GM Marketing Chief Discusses Challenges, Plan Going Forward

[akbar]

Whateever the difference in cost (either $17/week or $30/week), whether it matters depends on the demographics of the customer base. Based on my limited observation and following of the industry a larger portion of GM’s customer demographics (especially Chevrolet & Pontiac) represent people who are more cash strapped than say a typical Honda/VW/Toyota customer.
These customer’s even when they are buying expensive trucks, they still seem to live pay check to pay check. So its likely, that for them any small difference is much more magnified, especially with stagnating wages and costs of all the necessities going up.
Import buying customers on the other hand seem to be more conservative/wise in their spending habits.
I would like to think that I am off-base here and that GM marketing with their multi-million marketing budget would have a good understanding of this underlying reality, if true. But with the huge drop-off in GM’s sales compared to Toyota/Honda, I wager there is some truth in my observation.

[berne1]

The really disturbing thing in this interview is the fact that he blows off a $17/wk increase in fuel costs by saying "That's not much".

This shows exactly how out of touch he is with the buying public. A blanket statement like that refers to whom, exactly? I did a calc based on my commute and using Silverado 20MPG (hwy) vs. an Aura 4-cyl 30MPG (hwy). And these are "best case" calcs using highway MPG for simplicity. And my difference worked out to about $80/mo (best case). Now I consider that to be quite a bit of money, personally. Not to mention the fact that a Silverado would costs thousands of dollars more to purchase if you're in the market for a new car.

Maybe not so much to this guy who is making what, $300K-$400K+ per year, plus getting a FREE car and FREE gas, insurance, etc. To the guy that has taken a pay cut, been laid off, or is saving for retirement or kids' college, etc., that $68/mo is much more than he obviously thinks.

[damurf]

I'm new to this board but it appears the folks posting are far more in touch than this supposed marketing expert. I'm in marketing and the first thing you learn is this - the customer "owns" the brand and that the customer isn't necessarily always right...but they get the last word.

Mark needs to realize the glory days of people paying top dollar for low tech, solid rear axle, OHV engine, 4 speed auto SUV and trucks is over. GM got fat and lazy. Now the market is moving to high effeciency sedans and crossovers and GM is not prepared. Mark, we didn't hit these high gas prices overnight. Why did Honda and Toyota have hybrids (Insight/Generation I Prius) years ago and GM had nothing even on the drawing boards. Why oh Why did the first high tech hybrid get installed in a 5000 pound SUV so it could get 20 MPG but costs $50K?

[mgescuro]

If you need a truck? You need a truck.
You cannot haul stuff or tow things in a Camry/Malibu/Civic, etc.

But what GM fails to recognize is that there is a cost savings in driving smaller cars than big trucks. ANd in times of economics downturns and high prices, that's what happens.

THe $1,500 or so a month might not be a lot for me. It's about 1/100th of what I make annually. So that's not that significant. But what about people for who it is 1/10th their salary? It's a cost savings.

Is it enough to warrant spending $15,000 on a new car? Mathematically? No way!

But that is GM's mentality. They see spreadsheets.
The cost savings is "only" $1,500 annually.
Therefore, people will still want trucks because the cost differential is insignificant. And they won't spend money on a more efficient car. So why bother offering them? Cause we don't make any money off them anyways? But, just in case, we'll make the XFE and see what happens?

Hence their surprise.... hence GM remains 5-10 years behind the market in small cars... hence GM is in deep doo doo...
All because of their flawed belief that they understand the market and that they still have the ability to dictate what the market wants.

Simply put... GM is out of touch with the market and reality.

Originally Posted by damurf

I'm new to this board but it appears the folks posting are far more in touch than this supposed marketing expert. I'm in marketing and the first thing you learn is this - the customer "owns" the brand and that the customer isn't necessarily always right...but they get the last word.

Welcome to GMI damurf!!
Oh and yes.... What you say about marketing is absolutely 100% correct.
It is in every marketing textbook. It is taught in B-schools across the country.

Heck... even Bob Lutz himself said it in his friggin book!!!

So... what is Lutz doing at GM? And why isn't GM treating marketing this way?

For years, I've been saying this on GMI!! Where is the disconnect here!!! Why can everyone else see the problems, and why can't GM realize and do something about it!!??

And you're right, we didn't hit these high gas prices overnight! It's 8 years in the making. Even slow GM should have had something out 3 years ago!!! But no.

The reason is... GM cannot make significant money off small cars. They can only make money off trucks. So their focus was on trucks because they need money. ANd now all their cars are so outclassed, GM's in deep hurt because they never tackled the true problem -- corporate inefficiencies that made it impossible for GM to make money of small cars.

And now, the era of the big trucks and SUV's is over. What does GM do now?

They are in a race against time to put out world class compact cars on the first try! GM needs these cars to be a spectacular hit -- a grand slam. Otherwise, GM is dead. And I think they realize it. Every single program seems to be cut at GM now. They don't have the money to survive.

