One of the things I love about this site is the consistent welcome we all have to disagree with founding father, Robert Farago. He knows the truth about cars doesn’t come from pronouncements, but from productive exchange. Which is my slightly weasly way of saying: What’s with all this focus on brand dilution? Is it really the cancer of the car industry? Or, is it as misunderstood as Paris Hilton’s state of celebrity?
Robert’s contention-– shared like a bottle of Boone’s Farm with every market manager under the bridge-– is that a company’s brand is precious. Luxury car makers shouldn’t build dump trucks; sports car makers shouldn’t make minivans. That type of thing.
And it’s almost true. As Paris Hilton will tell you, the brand is the thing. She doesn’t sing or act or speak well enough to be famous for anything other than being famous. That’s her schtick and she schticks to it. Her branding-– as a famous, naughty party girl-– is so powerful she needs nothing else.
Cadillac used to be that way. Now it illustrates the danger in brand devolution. If people think you’re one thing-– a fat, luxurious car-– and you turn out to be another-– a thin sports sedan car with lots of extra leather-– you quickly become nothing. Jaguar’s spilling down-market gave us the X-Type: an OK sedan in a sea of OK sedans. Very un-Jaguar. Volkswagen’s Phaeton tried the reverse, backed out the door and left everyone asking ‘where’s the people’s car?’
Porsche teeters at a precarious point in its history. The Cayenne is simply not a sports car; it has no business sharing a bunkhouse with 911s. The more un-sporty things Porsche builds, the more it runs the risk of losing its premier sports car mantle. If that’s the brand. I think the Porsche brand is more slippery than a 962.
Porsche, the brand, is built with superb engineering. In fact, that is what it is. Superb design and execution that happens to result in some really cool cars. It also happens to result in a really cool SUV, probably a cool sedan, soon. If Porsche decided to start making tractors again, I bet they’d be cool too. Because that’s what they do – make cool things, mostly sports cars.
Porsche Design Group (a majority held subsidiary of Porsche AG) comes close to proving the point. They’ve designed, among other things, faucets, hard-drives, forklifts and subway trains. Very unsporting. The forklift should be about as far from a Carrera as you can get, except it’s not. Their forklift is cool and clever, so the whole brand earns a pass.
Honda is in the same personal watercraft. They make line trimmers and the S2000. Seriously, if Weedwacker built a $30,000 sports car could you ever be persuaded to open you checkbook? Moving from tractors to pumps to Formula One cars is quite an accomplishment, and probably couldn’t be done if Honda was known for any one of those things. They are known for competent engineering, regardless of what they engineer.
The design-engineering brand is more valuable than a manufacture’s brand. It keeps a company from being a one-trick pony carmaker. If the market for muscular rear-wheelers fades, the engineering-designer can race off in a different direction. SUVs replace eco-boxes, eco-boxes replace SUVs.
So why doesn’t every company that makes things try to position themselves as engineering-design gurus?
That won’t work for everyone, according to Wendi R W McGowan of Wendistry, branding and marketing consultants. “A brand is a believable connection with the consumer.” It is not as simple as a crusty stamp on the side of a cow. A brand is an emotional attachment between company and customer. Porsche and Honda have found one way of forging that bond. Other marks have found other ways. For example, no one buys a Ferrari because they expect it to be the most reliable car for the money.
Brand dilution, then, is not so much a disease as a vector. McGowan states. “Chevy’s not building on what they have.”
As a rusty example of old Detroit, she singles out Chevrolet. The company has the Corvette and a popular line of trucks, but fails to build on the spirit, excitement and loyalty those products have produced. Once those emotional attachments have been made, a company needs to reinforce them. Let them grow. Detroit has a tendency to push products and marketing schemes down, as opposed to letting ideas develop from grassroots.
As long as a brand maintains its connection with you, it will be healthy. A good brand isn’t selling you a product, it’s taking an invitation into your life. Kind of like this site. It wouldn’t bother me one bit if Farago added The Truth About Dryers. I’d come up with a couple of stories.
Great article.
Very interesting. I’m sold.
Excellent points. My father was so impressed with a 1988 Accord LXi (parents first Japanese car), he bought a Honda riding mower a year later. The car made its way down the family, and finally a 4th owner at around 250,000 miles with a lot of rust but only a few timing belt changes and struts. 13 horsepower, TWO cylinders, water-cooled. 1 acre every 6 days during the season. It survived me banging it off trees in my early teens. He still has it. Just batteries, blades, oil changes, a couple flat tires. Original coolant (20 years old!), plugs. Runs perfect, and I bet it’ll last another 10 years.
They stopped selling lawn tractors in the US I think in the mid 90’s (they were $4000 for what was the equivalent $900 Craftsman), but he’s always been loyal to their outdoor equipment, even though it normally cost a lot more, and sometimes more than Stihl.
