Conventional wisdom is that bad management is responsible for the impending death of this once-great American corporation. But that's too simplistic an explanation. While GM's management is ultimately responsible, the real culprit was brand marketing -- not the marketers themselves, some of whom are no doubt bright fellows -- but the entire concept of brand marketing. Let me explain...
The theory of brand marketing is that "brand" encompasses the "entire customer experience." It is therefore possible, through manipulation of imagery and semiotics, to associate brands with certain desirable characteristics. When customers value those characteristics, they buy that brand. Therefore since "brand" is what the customer buys, it make sense to spend money on "brand building" exercises like broad-based advertising, "branded" outlets, etc.
In contrast to this theory, I espouse what I like to call "business reality." And here it is:
- Fundamental truth #1: Good Product=Good Brand.
- Fundamental truth #2: Bad Product=Bad Brand.
Let's see how the "brand marketing" myth played itself out in GM.
GM's products, by and large, sucked compared to similarly-priced products from other manufacturers. Yes, they improved somewhat over the past few years, but the truth is that most American-made vehicles were pretty lousy and GM's were among the worst.
Rather than fixing that fundamental and all-important problem, the focus of GM's attempt to get customers to buy has been all about brand. The company had twelve (count 'em, 12) brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.
And some of those brands have been selling the same lousy product as some of the other brands. That's been the GM formula for thirty years: plenty of branding, with substandard products.
While this scheme kept thousands of brand marketers employed, it continually kept the company focused away from only real business issue, which is how to build a great product and sell it at a reasonable price.
If GM had managed to do that, all their problems would have magically vanished, and the "branding" would have taken care of itself. But somehow that all-important issue never got addressed, even in the midst of marketing budgets in the hundreds of millions of dollars.
Marketers keep telling me that "marketing helps companies understand what people want to buy." Well, if that's so, what's the deal with GM? Why couldn't they make cars that people want to buy?
Marketers also keep telling me that "marketing prepares companies for new markets." Once again, what's the deal with GM? Why couldn't they see that the growth markets would be smaller, energy efficient cars?
The reason is simple: marketing groups are not capable of performing those functions.
In my experience, it is the engineers who understand the next generation of products and technology, because they live and breath that stuff. And, it's the sales team that knows what customers want now and in the future, because the sales team is in the trenches with real live customers.
Those are the groups at GM that were consistently given short shrift in favor of the marketing gurus loved brands so much they spawned twelve of them. The problem with GM's top management isn't that they were horrible managers but that they drank the marketing kool-aid.
So, thanks to brand marketing, a great American company is on the ropes and will probably not survive. It's a tragedy that will repeat itself in other industries and other companies in the months to come.
Seriously, companies need to get their crap together and start making products (NOT BRANDS!) that people want to buy.
UPDATE (4/1): I tell the story of GM's brand marketing in "Why GM Failed, as Told By GM's TV Ads"