Wednesday, June 25, 2008

GM’s Demand Downfall Gives New Meaning To Un-Leaded Strategy

By John Gaffney, Executive Editor
It may seem like a bit of historical trivia right now, but consider this fact: In 1952, when newly-elected President Dwight Eisenhower needed a secretary of defense that could manage America’s post-war manufacturing capability he hired the ex-CEO of General Motors. Back then it was controversial, because Charles E. Wilson was an Eisenhower crony, and after all the former head of a major corporation that would stand to gain from the appointment. Now that appointment wouldn’t be controversial--It would be fodder for Jon Stewart and Stephen Colbert.

I won’t rehash the current litany of discontinued product lines and lost market share. The real cautionary tale from GMs performance over the past five years is in its complete ineffectiveness to sustain effective marketing measurement, predict key market changes, and generate demand for sustainable product lines. GM’s recent experience proves positive that demand gen is not a luxury. It also shows that “no lead” is not about gasoline for them, it is about having “no lead” on the next right customer.

The proof for me came with the most recent announcements that several gas guzzling product lines including the Hummer, would be discontinued. Smaller, gas efficient vehicles, dealers and consumers were told, would be the focus. So I did a little digging to find out exactly what that meant. It is true that GM has put a lot of R&D money into the Chevy Volt, a hybrid. However, the most I could find out about it was that GM still had not awarded the contract for building the Volt’s battery. Tough to generate dealer excitement for a dramatic repositioning when your lead car isn’t ready. Even tougher to generate demand for new products when the big news is a company’s blockage of demand from its old products.

GM’s move also shows that their marketing measurement has been ineffective. Just a year ago this company, that hired enough consultants and data analysts to match the GNP of a third world country, was proceeding as if the TV spots that filled NFL games with Hummer ads and that incessantly played John Mellencamp song was working famously. It was still working to build brand awareness while the pillar of the whole house, foreign oil, was crumbling.

Marketing measurement and customer needs assessment should have shown GM years ago that consumers want and need reliable cars. Reliable not in terms of highway safety, reliable in the face of oil price swings and fragile environmental conditions. Dodge, as early as last fall, was asking truck owners if they “had a hemi in there?” This challenge was clearly aimed at building demand for products that the company took less than year to bail on. Would GM have the guts to ask its middle class truck base the same question now? If it did the answer would be something like: “Yeah I have a &*&* hemi in here.”

DemandGen, from my perspective, is the way out of GM’s mess. It needs to separate itself from oil demand and get back into the game of auto demand. Show consumers and dealers alike that it’s on top of the situation from a product and process perspective. Dealers know it can spend money and pay agencies for clever ads. Put the John Mellencamp CD away. Stop pretending it’s the late 60s and hemi engines are cool. Get back to some dealer meetings, figure out how the Chevy Volt can compete with the Prius. The answer will be in the demand GM can create for this car by defining the customer that will buy it, and the best ways to get to that customer.

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