Having driven (but never owned, yet) Porsches, I always keep my eye open for a restored/unrestored Porsche diesel tractor. Not because they’re reliable, good tractors (they are), but because I like Porsche.
If I had need and money for a premium SUV, the Cayenne would be on my short list, along with the X5 because I like driving BMW’s, too.
Agreed!
Keith Ferrazzi, CEO of Ferrazzi Greenlight, recently said:
“As CMO at Deloitte and then Starwood, I hated it when other marketers measured themselves by the size of their budgets. When you’re running a business, take your marketing budget and push that money back where it belongs – in operations, into the hands of anyone who can make a difference to the customer. Throwing a lot of money at marketing alone will not get people to emotionally connect with your brand. To be successful, above all, you’ve got to create a generous solution. Keep focusing on making people feel so grateful and thankful for what you’ve given them. It’s not just the widget, it’s the emotion, the intimacy you wrap it in. Then you’ve got a home run.”
Brand-development is product based, above all else, sez he. It’s similar to the “build from grass-roots” referenced above.
However, I can’t say that The Truth About Driers would be very grass-rootish…
Why do people slate the X-Type? What has it done to people?
The X-Type is Jaguar’s entry level car, just like BMW’s horrible 3 series is, Mercedes’ A-Class is and Audi’s A2 (Soon to be A1, too).
I suspect the reason why people don’t like the X-Type is because “it’s taking Jaguar’s brand down-market”, but as I stated before, why does no-one look at the A2, 3 series and A-Class with the same derision? In fact, Porsche are more guilty of this than anyone! What the hell is the Boxster about? The only statement you make when buying a Boxster is “I can’t afford a 911”. The Boxster is just an entry level Porsche, but no-one says that it’s diluting Porsche’s brand.
The X-Type has a great ride quality and great luxury for an entry level car; core values to Jaguar’s brand.
A brand can have several different versions of its product, as long as its core values are adhered to; case in point, Toyota. Reliability and quality are fundamentals in all Toyota cars, from the Aygo to the Tundra. If you start having one brand for sports cars, one for cars, one for SUV’s etc, you end up with the mess at GM.
I’ve said it before and I’ll say it again, the X-Type handles brilliantly, has a great fit and finish, comes with more toys than most German brands and is very reliable. When you take everything into account, not just performance, but everything, the X-type is a sensational car….!
Now, over to the Porsche Cayenne. The Porsche Cayenne is the automotive equivalent of Joseph “The Elephant Man” Merrick. Underneath is a gorgeous soul, a passion, a beauty and a brilliant technical ability…..but on the surface, bloody hell, is it ugly!!!!!!!!!
Incidentally, I think expanding the “The truth about…” as a brand is worth exploring. You could have it as a franchise where someone with a bee in their bonnet about the government, say, could set up a website called the “The truth about government” in a Michael Moore style. As long as the core values of Mr Farago’s “The Truth About” brand is held, it should work! Much like Richard Branson does with his “Virgin” brand.
Sorry, but I’m not sold. While brands CAN extend in all sorts of ways– I love my Porsche design kitchen knife and a handsome IWC Porsche watch– the sheer volume of marketing messages assaulting the average America/European/Canadian/etc. consumer severely limits their ability to think laterally. The tighter the brand, the more powerful it is. For example, Febreeze has just hooked-up with Swiffer. It’s a logical connection, but it weakens both brands. (Ask Proctor & Gamble how it should be done.) But don’t take my word for it. Play word association with your favorite non-pistonhead. Ferrari. Sports cars. Honda. Quality engineering? Lawn mowers? Even if it IS true, is it a good thing? As a carmaker, wouldn’t you want your name instantly associated with… cars? We had a chance to buy The Truth About Trucks. (Ford nabbed it.) It's a logical brand extension– that would have detracted from my efforts here at TTAC. And yes, "The Truth About" would make an excellent series of sites. But, as GM has yet to learn, focusing resources matters. And I hate to say this Katie, but I drove a few X-Types and they were all horrible. The [petrol] engine whined. The diesel wasn't much better. There were sharp edges everywhere. And it looked EXACTLY like a knock-off XJ (which also looked like a knock-off XJ, only bigger). The concept of an "entry level" Jag was fine. The execution was excreable. If they'd built a relatively inexpensive F-Type, everything would have been different.
Mr Farago,
Then I can only conclude that Jaguar are selling different versions in the United States to the one sold in the UK. Because my X-Type is brilliant! BMW’s, Mercedes and Audis all look boring in comparision.
Maybe there was some overlap between Volvo and Jaguar during their PAG days and Jaguar had to “dumb down” their product so as not to tread on Volvo’s toes (Which Ford valued more than Jaguar)?
Now that Tata own Jaguar, this will be reversed and Jaguar can sell the better cars in the United States. After all, if you were an Indian company trying to get a foothold in the biggest market in the world, wouldn’t you leverage an established brand you own……?
