GM's Saturn brand was an instant winner when the car brand debuted in 1985, seemingly the answer to the Japanese invasion. The company wooed drivers with snazzy styling, good enough performance, and no-haggle but competitive prices.
But despite success with consumers well into the 1990s, Saturn was actually dead as a sustainable strategy out of the starting blocks. And it ultimately made GM less competitive against Toyota and Honda.
What happened? Saturn had two fatal flaws, writes Mark Ritson.
Unprofitable. Although a hit with drivers, Saturn was unprofitable, as are many "fighter brands," because of high start-up and operating costs that proved unsustainable.
Distraction. Building Saturn proved a tremendous distraction at a time when GM needed a full systemic strategy, not just one brand, to fend off Japan.
Read Ritson's full blog post, Why Saturn Was Destined to Fail.
The idea of the fighter brand is worth our discussion. FBs are created to take on low-price competitors; think P&G creating Luvs to protect Pampers. But it's a very risky strategy if you don't have expertise in low-end markets -- making and selling something cheaper is not as easy as it sounds..
Ritson, who writes about fighter brands in the October issue of Harvard Business Review, says companies need to ask themselves five questions before starting a fighter brand.
- Will it cannibalize our premium offering?
- Will it fail to bury the competition?
- Will it lose money?
- Will it miss the mark with customers?
- Will it consume too much management attention?
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