The Elephant Can Dance
(Although this article was published in the April, 2001 issue of RETAIL INSIGHTS newsletter, it was really the result of a speech ten months earlier in June 2000, given at the annual meeting of GM shareholders in Wilmington, DE)
Why has General Motors' market share been declining every year? The answer lies in the General's lack of retail automotive marketing savvy. Executives continue to receive millions of dollars while plants are closed, divisions eliminated, and tens of thousands of employees laid off. The financial wizards have created stockholder wealth through efforts in satellites, computers, and acquisitions and spin offs. However, our core business has suffered, perhaps more from a lack of understanding than a lack of focus.
Although we have taken much of the cost out of manufacturing vehicles and build reliable, fuel efficient, safe, quality and stylish automobiles, our market share has continued to slide. How can GM reverse the decline in market share from 50% to 40% to 30% and headed toward 20%?
We don't need a remake of our product lineup. We need a remake of our image. The object of this paper is to suggest solutions, giving constructive criticism by offering the TOP TEN things General Motors can do to increase market share:
#10: Real World:
The strength of General Motors is its' dealer body. When put in charge of General Motors, Mr. Alfred P. Sloan Jr. took a train around the country visiting the dealers. As a result of his travels, he developed many good things, including the 10-day report and the annual model change.
Instead of meeting in Italy or Disney World, the top 500-1,000 salaried employees of GM should randomly be assigned a dealership to visit for one week, unannounced, and spend the majority of his or her time in the service department. They should meet customers, listen to their needs, and build good will for the Corporation.
#9: New Car Announcement:
The annual model change was established for a reason. Traditionally, sales slow down in the fall and increase in the spring. Announcing new models in the fall helped even out production and gave the industry a sense of order. Today, you don't know what is going on, what is coming out, or when. People don't like confusion. The anticipation of new models arriving in the fall was always one of the most exciting parts of the business, something you could look forward to. These days we are selling three different model years side by side, which isn't good business.
#8: Divisional Brand Images:
Buick is a brand. Oldsmobile is (was) a brand. Regal and Century are cars. We should focus our brand marketing on our divisional images and the cars would sell themselves.
Corvette is one car we really do right. We're hitting on all cylinders. No discount, no rebate, just image. I waited 10 months for mine, paid the sticker price, and love the car. However, the other day I was talking to Batman. He brought the Batmobile in for service and while he was there, I offered him a Corvette to drive while his car was being worked on. Surprisingly, he refused. On*Star is not available on Corvette. This is an example of not matching products to the market we are trying to reach.
Instead of offering a Catera lease with a free 1st payment and security deposit waiver, we should offer a manual transmission that would appeal to the market segment we are targeting.
Eliminate requiring an employee to retain a leased vehicle for 12 months.
Charges should be done away with. A whole marketing campaign could be designed around this savings for our customers. If you want to pay freight, get a foreign car. We would receive tremendous good will and improve our image in the marketplace.
#3: New Car Deliveries:
Why do we call them deliveries? We don't deliver; the customer comes to the dealership and picks up the vehicle. Let's change this by working with dealers and offer home deliveries. The customers will love it.
To have a good image, our products have to hold their value. The reliance on fleet sales to rental companies falsely portrays a higher market share. When the units are bought back after a short while and dumped at auction, it destroys resale.
Rebates are a cancer, they kill image. They are also very confusing. Prestigious automobiles should not have rebates. General Motors needs to break the addiction.
Often times the dealership is notified of the rebate before the cars or brochures have even arrived. Many times customers are alienated because a program has been cut off or missed.
If there were a problem with days supply in the field, a better marketing program would be to increase the residual value 2 or 3 points. Problem eliminated! The image would be that of a great car with a good lease instead of a slow mover with a big rebate.
By making moves such as these our image will improve, our market share will increase, profitability will rise, and the stock price will soar.