Porsche error here is not that they made “a truck”. I’m sure they knew that most porsche households had “a truck” and they thought they could provide it.
No, Porsche should have made a competitor for the BMW 3 series. The size of that car is perfect for worldwide sales, large for poor countries, and a touch small here in the oversized USA. Porsche could have “out BMW’ed BMW”, while M-B flails around with the C class and Audi saves the Juice for the S and RS models. Price it between the 335i and the M class and you would have had a winner. It would have broken the “four door porsche” barrier without making a rarity like the Maserati Quattroporte.
A practical daily driver would have made more money than a “truck”. Enthusiasts would have detoured from the Bavarian Car Store. Porsche would be able to expand the parts basis and realize lower costs.
A 3 sized four door car would have been a much better call and much less vulnerable to high gas prices.
Robert,
Actually, I think continued marketing assaults consumers is exactly why branding is both valuable and scalable. If I see a Chou lawnmower in the store, I’ve got to do more work. I’ve got to learn if it’s any good. If I see a Honda, I’m fairly certain it’s a solid machine.
I think Honda is in business to make money, not cars. Cars happen to result in money at the moment. It’s not a very romantic or car-centric way of looking at the company. It’s also why I don’t think it bothers them one bit to have “car” chosen first in a word association game.
Katie,
I don’t hate the X. It’s very pretty. Driving it was a bit of a disappointment, and that is not a feeling that makes one want to pull out the check book.
The Boxster, on the other hand, makes me wonder why people shell out for the 911. On American roads – not the track – it’s superior and half the price.
KatiePuckrik–
Sorry, but you can’t tell me the X-Type “handles brilliantly” and then tell me that there’s no point to the Boxster.
The Boxster is all about handling. Mid-engine, RWD, balance. Don’t confuse handling and grip.
For example, Febreeze has just hooked-up with Swiffer. It’s a logical connection, but it weakens both brands. (Ask Proctor & Gamble how it should be done.)
How do you figure? You’ve said some out there stuff before, but this just takes the biscuit.
Katie:
It’s just that some people don’t realize that you can change who you are fundamentally, and that it could be a good thing. A bad brand isn’t better than no brand at all. I still don’t get how anyone could slate the Cadillac CTS for being an actual modern car and not a V-8 powered parade float other than the same, tired “it’s not what I think it should be” argument. Focus is a good thing. Too much focus is an awful thing, because it makes you a one-trick pony. Just ask Volvo.
NICKNICK,
You missed the point of my post. I never said the Boxster was a bad or pointless car, it just has no place in Porsche’s brand image of luxurious sports cars if I adhere to the principles of why people say the X-Type is hurting Jaguar’s brand (i.e devaluing the brand).
However, if we go with the principles of what I think a brand should be (i.e a core set of values, like the Toyota example I gave earlier) then the Boxster DOES have a place in Porsche’s line up (like you said, RWD, mid engined and good handling) as an entry level car, just like the X-Type does in Jaguar’s line up (the car holds to Jaguar’s values of luxury and an excellent ride quality).
If we have a brand for SUV’s, another for sports cars, another car etc, we end up with GM’s mess. Whereas, having a core set of values and building cars to those standards can expand, even add value to a brand. Like Carshark says, focus is great, but too much focus restricts you and your brand.
Volvo is an excellent example. For years, they were the kings of safety. Now (no coincidence under Ford’s regime) they lost their crown to the new boys of Renault. Now Renault are the Kings of safety and Volvo are a distant second. Unless Volvo reclaim that title back, what does their brand stand for? They concentrated so much on safety, the Volvo brand didn’t stand for anything else. Now, had they expanded the brand into having a few more values (i.e quirky styling, proper luxury, etc), then they would still have some brand equity left, on which to sell cars whilst they tried to reclaim their “safety kings” title back.
speedlaw :
Amen! A Porsche 3 series fighter would be awesome. I could imagine a lighter vehicle with that boxer engine nestled low and very near to the CG with great handling and elegant styling. I would buy that in an instant.
As for the Cayenne, well reference my nomination of it for ugliest car of all time. It is a detraction from the brand, IMHO.
I think you can stay faithful to your brand without being pigeonholed. I see it like the show Iron Chef. The food they make ranges wildly in style, texture, look, and even flavor while always keeping one ingredient front and center.
The X-Type is Jaguar’s entry level car, just like BMW’s horrible 3 series is, Mercedes’ A-Class is and Audi’s A2 (Soon to be A1, too).
Horrible 3-series? I know some people think it’s ugly (I don’t, I like BMW’s current look), but I have never heard it described as “horrible”. I think the 3 series line is wonderful. They are comfortable, everyday cars that happen to handle very well and they have good, smooth power.
You could have it as a franchise where someone with a bee in their bonnet about the government, say, could set up a website called the “The truth about government” in a Michael Moore style.
