Now that I agree with 100%. The idea of an import fighter brand, was misguided. They didn’t need a brand, they needed quality and reliability. They needed it across all their lines.

I disagree with these two posters. The Saturn brand as originally conceived and executed was different from the other brands. It was billed as the practical person’s sporty car. They were going to do little to the image, but improve the quality steadily. It really was something different from anything Chevrolet could have been, and the single model sold nearly 300,000 copies in its peak year. GMs mistake was to dumb down the original concept. After the 1996 remodeling, it was no longer the least bit sporty, nor did it look cool anymore.

I had a ‘93, I’d been proud to be a Saturn owner, and suddenly I began to be embarrassed to be a Saturn owner. GM had a great branding concept in Saturn, and it completely changed it overnight to something totally different, and lost all the original customers.

Oh, and as someone said earlier, it was very light–2450 lbs. That was part of its sportiness. I can remember trying an Impreza. The thing felt like lead by comparison.

Well, they are hardly selling at that price as Bimmers, anyways, so I don’t think that’s too big a deal for BMW. The 128i starts at about $29K.

That’s an argument for killing Buick, not for trying to push Cadillac places where it can’t go.

In the practical world, differentiating the number of brands that GM has is impossible. They would end up being a bunch of unprofitable, low-volume niches, which is not much different from what they have now.

If you build in low volumes to make a profit, then the only to do that is to go exotic, otherwise the revenues are too low. Low volume, non-exotic just doesn’t work. That’s what Saab does right now, and we all know how well that’s going.

Thank you. That’s what I’ve been trying to say.

pch101

I still think it’s a mistake to sell a Caddy in the low $30s. Merc and Bimmer don’t have another brand to sell at that price level, and even so, I still think they’re making a mistake.

Toyota, Nissan, and GM do have other brands to sell at that price. Caddy doesn’t need a near luxury car, that’s what Buick is for.

In theory, yes. In practice, no. The cost required to develop the marketing and the distribution network that would support the brand message would be cost prohibitive and inherently unprofitable.

It is not possible to craft 20 different messages for a single automaker’s lineups without going to ridiculous lengths to differentiate each brand. Consumers would be unlikely to see the differences, so the money would be wasted. With the emergence of affordable style and the widespread proliferation of technology, it is now much more difficult to create brand differentiation that is meaningful to the customer than it was seventy years ago.

And it’s unnecessary. If the brand is effective, the individual models will project those brand values but modify them to suit the specific product. The extra branding just costs a lot of money, to no end.

Don’t take what I said out of context. I was merely saying that BMW’s don’t offer as much as Jaguar. It was only part of a bigger point.

Oh, and you can get satellite navigation on a $21,000 Mitsubishi Lancer GTS and a $24,000 Chrysler Sebring. Doesn’t mean they’re the greatest cars out there.

BMW’s have absolutely nasty interiors and you get next door to naff all for your money. If you want toys on your 3 series you have to pay through the nose for it (this applies to Audi, too). Whereas, on the Jaguar X-type, buy an SE or higher model and you get a DVD Sat-Nav as standard.

So the X-Type is a superior car to the 3-Series simply because it offers more features for a lower price?

Alert Hyundai: according to this, they make the best cars in the world…

/sarcasm

Then you happen to disagree with all of the automakers that succeed in this space. BMW, Mercedes, Lexus and Infiniti all target this range as the starting pointing for their offerings.

All of the luxury carmakers have one or two “near luxury” vehicles as a starting point. The price points for the lower end of “near-luxury” vehicles overlaps with the upper end of the price range for mainstream sedans.

The pricing structure as it stands today gives a $30-35k sedan buyer two universes of options — buy a near-luxury sedan (perhaps without all the bells and whistles) from a luxury brand, or the top of the line model of a mainstream brand.

The price overlap is by design. They want to take some conquests at the top end of the mainstream market and lure them in. They have other, more expensive models for the more affluent customers, but they also have 1-2 cars that compete with the lower echelons. If they didn’t, they’d have a difficult time expanding their customer bases.

In that sense, I’ll differ with some of the arguments made here. While exotics need to keep everything they sell in the stratosphere, luxury car brands need to have baseline models that are within reach of the middle class climbers.

There should never, ever be an affordable Ferrari. But Mercedes, Lexus, etc. are in the luxury segment, not the exotic segment, and they do need to sell some obtainable vehicles.

The luxury car makers do need to also offer some top-line models that are out of reach for the sake of preserving their status, but to take that approach with every single vehicle in their lineups would be financial and brand suicide. They seem to know this, which is why they structure their models and prices as they do.

