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.