When you say “Michael Moore style”, do you mean that in the confrontational, no holds barred way or in the “I’ll use information that isn’t true as long as it helps me sell my ‘documentaries\'” way.
Michael,
Brilliant article. Brands can and SHOULD grow. The marketplace it too competitive not to. If you’re not growing you’re losing ground. But doing so is dicey. I think there are a couple of rules for a company to do so successfully.
First, the company and brand must be healthy. Porsche could make the Cayenne because they were healthy and their brand securely established. Chevy should not because their corporate offices are in crisis and their public image blemished. Damaged companies and/or brands should contract to their core and execute to that until their regain strength.
Second, the execution must be deliberate, strategic and flawless. If a company is going to take their customers someplace new and strive to draw new associations with their brand, nothing less than perfection will do. If the Cayenne was a sub-par SUV, Porsche would have been eviscerated by the court of public opinion.
TexasAg03,
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.
BMW’s ride quality is OK, but that’s the problem, it’s OK. BMW is using its brand equity to rip customers off one only has to look at the 1 series for evidence of that…..
As for Michael Moore (and I really don’t want the rest of this thread to be taken up by this, for the record!), he used to have a competition (I don’t know whether it’s still running or not) with a prize of $10K for anyone who can prove that any fact he’s used in any of his films is untrue. So far, no-one has claimed this prize……
Honda is about quality and efficiency and good driving dynamics. And if I wanted a lawn tractor, I’d buy one from them. But Porsche is not about trucks. And the Cayenne is an aesthetic abomination. I drove one recently, and it was an abomination in that department, too. The FX35 I drove was FAR superior. I agree with the suggestion that if they wanted to expand they could have competed against the 3 series. I love Porsches, and you can see my menorah made of porsche valves on my website, motorlegends.com. But they lost me with the spice truck.
I think it would be cool if Ford started building airplanes.
Didn’t this Porsche debate already take place 30-some odd years ago with the 928? Wasn’t the 928 a total “sell-out” to the American public? A very un-germanlike V8, front-engine luxury-touring abboration from Porsche?
Same story, different year.
Just like I’m glad no one listened to Rolling Stone when they declared the Led trash, I’m glad people like Ferruccio Lamborghini didn’t have to listen to arguments about “sticking with your brand image.”
BMW’s have absolutely nasty interiors and you get next door to naff all for your money.
Once again, your opinion. I happen to like the current (and past) 3 series, inside and out.
BMW’s ride quality is OK, but that’s the problem, it’s OK. BMW is using its brand equity to rip customers off one only has to look at the 1 series for evidence of that…..
I think the ride quality is fine. I prefer more of a handling bias.
As for Michael Moore (and I really don’t want the rest of this thread to be taken up by this, for the record!), he used to have a competition (I don’t know whether it’s still running or not) with a prize of $10K for anyone who can prove that any fact he’s used in any of his films is untrue. So far, no-one has claimed this prize……
That’s the first I’ve ever heard of this contest. Where can I find information about this? I did a Google search and found some forum and blog comments about this “contest”, but I can’t find anything official. In fact, in many of the places I found the reference, people asked for a link but no one could provide it.
It appears that there is no such “contest”.
Correct me if I am wrong but isn’t the Cayenne an excellent off-road vehicle, that also handles very well on road? The last I have seen and heard the Cayenne (when properly equiped) is just as capable in the rough as a RR, landCruiser, G-Wagon, Forerunner, Hummer H3, etc.
In all farness it can be stated that Porsche on its first attempt built an excellent off-road, AWD vehicle that also happens to be pretty fast, handle very well on the road, is fairly roomy yet not too big, reasonable luxurious, and very well built. It also looks like a Porsche.
Call it ugly if you will but it is a off-road vehicle, ugly tends to look good in a strange way on these types of vehicles.
Actually the Cayenne is not a bad fit for the Porsche brand. It is like Addidas making an excellent pair of hiking boots. Hiking boots are still solidly in the world of “sport”. BTW Addidas does make some excellent combat boots that are considered to be some of the best in the world. What would not fit would be a Prosche “Fleetwood Brougham” or a pair of Addidas tuxedo loafers.
IMO the Cayenne is an excellent compliment to a 911 or Boxster parking in the garage. Unlike say a BMW 5 series you do not look stupid with a trailer hanging off the back of your Cayenne. You Cayenne still looks good when it is dirty. Drive it on to the sand at the beach, its OK. Plow through 7″ of snow with alomp, go right ahead.
All of this speaks of a sporting nature: Porsche.
To me, Honda’s big branding mistake is the new porker of an Accord.
I can understand Porsche attempting to branch out, but wonder whether building an SUV was true to the origin of Porsche, and to the perspicacity with which they’ve stuck with their original design ethos.
The Cayenne is a mistake (as is the Touareg cross-platform synergies of that); and the Panamera is a mistake. But sometimes mistakes have to be made, apparently.