Successful brands have a very clear sense of purpose, and when they run into trouble it’s usually because they have tried to tinker with this to exploit opportunities that were not aligned with the brand’s original purpose.
Consider the watch buyer today. Rolex has lost a considerable number of enthusiastic followers because of the brand’s desire to exploit ostentatious luxury, rather than continuing its watch engineering excellence focus. The Rolex bottom line looks good, though a crunch is coming now with the tightening of the economy. Will Rolex regret having chased off its learned fan base to a range of under-the-radar watch engineering excellence brands? Quite possibly – as it is this base of engaged fans and enthusiasts that provide substance to brands. When they go, the brand’s substance fades.

What also happens is that the previously leading brand, by taking its eyes off the ball, may create openings for new players, or previously small players that have been biding their time.
IWC can’t believe their good “luck” – their sales have rocketed as buyers have defected to IWC from Rolex. Buyers driven away by the wrong values presently projected by Rolex watches. Rolex’ actions have also created opportunities for a large number of other brands, Stowa – Hublot – Bell & Ross – Sinn – Corum – Lange & Söhne. Doesn’t matter whether the brands are new or established – Rolex put a vast footprint over the market, and was the portal brand for people seeking the more exclusive watch experience. Then Rolex changed its colors, and now buyers are flocking to the brand for what its enthusiasts see as “all the wrong reasons.”

We’re dealing with the sales vs brand building dynamic. When the brand is tightly focused, then sales and brand building go hand in hand. (Viz. Prius/Apple).
When the brands are not tightly focused, sales and brand building are often at loggerheads.

GM could have 20 different brands under its umbrella, if each of these was tightly focused according to a purpose. And note that I write purpose instead of need, because the need focus of marketing the last few decades has destroyed a lot of great brands.
A focus on needs has the manufacturer chasing after customers asking what they want, and then trying to translate those wants/needs into products.
A focus on purpose has manufacturers chasing after excellence in their offering.
GM’s problem lies in believing that excellence no longer mattered, if they could flummox consumers into thinking that their “metal on the move” would satisfy their needs. And flummox they did, through a segmentation of their brand advertising, pretending that similar looking cars were different, because the people who were supposed to buy them were shown to be different in the advertising and marketing.

Meanwhile they let the spreadsheet johnnies loose on their platforms, seeking cost efficiencies rather than differentiating purposeful excellence.
If GM had let each of their brands portray a purposeful excellence, then the company would be shining today.

I disagree strongly with those saying GM has too many brands. A distinction is missing in that statement. GM has too many UNDIFFERENTIATED brands. There are many categories of cars, and GM could have a brand for each — but GM can’t have eight brands that each contain as many categories as possible. There’s no purpose in that.

I have to disagree that entry level luxury is $30K. That just is not a really expensive car these days. A run of the mill family sedan is going to be more than $20K. A Malibu LTZ is almost $27K.

I can’t see Caddy selling large sedans at $70K either, if they’re going to sell cars at Pontiac prices.

What I do agree with you on is that the brand might already be so damaged that there is nowhere to look for growth except at the lower segments of the market. But that just leads to a downward spiral of more brand dillution. When we reach the point where I can choose the Impala SS or a slightly cheaper Caddy, all is lost. IOW, the growth, if downmarket, can only come at the expense of the already crippled brands like Buick and Pontiac. No problem jettisoning those, but when the overlap in price with Chevy happens, as it must if Caddy is to continue to grow down, then the brand is done for.

But only GM has had as many as 8 or more at a time. Three or four are not unusual, but GM has been more aggressive than the rest in respect to the number of brands.

In my mind, the CTS is fine for Cadillac (although it needs a better interior). The magic price for admission into luxury cars is $30,000-35,000, and it’s right where it needs to be, at least on price.

What’s bad for the brand is that it can’t get away with selling a 4-6 cylinder Cadillac in that price range, as does everyone else. Cadillac is still burdened enough by its brand that it has to offer a lot more for the money in order to even hope to compete.

That’s a long-run problem for them, I can’t see them ever selling a distinctive large body $60-70k sedan that competes with the S-class/A8/7-series, because they’re already competing on size with the 5-series/E-class/A6 with the CTS. It’s going to be a tough brand to rebuild, I’m not quite sure how they could pull it off.

