Editorial: Restoration Hardware
What to do with all of GM’s brands? That’s one of the big questions that will vex the Presidential Task Force on Automobiles, as it makes its final determination on Chrysler and GM’s fates. Robert Farago’s branding guru Al Ries thinks The General should give Buick, Saab, Saturn, HUMMER and Pontiac their discharge papers. Keep Saturn for entry level cars, Chevy for the mass market, Cadillac for luxury cars and GMC for trucks. Coincidentally, while RF was talking to his marketing maven, I was exchanging emails with Paul Earle, president and founder of River West Brands. Earle specializes in revitalizing distressed, orphaned and ghost consumer brands.
River West’s properties include Coleco, Bonwit Teller, Underalls and Brim, among others. River West and similar companies (e.g., the Himmel Group) identify strong brands whose current owners have allowed them to languish or lie dormant. They buy or license the distressed or orphaned brand, resuscitate it, manage it profitably or sell it, sometimes back to the original owner.
If any company has squandered brand equity it’s General Motors. I asked Earle what he’d do with GM’s brands. Interestingly, he disagrees with Al Reis and thinks that GM shouldn’t dump the majority of its brand portfolio.
Earle said that he’d seen a lot of articles and remarks about discontinuing Buick and selling off Saab. The challenge for GM shouldn’t be having an “attic sale,” but rather how to manage the company’s intellectual property, specifically its brand names and trademarks. He thinks the current crisis is “an innovative development opportunity” and that GM’s brands “could be great platforms for learning labs for new concepts.”
Instead of thinking about which brands to keep, which to sell and which to kill, GM should be thinking about what opportunities there are to repurpose those brands down the road. GM needs to identify which are its core brands and which are non-core brands and then use the non-core brands as “springboards to new ideas.”
Using an existing albeit dormant or moribund brand for a new idea provides consumers with comfort, familiarity and trust. Introduce a new concept with a familiar name. Once the idea is proven in the market, you have data points to work with. The concept can be transitioned to the core brand.
With Earle’s model, GM may have been wiser to make the Chevy Volt a Pontiac or Buick. If successful, the electric/gas hybrid could have helped revive these distressed brands. GM could then have moved the cutting edge technology to its core nameplate (Chevy) or its premium brand (Cadillac).
I asked Earle if he was euphemizing. Were GM’s “distressed” brands actually “damaged”? “Not per se,” he answered. “GM needs to identify what each brand is on it’s own, what each brand is as a member of a family of brands and how those brands can enhance technologies . . . GM still has a treasure trove of IP in terms of brand marks, designs and technology. GM can leverage that IP with partnerships inside and outside the auto industry.”
Earle strongly disagrees with the idea of killing off any of GM’s eight US brands. “Killing off a brand means walking away from an asset.” Earl says the value of the brand may be diminished without the core industry, but any brand with name recognition has intrinsic worth, whether that’s inside or outside its home territory (e.g., Buick in China) or within or without its core products area (HUMMER camping equipment).
Earle notes that introducing a new Chinese or Indian automobile brand to North America would be a far greater/more expensive marketing challenge than restoring the Buick or Pontiac brand, whether that restoration is done by GM or by someone else. Lest we forget, it’s taken Hyundai and Kia 15 to 20 years to establish brand names in the US, at a cost of billions of dollars.
By the same token, even orphan and ghost brands long off the market still have brand equity. Earle says automotive brands may have even longer shelf lives than consumer products. Studebaker and Packard are still recognized by consumers 50 and 60 years after they disappeared from the US market. Though Chrysler does nothing with the IP, since buying American Motors and Jeep, it’s continuously maintained the trademarks on Willys.
Brands are valuable things even if squandered. Killing a brand can create uncertainties about trademark ownership as well. Earle thinks it’s prudent to maintain doing commerce with a brand to avoid losing IP rights.
Many people believe that brands like Saturn, Pontiac, HUMMER and Buick are irreparably tainted. Earle, on the other hand, would relish the opportunity to revive them. It’s something Rick Wagoner, Congress and/or a bankruptcy judge should keep in mind.