Whether Porsche manages to turn this into fortunate mistakes is another matter – they’re looking into the future and probably realize that though suing Livingstone in London may give them a stay, they have to change their cars in order to meet increasingly prohibitive operating conditions for supercars.
I don’t think Mullaly was sad to saddle Tata with the Jag and LR congestion charge hogs, for instance – as he turns Ford to meeting new requirements for cars.
Here’s a mysogynist angle on Porsche, as the brand was once “explained” to me: “Porsches are supposed to be so difficult to drive that you’ll rarely see a woman behind the wheel.”
This point was raised when the Cayenne concept was touted – and judging by some of the reactions to the Cayenne, there were quite a few mysogynist Porsche owners and enthusiasts around.
The fact that Porsche can co-engineer a Touaeyenne doesn’t mean it’s good for the brand to have done so — but then at least they brought their Porsche dedication and acumen to the task, and made certain it belongs under the brand umbrella. (Consider what GM has done to Saab as a guide to the don’ts of that.)
The editorial raises an interesting issue. For Porsche, it’s one of ensuring that their vehicles meet regulatory requirements in the future, and of reaching out to potential new customer groups. I think one measure of the limits to that, is the fact that they’re spending their extra capital on VW, rather than branching something unique into a casserole of autos.
I agree with the suggestion that if they wanted to expand they could have competed against the 3 series.
What exactly would a 3 series porsche be? How could it or would it be superior to the BMW product? How much would they sell it for? And who would by it?
How long before the those guys from Asia take the concept and turn it into something that tiny little Porsche will be unable to compete with?
Witness there is no entry level Porsche in the 30grand range because there is nothing Porsche can offer in this price range that cant be beat at a lower price by MANY other automakers. Quite simply Porsche CAN NOT built enough vehicles to compete in the mainstream.
Mr. Farago is 100% correct that a brand should be focused, and that it should be possible to summarize a brand value in just a few words. If it takes more than ten words to describe your brand, you haven’t got one.
However, I think that there are some who misconstrue this concept by confusing “brand” with “niche.” A brand does not necessarily have to be so narrow that it limits itself to a few products or that it can’t have varying products within the same brand.
For example, Toyota has a great brand, at least in the United States, where customers associate it with reliability and durability. This brand allows them to sell everything from the lowly Yaris to the costly Land Cruiser, and a whole lot in between. Toyota is in a position to introduce vehicles with a variety of price points and configurations.
Not everyone has such a flexible brand. GM’s US operations have had the most problems with this because they have too many brands to the point that they blur together. Their branding ladder worked when each badge had a couple of cars each, but expanding each division’s lineup to create abundant overlap just confused the customers and drove them away.
The Cayenne was a risk and in hindsight, I think that it paid off. Personally, I thought that it was a horrible idea before the fact, but sales suggest that I was wrong. The Cayenne has brought in new customers while maintaining the loyalty of Porsche’s other buyers and the integrity of the brand, so it provides benefit just so long as it makes money. (On the other hand, if it is going to be a loser in the brave new world of the New Economy, they can cut it in a heartbeat and not hurt themselves at all.)
Porsche’s identity is centered firmly around the 911. The Cayenne doesn’t change this one whit. But if there comes a day when they can’t evolve a modern 911 that can appeal to the market without looking archaic or stale beyond repair, then they are dead meat. Its design is so distinctive and specific that it’s one of those things that is either going to work or fail. It works now and it has for a long time, but I wonder whether it can work into perpetuity.
Stein X Leikanger:
How can you declare the Panamera a mistake when no one’s driven it yet? Because it’s designed to be a sleek, powerful sedan that handles well instead of a sleek, powerful coupe or convertible that handles well? This is exactly what I mean by “too much focus”. Porsche has made themselves synonymous with handling and performance, and I don’t see how a sedan hurts that image.
I see what you mean by the “design engineering” point, and even agree that it is generally on target. A company that has a well-deserved reputation for solid engineering has significant leeway on what it engineers, as long as the high standard of engineering is maintained.
However, from a _marketing_ perspective, especially in the sub-prime, mortgage-brokering, craptastic-fantastic market in America, most (not all, present company excluded) Porsche’s are sold to blighters who don’t give a rip about engineering. They are buying it because they perceive some kind of penis-extending or midlife-delaying quality. The engineering and race-bred reputation is a fig-leaf for these guys – the real draw is that other people know that (a) it costs a lot and (b) it is a “sports car”.
Monkeying around with a soccer-mom car – greatly engineered though it may be – scores a direct hit on this demographic. Other peddlers of automotive chest-wigs, such as the new, improved Maserati are waiting in the shadows to welcome them.
@CarShark
You did read my next sentence? Stating mistakes sometimes have to be made?