Certainly GM’s multibrand business model isn’t unique at least in the US. Ford is trying to have 3 brands (they really only have one) and Chrysler had as many as 5 (though the public only accepted 3 as real) Chrysler still has 3 brands today.

I see no reason, in theory, why Cerberus can’t take Chrysler upmarket where it used to be – or at least up from where it is now, leave Dodge as the brand with broad market appeal (well, kinda, sorta) and quit screwing with Jeep’s traditional outdoorsy 4 wheel drive image. One brand could not serve all three of those segments, and they aren’t exactly small niches.

I’m not sure there is really any definite limit on how many brands a company can have -but they have to be different from each other. They have to have a reason for being.

I do agree that GM probably just doesn’t understand niches well, and it is a distraction. GM can’t afford distraction right now.

Exactly. That’s why I call it a Pontiac. That and the fact that it sells at a Pontiac price.

Land barges still sell. See your Lexus dealer. There is a place for a car like the CTS – and it’s a good car – but it’s not a Caddy. It’s a Pontiac. It’s excitement.

No, the CTS is a brilliant car that fits your own preconceptions and biases of what a Pontiac should be and doesn’t fit your preconceptions and biases of what a Cadillac should be. I’ve said it before and I’ll say it again: It isn’t the 1950s anymore. 20-foot land yachts with fins don’t sell anymore. The market has moved on. And I find yours and Farago’s argument in direct opposition to the basic sentiment here: that one of GM’s biggest problems is that it hasn’t moved on. Farago has said before that Cadillac should be “unobtainable”, like it was in the “good ol’ days”, because after all, the best thing a brand that made obsolete $40K-$50K sedans can do is foist a $100K+ 16-cylinder sedan on the market. Of course.

China is branded “the Peoples Republic of China”.

With that said…USA is a brand to some degree in the minds of many. Many also deny that.

In reality brands do not exist. What we call branding is really just a series of demonstrations. You demonstrate something and folks will enthusiastically react and respond like roaches when the lights go on. Its a vulnerability of people. One that is exploited for stupid reasons. Consumers are needy spiritually. So are Sellers. Its only natural both buy into branding. It all comes done to not knowing how to live a better life. Its about not knowing how to integrate spiritual needs into ones way of life.

I think that you can add divisions if the expectation is to keep them as low volume niche brands. But these would be small lifestyle brands, such as Mini, or quirky niche products such as Subaru, that sell very few cars.

A niche strategy might be OK for a higher-end operator like BMW, which knows how to manage profitable niches. But GM is a mass consumer company that does not understand niches enough to run them effectively. You end up with the situation that Ford had with PAG — a drain on management resources that could have been better deployed somewhere else.

To achieve mainstream sales levels, there is no way to maintain multiple car brands in similar price ranges. There is no longer any room for a single automaker to have three or four middle-class high-volume mainstream brands. You can’t make those brands different enough to differentiate them adequately, and you can be sure that sales of the niches would be low.

GM is fighting a losing branding battle because the inability to differentiate these brands is inherent — they can’t do anything about it, no matter who tries it.

And we have to remember that GM is the only automaker that used this branding strategy in any meaningful way. They were not the rule, but the exception. In the history of automaking, they are more of an aberration than a norm.

Sloan’s model did work well…..right up until foreign competition came!

It wasn’t foreign competition that destroyed Sloan’s model. As pch pointed out, the model worked great when the way to differentiate cars was wheelbase and horsepower. Look at a ‘32 Buick and a ‘32 Chevy. The Buick had a few inches on the Chevy, in every direction, and a bit more horsepower. Neither had automatic tans, power windows, A/C, cruise control, etc.

But when it became possible to dress up an Impala and make it as nice as an Olds, and for that matter as nice as most Buicks, that’s when the Sloan model broke down. There is no reason to pay more for an Olds when you can have the same amenities in a Chevy. People slowly figured that out.

The competition with the Japanese was partly the lack of small fuel efficient cars from the (then) big 3, and the lack of real quality in the ’70s and most of the ’80s. It had nothing to do with the number of brands on offer.

Also, you mention in one of your posts that “Vauxhall aren’t trying to sell Porsche level sports cars”. You’re right, they aren’t, but that wasn’t my point. My point was how GM used the Vauxhall/Opel “vanilla” brand to create a significant market share in Europe. They didn’t launch 8 different brands. But, with regards to the luxury market, they had SAAB to cover that, but now, they’re introducing Cadillac. Brand swamping commencing!