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I don't understand why any of the brands have to be killed off or why there has to be separate dealer networks. Give each division a couple unique products and do them REALLY well and then sell them on GM lots. These GM lots would sell ALL GM products. They would service ALL GM products. Yeah it's going to kill off some redundant products and yeah some dealers are going to fail but in the end it would create a much stronger product lineup. There is no reason at all for a full brand lineup. Pontiac doesn't need a G3. Doesn't need to be both GMC AND Chevy trucks unless the Chevy trucks are limited to mid-size and 1500 series trucks and GMC trucks are limited to 2500 and up. Anything else is rebadging again - UNLESS there are truly two unique products. I'd rather see Chevy sell a unibody truck (see Holden for midsize, see Opel for four-cylinder compact) and mid-sized trucks and SUVs (see the Colorado and S-10 series) and leave the GMC trucks be full sized trucks and SUVs. Yeah a few guys will cry in their beers over it all but sell them rebadging kits to make their GMCs look like Chevys or something. Yes this might kill off a few "classic" names like the Chevy Suburban but the product will still be there. We're talking about reorganization tactics so ALL of the GM products don't disappear. Give Caddy a CTS sedan AND wagon. Maybe a larger Caddy as well. Keep them sporty. Make them REALLY good. BMW or Merc style cars - not looks but in performance and features. Keep Saab. Give 'em a sedan, wagon and 'vert. Because the lineup doesn't have a dedicated dealer network, Saab doesn't need a full lineup. Because folks are in a GM dealer to buy a vehicle they can cross shop right there. I came in to buy a mid-range sedan but I REALLY like this Saab 'vert. And they buy upscale. Or they do it next time. Head slapper - I 'coulda had a Saab... Give Buick a sedan, wagon, and SUV and make them really, really soft and floaty. The current Lacrosse and whatever their SUV is would be fine. -OR- Kill Buick, make Caddy the big soft cars and make Saab the sporty upscale products. Keep Saturn. Give 'em Opels just like GM has BUT build them here so there is some profit to be had. Build Cobalts, Saturns, and other small vehicles at SpringHill together. ADVERTISE the damn things. I have YET to see an Astra in person around here and the Saturn commercials I have seen seem to AVOID showing the Astra. One I recently saw showed every Saturn product BUT the Astra. Again MAKE THEM GOOD. Aura sedan, Astra 3 & 5 doors, the Zafira, and maybe the Corsa. Kill the Ion and whatever else they sell now. Save the roadster and sell it as a Pontiac. Pontiac - keep the G8 and G6 coupe and sedan. The roadster. Kill off any others. Possibly sell the Holden Ute as a Pontiac instead of a Chevy. It it is a Pontiac then it gets sporty wheels (no hubcaps), dual exhaust, and so on. No economy Pontiacs. Not against 4-banger Pontiacs but the 4-banger has to be REALLY good - like Quad-4 good (in it's day). Maybe turbo four bangers only. Don't have a problem with the HHR or the Cobalt (except I don't want one). Sell 'em as Chevys. Don't have a problem with the Aveo but I'd kill it off in favor of the Corsa sold as either a Chevy or Saturn. Remember b/c all these GM products would be sold on the same lot, each division does not need a small car. This would give them a 18 products or so and they would have a full lineup of products though not under one division or under some odd dealer lineup split. It obvious to me that alot of what GM has chosen to do over the years was to satisfy the dealer network regardless of how short sighted it looked to the consumer. I hope they go broke b/c I don't see any other way that they can make the tough choices that need to be made. NO I don't want to see the unemployment b/c even if times were good we'd all feel the hurt and right now we'll likely REALLY feel the hurt. Either way, the gov't will simply print up some more money and hand it out. Not a question of political parties to me - I think either side would be doing the same thing. Bush was and Obama is...
There's no real place for "mid-level" brands anymore. They've been superseded by the high trim levels of the mainstream brands. Buick has been more or less replaced by LTZ Chevies, Mercury by SEL Fords. I believe Cerberus is trying to turn Chrysler into a sort of almost-luxury Acura and Vovlo level brand. They've been chopping all of the lower end trims recently.