This is from a Porsche brochure – and also a very memorable commercial with Ferdinand himself:
Because of this no committee has ever created, or will ever create, a Porsche. Committees are, by nature, timid. They lead to creations which have no soul. No clear identity. They respond to momentary pressures or marketing trends. No Porsche has ever been created or altered based on fleeting whims
My post dealt with the fact that Porsche has to adapt – they should have built the Tesla, instead they are going for sedans and SUVs.
You did read my next sentence? Stating mistakes sometimes have to be made?
You did read my first sentence, where I asked you why you made such a bold declaration with absolutely no evidence whatsoever?
The rest of what you said reads familiar. It’s not what you want, so it must be wrong. There’s nothing wrong with making high-performance sedans and SUVs, and using the Tesla as an example was a poor choice. And who’s to say that if the Panamera succeeds that the money won’t lead to a Porsche Tesla with better, more liveable battery technology or a better gearbox? People tend to forget that all that Cayenne money from “soccer moms” had to have added something to the next 911’s R&D budget.
I just gotta say, I agree with the editorial whole-heartedly. And reading through all the comments just makes me agree more. The Cayenne, IMO, is and has been a success because it’s the Porsche take on an SUV. As long as Porsche continues to release the Porsche take on , then they’re adhering to their brand. And the Cayenne is inarguably a Porsche. If you looked at it and drove it and were like, “Is this the new Land Rover or something?” then Porsche would have failed.
Automakers with strong brands — Toyota (the reliable take on X), Honda (the efficiently engineered take on X), Hummer/Jeep (the unbreakable take on X) — can produce whatever they like as long as it adheres to the brand’s core competencies. Hell, Jeep sells baby strollers… brand weakening, or the unbreakable, go anywhere take on baby strollers? You decide, but I see tons of them out there. The struggling brands have no identity, nothing to fill in the blank in (the _____ take on X). RF wants GM to focus its brands, but I don’t think they need to do it in the way he thinks. Chevrolet (the affordable take on X), Pontiac (the performance take on X), Buick (the comfortable take on X) just screams of badge engineering, and we haven’t even started talking about cars yet. But that’s the logical outcome of that strategy, where Chevy builds the cheap version of the Epsilon platform, Pontiac builds the fast version of the Epsilon platform, etc.
Here a question that needs to be answered before we go to far with this branding matter:
Exactly how much enjoyment are you getting out of your sports car today?
Today ALL the roads around the NYC Metro area are considerable more crwoded than they were a mere 10 to 15 years ago. Back in the late 1980s and early 1990s I could actually find nice quite places to really drive. TOday that is not the case anymore. Areas that used to be lightly populated with light traffic are now all developed. I addition to the crowding on our roads the quality of them has gone down quite a bit. Today not only NYC, but parts of Northern NJ, Westchester, and Nassau are all pothole city.
My understanding is that the rest of the world is not any better. Europe, Japan, Asia are all crowded with no room for fun on the roads.
With that said just how far can Porsche push its sportcar hertiage into the future. In reality automotive technology and the worlds population are on a collison course. While some automakers are making stupid 600hp cars. the others are producing MILLIONS of little commute buggies to fill up every remianing gap in traffic.
In all honesty a 911 Turbo and a Cayenne Turbo look just as silly sitting in a traffic jam. The difference is the Cayenne is a bit more comfortable.
Any automaker with a bit of sense needs to take the changing nature of our driving habits into consideration when planning for the future. In today’s world Porsche’s 911s and Boxsters really cant get any better in a USEFUL sense. Porsche can bump up the HP to over 500hp but so fucking what! You still cant use it anywhere but on a racetrack. At the rate we are going with automotive design and engineering we will soon see cars that will routinely pull over 1.0gs, blast to 60 in under 3 seconds, and top out at over 200mph. Until someone builds us a “SuperHighway” (which will never happen) we will never be able to use this performance to good effect.
Now with that said were does Porsche go in the future, if not branching out into other products. I guess Motorcycles could be a good plan to maintain the performance hertiage.
@CarShark
I have this watch:
http://www.yorktime.com/watch/sku/289/images/6263.jpg
They’re also making this watch:
http://graph.bidz.com/graphics/85/77/20.jpg
I wish they didn’t.
:-)
Let’s not forget that Honda made only motorcycles for decades before that horrendous “brand extension/dillution” into cars.
Wiedekin at Porsche made the Cayenne for one reason only: VW needed an SUV, and it would be cheap (and highly ptofitable) to make a Porsche version. It was too tempting, and has made a ton of money.
If the Cayenne (which I hate) is so bad for Porsche (I’m looking at Farago), why is Porsche making record profits, whith which it is swallowing VW? Wiedekin is fucking brilliant, selling Porsches with outragous mark-ups for options ($1500 for color-keyed vent outlets, or something like that) and tarted-up Tuaregs.
Last time I checked, they’re in the business of making money, and they certainly have succeeded. If Wiedekin read this article (as well as some of the branding-neurosis comments), he’d be chuckling all the way to the bank.
Porsche’s “brand” is luxury goods, some of which happen to work well as sports cars in the right hands, which isn’t all that often.
