Magazine article Marketing

Mark Ritson on Branding: GM Is Risking Death by Brand Overload

Magazine article Marketing

Mark Ritson on Branding: GM Is Risking Death by Brand Overload

Article excerpt

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 (u2.2bn) 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. …

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