I understand your point, but this is my point – their significant market share in Europe is only in the “cars for the masses” segment of the market. Vauxhall has no significant market share in luxury cars, sports cars, and so on. If GM wants to enter other market segments, they have to do it with another brand. Brands have limits. Even brands with lots of room to extend to many types of vehicles still have niches they can’t fill.

Phil is right to a large extent – GM wouldn’t have too many brands if there were some actual differentiation, and a reason for the various brands to exist – an appeal that resonated with buyers. But GM does have too many in practice because it doesn’t have the cash to build and market 8 truly different brands, and it doesn’t have 8 different ideas for brands anyway.

If pch is right, (and respectfully pch I don’t think you are) then there are only about 4 or 5 reasons for an auto brand to exist. That means at tops 4 or 5 divisions.

As RF keeps pointing out, there is also the problem of focus. (And perhaps this is what you are driving at when you say brands should grow organically) It’s hard to run 8 divisions with real focus. In Sloan’s day, the divisions were given a good deal of autonomy. Little by little things were “rationalized” and the divisions which were once for practical purposes different companies, all became less independent.

You keep saying Toyota does with 2 brands what GM does with 8. But GM only has 8 brands in a nominal sense. It’s brands aren’t different from one another. It has maybe 3 brands, or perhaps really just Chevy, Caddy, and a whole bunch of stuff that doesn’t stand for anything, and isn’t really different than what the Chevy and/or Caddy dealer offers. It’s been this way for decades.

If they had a bread and butter division, an excitement division, an upper middle class division, a sports car division, ONE truck division, a techno wizzard division, and so on, then they might have a chance. What they have is 4 Chevrolet car divisions, a division that produces mirror image Chevy trucks, a division which produces absurdly large SUVs, a foreign brand which isn’t quite luxury or quite performance, or quite anything, and a luxury division that is going down market.

If your point is there is no use in replicating efforts with useless brand engineering, we have no disagreement. I’m just saying the market is segmented, and one brand can’t satisfy all segments.

Oh, and I agree with RF – the CTS is a Pontiac.

Sloan’s model did work well…..right up until foreign competition came!

Naturally, Toyota’s brand couldn’t extend to luxury cars (Hence, Lexus), there’s obviously a limit, but the Toyota marque managed very well against Chevrolet, Buick, GMC, Hummer, SAAB, Saturn and Pontiac!

Scion I don’t understand and I think was a mistake for Toyota. Scion was supposed to be the “funky, young” brand. Yet, in Europe, Toyota are selling the Aygo (which exudes funkiness and young person’s appeal) under the Toyota brand. Sales, apparently, are phenominal.

I’ve already expressed my views on Acura in a previous post, so I won’t repeat myself.

Toyota do in 2 brands what GM do in 8.

Also, you mention in one of your posts that “Vauxhall aren’t trying to sell Porsche level sports cars”. You’re right, they aren’t, but that wasn’t my point. My point was how GM used the Vauxhall/Opel “vanilla” brand to create a significant market share in Europe. They didn’t launch 8 different brands. But, with regards to the luxury market, they had SAAB to cover that, but now, they’re introducing Cadillac. Brand swamping commencing!

Finally, I accept your clarification. I enjoy the mutual respect we all have on TTAC and long may it continue…..

Toyota and Honda sell fewer cars, yet generate more profit in absolute and relative terms, so clearly they are on to something.

Actually, believe it or not, Toyota now sells more cars than GM does in the United States. The key word here is “cars”, as opposed to “vehicles”. GM’s still sells almost twice as many “trucks” than Toyota does (the term “trucks” includes vans, pickups, and SUVs).

That’s just the thing – they don’t say something.

I’ve said it before in this thread, that Alfred P Sloan’s model never worked to start with. The moment competition came from abroad, GM faltered and never stopped faltering. And which business model did each of the imports use? Did they flood the market with brands? Or did they expand organically? Hyundai did it, Nissan did it, Honda did it (even educated fleas did it!). It’s a business model which works.

pch has already addressed the fact that Sloan’s system worked quite well for a time.

If growing “organically” is a good business model, it’s difficult to explain why Toyota had to come out with Lexus. It should just have organically expanded into luxury cars under the Toyota name. It’s also difficult to explain Scion, Accura, Infinity….

Wow, I have to both agree and disagree. I agree that most of what motivates a Porsche buyer is perceptual. (The engineering is real enough, but it won’t be used and as LandCrusher points out, that is a good thing) But I think sportscarness is still part of the perception. If I just want to display wealth, I really don’t need a 911. Lot’s of other cars will fill the bill.