[Buickman]

the Corvette, CTS and Malibu are very good products. the Enclave, G8, Silverado, and Tahoe are also more than acceptable vehicles. the trouble isn't the offerings, it's management's lack of vision, the absence of accountability, and most of all...cost effective, brand enhancing marketing.

I am of the belief though that GM doesn't want success in the short term. they would never be able to relocate an industry's production, dramatically reduce wages, and eliminate benefits under good times. IMO they are out to eventually control distribution of foreign manufactured goods. if that calls for the loss of $100 Billion in the near term but leads to Hundreds of Billions in savings long term, the Red Ink is worth it. how else can you explain the Board's support of someone who has lost so much money annually, and wiped out so much shareholder value? there must be a reason. as incompetent as they appear, these are not stupid people.

[fp115]

Originally Posted by mgescuro

The reason is... GM cannot make significant money off small cars. They can only make money off trucks. So their focus was on trucks because they need money. ANd now all their cars are so outclassed, GM's in deep hurt because they never tackled the true problem -- corporate inefficiencies that made it impossible for GM to make money of small cars.

And now, the era of the big trucks and SUV's is over. What does GM do now?

They are in a race against time to put out world class compact cars on the first try! GM needs these cars to be a spectacular hit -- a grand slam. Otherwise, GM is dead. And I think they realize it. Every single program seems to be cut at GM now. They don't have the money to survive.

All their cars aren't outclassed, only entry levels. GM owns the mid and the full size class is not very competitive. GM does make money on cars, but you seem to have misunderstood Bob's statement. That is selling the cars for more than they are worth, which is what is being done with trucks for a while and what Honda and Toyota are doing with their cars. Sure the CAW and UAW take a lot out of each car built, but it doesn't mean they aren't profitable.

Yesterday at the GM broadcast we saw some interesting numbers regarding the market. The crossovers have made the jump to 19.5% of the marketshare, trucks are at 27% and cars for the first time ever hit over 50% marketshare at 54%. Trucks used to be about 50% and cross overs used to be around 10%.

GM doesn't need a car that betters Corolla's sales right away. It won't change the company all that much financially. Trucks even wouldn't be able to keep the company affloat. All the cuts made thus far are what will ensure GM's future survival. By 2010, the cuts GM have made for the past 2-3 years, GM will be saving up to $18b per year, if not closer to $20b. Yes GM needs a much more competitive car than the Cobalt, but it won't be a car such as the Cruze or the Volt that will return GM back to where it used to be, those will simply help restore marketshare and company perspective.

The company has enough liquidity to make it through 2009 until the bulk of the savings come to play. This is going off the worse case scenarios and with gas priced at $6.5/barrel, increase material cost, and the dwindling US economy. Before making a post again, to which you have been doing a lot recently look up the facts. The "GM is dead" crap just does not cut it.

[Buickman]

Originally Posted by fp115

All their cars aren't outclassed, only entry levels. GM owns the mid and the full size class is not very competitive. GM does make money on cars, but you seem to have misunderstood Bob's statement. That is selling the cars for more than they are worth, which is what is being done with trucks for a while and what Honda and Toyota are doing with their cars. Sure the CAW and UAW take a lot out of each car built, but it doesn't mean they aren't profitable.

Yesterday at the GM broadcast we saw some interesting numbers regarding the market. The crossovers have made the jump to 19.5% of the marketshare, trucks are at 27% and cars for the first time ever hit over 50% marketshare at 54%. Trucks used to be about 50% and cross overs used to be around 10%.

GM doesn't need a car that betters Corolla's sales right away. It won't change the company all that much financially. Trucks even wouldn't be able to keep the company affloat. All the cuts made thus far are what will ensure GM's future survival. By 2010, the cuts GM have made for the past 2-3 years, GM will be saving up to $18b per year, if not closer to $20b. Yes GM needs a much more competitive car than the Cobalt, but it won't be a car such as the Cruze or the Volt that will return GM back to where it used to be, those will simply help restore marketshare and company perspective.

The company has enough liquidity to make it through 2009 until the bulk of the savings come to play. This is going off the worse case scenarios and with gas priced at $6.5/barrel, increase material cost, and the dwindling US economy. Before making a post again, to which you have been doing a lot recently look up the facts. The "GM is dead" crap just does not cut it.

you seem to be an intelligent man, although IMO somewhat misguided in supporting an incompetent regime. would be interested in hearing your opinion/analysis of GM's marketing...

[fp115]

Originally Posted by Buickman

you seem to be an intelligent man, although IMO somewhat misguided in supporting an incompetent regime. would be interested in hearing your opinion/analysis of GM's marketing...

That is something I definitely do not say in public. Trust me... not something I like from the company and would love to change a lot of things.

