General Motors had been a successful company in the fifties. At the time GM held over fifty percent of the automobile market. In 2009, they had to file for bankruptcy. What happened? How did such a dominating company end up falling so low? It should have been a difficult question to answer, but it is not.
GM’s failure was probably as much due to product failure as due to branding failure.
While its brands such as Cadillac, Buick, and Pontiac were successful in the fifties and sixties, the seventies saw these cars losing steam. The reason was probably the energy crisis. Or the sudden realization that smaller cars were better (as opposed to big was better style that the industry was following till then). Introduction of a few foreign cars which were small and fuel efficient, lead to consumers bypassing the larger fuel guzzling GM brands. GM started losing its market share. In 1980, the company’s share was 45 per cent. In 1990 it became thirty five per cent. The company suffered loss instead of profits.
After that General Motors tried many things to revive its status. It introduced compact versions of its brands Pontiac, Buick, and Cadillac. It set up and acquired new brands such as Saturn, Saab, and Hummer. It even improved its worker remuneration. It spent millions of dollars in brand building and marketing. Yet, it continued its downward spiral.
In the branding scenario, GM’s mistakes are obvious. It had too many overlapping brands; too many of its brands competing for the same share of market (too many brands competing for its budget as well). That is just enough to cause confusion among customers. General Motors did try to manage the brands by setting up a separate brand manager for each of its brands. Even then the branding was confused. Instead of figuring out what the brand should stand for and aggressively marketing that, their brands tried to borrow from other automobile brands. An example is Saturn Vue’s tagline “Rethink Safe.” Safe stood for Volvo.
It was not just branding either. The product development suffered too. When GM cars were giving inconsistent quality, foreign manufacturers had started offering top quality products. While spending millions in branding, GM forgot to spend money towards improving the quality of their motor cars. And when all is said and done product quality matters a lot.
Be clear about your brand’s core values. Be clear about what your brand stands for. And never, ever compromise on product quality. The GM story teaches us that.