I said earlier that Michael Martineck sold me over to his side. I’ve almost been bought back.
Anyways, a 3 series sized Porsche? Are you out of your minds?! Porsche is all about being upscale. Now they’ve brought in the Cayman and Boxster which brought them downmarket a bit, but not too much. A 3-series Porsche would bring them way too far down. Sure, they probably shouldn’t have made the Cayenne but at least it’s upscale and therefore somewhat conforms to their image. Same with the Panamera thingy. Porsche should NOT move further downmarket.
And how can a 3-series sized vehicle make more money than the Cayenne? The higher the price of a car, generally, the higher the profit margin. Porsche would have to sell a lot of small sedans, which would be difficult because that market is already hugely saturated with BMWs, Audis, and so on, in order to make as much money as they do on the Cayenne.
FYI:
Porsche used to be a sportcar company. This whole upscale luxury car image thing is rather new to them and only came about after the mid 1990s.
Please remember such cars as the 912, 914, 924, 924 Turbo, 944, 944s, 944 Turbo (s) and 968 (I’m stretching it with thias one). These used to be the entry level Porsches and they were reasonable affordable in their day. They were priced in the BMW 3 series range.
Porsche used to make a shit load of money in this segment until the dollar began to fall. In all honesty Porsche got beat out of this market in the 1990s by some excellent Japanese cars that were offer 911 performance at 944 prices.
Great editorial, there’s valid points on both sides of the debate.
My observation is that as long as a design-engineering firm is profitable or financially-independent, they’ll branch out, expand their design portfolio, acquire manufacturing might, and the like.
Porsche is selling themselves as design brand. They can afford to perilize their sports-car image because they’re flush with cash, and besides, they must be profiting from harddrives, kitchen knives, wristwatches, and the like.
Once these companies become so diversified they’re bloated, profits eventually decrease and it’s relatively painless to spin-off non-core operations (at least at first). This often attracts new investors while maintaining cashflow for a back-to-basics regime (one would hope).
Where Honda is today is where GM was in its heyday. GM made Frigidaire appliances, procured EMD locomotives, absorbed Fisher Auto Body, owned Allison and Detroit Diesel, etc. GM continues to divest profitable operations to keep its core business afloat (GMAC and their Medium-Duty trucks more recently), backing themselves into a corner with each big sale.
Will Honda and and Porsche suffer the same fate? Not if brand matters. A notable difference here is that Honda and Porsche qualify as brands, their marque is stamped on everything they make (save for Acura). GM isn’t a brand -Chevy, Buick, Pontiac and Saab are brands -GM is just a front for investors. So when people have a good experience with a Honda lawnmower or a Porsche wristwatch, if the brand relationship is strong then that good reputation extends onto their automotive products, at least in theory. I’m sure customers are satisfied with their Allison Transmissions or EMD Locomotives, but that didn’t necessarily translate into loyalty towards GM as a whole.
While Michael makes some valid points, I do think the V6 Cayenne was and is a big mistake. Why would anyone want a slow Porsche? Why a V6? Price? I don’t think a cheap Porsche is good for the Porsche’s brand either. I am also sure that if Porsche wanted to make a pickup truck that it would be impeccably designed and superbly engineered but I don’t think that is a good idea either.
Sorry Katie I also have to agree with RF on the X-Type. It looks like a shrunk-in-the-wash Taiwanese copy of an XJ and drives like a portly but well appointed last generation Ford Focus. The entry level 2.1 V6 FWD model they sold in some markets was enough to make me cry.
Ferrari came very close to building this four-door sedan:
http://ferrari.vintage.free.fr/Images/Cars/Ferrari_Pinin.jpg
Why would anyone want a slow Porsche? Why a V6? Price? I don’t think a cheap Porsche is good for the Porsche’s brand either.
If you actually purchased a Cayenne to use as intended a V6 equiped with a manual transmission would fit the bill just fine. For bad road, bad weather, and off-road travel a big powerful v8 is not important and the extra fuel consumption is not very helpful. Since the v6 Cayenne is lighter it will perform a bit better in the rough. BTW it will still handle as well (or better) than a v8 on the street. 280hp and a 0 to 60 in 8 seconds is not bad or slow for a 5000lb vehicle.
Would a Porsche Pickup also work? Yes! Would it still be a real porsche? Yes! Do anyone remember the 959 porsche entered (and won IIRC) into the Paris- Darkar rally serveral years back?
Trust me if Porsche made a “ridgeline” type vehicle I’m am sure would be very successful in many market thoughout the world. There is so much more to motorsport than just race/sports car on a track.
The Truth About Dryers? I know you’re just being hypothetical, but I’m already rolling my eyes. My interest in this site would begin its decline the very second I heard of its existence.