[Glemaire]

Hey dips**t can you not read the post, it says 5.3 liter not 4.8 liter, are you just stupid or do you just think that you are God's gift to the car industry. Try selling them and see what happens to your little theory on who is buying what. Experience it firstahnd and then say something!!!!!!!

[Buickman]

Originally Posted by fp115

That is something I definitely do not say in public. Trust me... not something I like from the company and would love to change a lot of things.

can respect that, used to feel the same way.

[johnnyl321]

But the public hears the media daily talking about how high prices are and how bad the economy is and it scares them and makes them do irrational things.


People are sheep. They simply follow the herd. At least some of us are trying to change that mentality, but it's an uphill struggle.

[Buickman]

well, as a young man I dreamed of leading the country in sales, did it.

imagined taking a store to #1 USA, did it.

goofy as it may seem, now my goal is taking over General Motors. call me crazy, or get on board. should be interesting.

[awalbert88]

Right up until reading this interview, I believed GM would not only survive the economic downturn and high gas prices, but come through it better off. I no longer believe that will happen. This man is out of touch with the consumers in a frightening way, and he's supposed to be the marketing head.

GM, cease all truck and SUV advertising. Those vehicles will only be sold to people who genuinely need them at this point. Every single marketing dollar you have must go to ads that talk about fuel economy and class-leading (read: Malibu/Aura) sedans. Any other advertising should be written off immediately as a loss on your books, because it will not help AT ALL. The public at large views GM as a maker of SUVs and trucks, which are not as fuel efficient as cars. Therefore, any cars GM makes are viewed by this same public as being as inefficient as the trucks and SUVs GM makes (the fact that they may have the best fuel economy in their respective classes does not matter). The only way to change this perception is to STOP ADVERTISING the trucks and SUVs. This includes dealers. They're not helping the situation at all.

[Buickman]

Originally Posted by awalbert88

Right up until reading this interview, I believed GM would not only survive the economic downturn and high gas prices, but come through it better off. I no longer believe that will happen. This man is out of touch with the consumers in a frightening way, and he's supposed to be the marketing head.

GM, cease all truck and SUV advertising. Those vehicles will only be sold to people who genuinely need them at this point. Every single marketing dollar you have must go to ads that talk about fuel economy and class-leading (read: Malibu/Aura) sedans. Any other advertising should be written off immediately as a loss on your books, because it will not help AT ALL. The public at large views GM as a maker of SUVs and trucks, which are not as fuel efficient as cars. Therefore, any cars GM makes are viewed by this same public as being as inefficient as the trucks and SUVs GM makes (the fact that they may have the best fuel economy in their respective classes does not matter). The only way to change this perception is to STOP ADVERTISING the trucks and SUVs. This includes dealers. They're not helping the situation at all.

the dealers are, and have always been, the strength of General Motors. can you say Seabiscuit?

[fp115]

Originally Posted by awalbert88

Right up until reading this interview, I believed GM would not only survive the economic downturn and high gas prices, but come through it better off. I no longer believe that will happen. This man is out of touch with the consumers in a frightening way, and he's supposed to be the marketing head.

GM, cease all truck and SUV advertising. Those vehicles will only be sold to people who genuinely need them at this point. Every single marketing dollar you have must go to ads that talk about fuel economy and class-leading (read: Malibu/Aura) sedans. Any other advertising should be written off immediately as a loss on your books, because it will not help AT ALL. The public at large views GM as a maker of SUVs and trucks, which are not as fuel efficient as cars. Therefore, any cars GM makes are viewed by this same public as being as inefficient as the trucks and SUVs GM makes (the fact that they may have the best fuel economy in their respective classes does not matter). The only way to change this perception is to STOP ADVERTISING the trucks and SUVs. This includes dealers. They're not helping the situation at all.

Ending ads on Trucks and SUVs is rather stupid at this point. Trucks and SUVs still account for a huge portion of sales. Though at its lowest point in ages, they still sell many trucks and suvs. Companies, construction and many people still buy them, it does not mean you must end all.

The idea behind advertising is not to kill something that you have an working, but rather lower that budget and move the funds around somewhere else. For once I have to say GM did somewhat of a good job on the Malibu advertising, but in order to do that they cut into advertising funds that no other GM car has done in the past many years. But sometimes advertising efficiently is not about spending the most amount of money, but doing something different, something that will make people remember. Off the top of my head I can name over 10 different marketing programs that can be done and are relatively cheap. Sad part is that of those GM took 2-3 of the ideas and doing them in Canada and guess what, it worked in the past month (see Saturn's sales).

GM is onto something from the July 15th broadcast when they announced cutting of marketing, not sponsoring Nascar is a huge step towards making marketing more efficient, we aren't in the 80s and 90s where if you win a race you will sell hundreds of cars. Rather we are in the digital age and the age of customer support. Customer cherish hands on experience while seeing something that immediately catch their attention afterwards online or thru a friend.