, and it is suffering from all the classic ailments of a company with too many brands.
GM is struggling to make the marketing investments necessary to maintain brand equity and generate sales. This may seem curious, given that it spent more than $4bn (ú2.2bn) on advertising in the US last year alone, but once you share that amount between 11 marques and more than 80 different models, the budgets for each begin to look much less generous - especially when you are competing against more parsimonious brands, including Toyota and Porsche, which have much leaner (and therefore much more efficient) brand architecture.
GM has also become dangerously addicted to economies of scale at the expense of brand differentiation. It is over-reliant on building different branded vehicles from a shared platform. While this is an excellent way to reduce development and production costs, it results in ever-more homogeneous products and a rapid reduction in differentiation and brand equity. The latest Pontiac Torrent, for example, is little more than a rebadged version of the Chevrolet Equinox, and consumers know it.
GM is also economising on front-of-house systems, with many dealerships now merged into cost-efficient, but brand-killing, shared retail points. Target segmentation and brand differentiation are being replaced by cannibalisation and commodification as GM gradually destroys itself.
In a recent speech, GM vice-chairman Bob Lutz stated: 'We are not discussing the elimination of any brands.' The great irony of GM's plight is that a steadfast belief in maintaining every brand in its portfolio results in the gradual destruction of them all. Lutz claims GM 'loves all its brands equally', but this is a mistake when it includes corpse-like Pontiac and high-potential star brand Sa-turn. Brands are not children; some of them must be killed to help others.
Vauxhall is a perfect illustration of what happens when a company has too many brands spread too thinly. Its brand is as indistinct and insipid as the cars it produces. What does Vauxhall have in terms of brand equity? Nothing. Neglected, ignored, unimportant. The only good thing about GM's ownership is it will take another couple of years for the brand-addled management to realise they should close Vauxhall down - or sell it to the Chinese.
GM's marketing supremo Mark LaNeve recently told BusinessWeek: '(Do) I think we have too many brands? No, but we have to manage them a lot better.' And therein lies his, and GM's, problem. The former is linked to the latter, and one thing cannot be fixed without the other. 30 SECONDS ON ... GENERAL MOTORS
- GM is the world's biggest car maker in terms of sales. Founded in 1908, it is based in Detroit and has 327,000 employees, with manufacturing facilities in 30 US states and 33 countries around the world.
- Almost 9.2m GM trucks and cars were sold globally last year under the Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall brands.
- GM lost $10.6bn (ú5.7bn) last year. It is now axing 30,000 jobs, closing 12 plants and raising cash by selling its shares in other firms and subsidiaries.
- Last Friday, Kirk Kerkorian, whose Tracinda Corporation is GM's third-biggest shareholder, proposed a global alliance with the Renault-Nissan group; Carlos Ghosn, chief executive of Renault and Nissan, is reported to be interested in acquiring a minority stake of up to 10% in GM and including it in the Renault-Nissan partnership.