Diverse branding works best at the extremes. Porsche and Honda get their reputation for solid engineering predominantly in upscale markets. So does Swiss Army. On the contrary, something like the fill-in-the-blank for Dummies book series is successful because it appeals to the lowest common denominator of intelligence. Same with Walmart’s low pricing strategy on everything from clothes to electronics.
TTAC would not succeed in other areas like dryers or computers unless it targeted the educated, critical consumer. It would not work as a The Truth About ____ for Dummies. It would have to be something like the Consumer Reports online without the subscription.
Also, people aren’t passionate enough about dryers, or printers, or pants to keep partaking in a dialogue after the purchase. People do that with cars.
The homepage would have to be The Truth About… (www.tta.com) and then be a portal to all other topics, of which cars, computers, and household appliances would have to be the main boldfaces. Kind of like http://www.yelp.com.
re: “What the hell is the Boxster about? The only statement you make when buying a Boxster is ‘I can’t afford a 911.’″
KatiePuckrik: April 1st, 2008 at 7:54 am
spoken like one who has never bought a boxster – and most likely never will – but that erroneous sentiment has been so frequently expressed and so successfully refuted, ad nauseam, that i won’t even attempt to do so again, here.
What, Porsche makes sports cars ? I only ever see Cayennes ferrying middle-manager execs to lunch around here. I’m not spending $100k on a sports car from a company that caters to that sort of people, everyone will think I’m a stiff in a suit.
I used to lust after Jaguars; I said if I ever made my fortune there’d be an XJ for the Mrs. and an XK for the mistress. But now with every yahoo driving an x-type and realtors in s-types, I’ll take my fantasy web surfing to http://www.maserati.com.
Here is the thing about SUV’s and sports cars. The target audiences have insanely large overlap. There are certainly lots of people who would never cross from one to the other and back, but there are a LOT of us that want anything but a boring car. Ask car salesmen and insurance guys about this, I think they will agree.
So, a Porsche SUV that is high performance, fast on and off road, and ready to race in either place isn’t a stretch IMO. Had they made an SUV that was more of a suburban or Range Rover then there would be no room to gripe. OTOH, the Cayenne seems to be a great soft road sports car.
I was just thinking the same thing about Hondas. Honda makes anything with an engine. Could it be that our perception of the brand is not the same as the company’s (reference the IS-F discussion). In the case of Lexus we assume that they intended the brand to be boring reliable, luxurious transportation, with a side order of positive dealer experience. Boring is a quality we associate with the brand, but not necessarily a brand value.
By that same token, Honda makes well engineered ________. We associate them with cars. This emotional connection and gut recognition are the results of a focused brand. Any brand extension should not shock or distract from the brand values. I agree with the prior poster that a brand must be healthy to attempt an extension. However, the extension should highlight the brand values and stick to them. Whether those should be the defined values or the perceived values is another discussion.
PS- I also like Dr. Strangelove.
Wow. Where to begin.
I’m with RF and pch101 on this. Brands need to be tighty focused.
As pch points out, this doesn’t mean – necessarily- that a brand can’t extend to many products. Honda for example stands for quality and durability (e.g the same thing Toyota stands for). Honda makes excellent small engines for power equipment, they make excellent motorcycles, excellent outboard motors, excellent cars, and when they get their HondaJet plant up and running (if they havn’t already) I have no doubt they’ll make excellent business jets.
But Honda isn’t a luxury brand. It can’t extend itself into one. It’s Accura brand has done poorly because no one really sees it as a separate brand, they see it as an overpriced Honda. Argue with me all you like about platforms and engineering differences, but I’m telling you that the average consumer thinks of Accura as an overpriced Honda. Accura offers durable, reliable engineering, at a higher price. Not suprisingly, people get their needs met by the cheaper Honda branded cars and avoid Accura.
Toyota has been more successful with their Lexus brand. Part of the appeal is that buyers know they’ll get a reliable Toyota engineered car, but somehow they’ve been able to differentiate the product.
Toyota could also get into lawnmowers and snowblowers, etc. And no sensible person would have any qualms about flying on a ToyotaJet business jet, if they chose to make one.
But not all automakers have a brand that can be extended so far as Toyota and Honda can. For one thing, luxury makers can’t go down market w/o destroying the brand. Part of luxury is exclusivity, and you don’t get exclusivity at $30K. Cadillac and Lexus are going to find that out.
Porsche’s brand, at least in the US, is seriously fast, seriously competent sports cars. Germans may be well aware that Porsche made tractors, but the average Yank 911 buyer doesn’t really want the Ag tradition mixed in with his sports car.
The Cayenne is a horrible branding mistake because it’s not a seriously fast, seriously competent sports car. It doesn’t really matter if it’s making oodles of money – branding mistakes sometimes do make money in the short run, even while sowing the seeds of brand dillution.
I disagree with the notion that Cayenne is Porsche’s “take” on the SUV. I don’t want to see Porsche’s take on SUVs, or dump trucks, or anything else. Maybe in the European market they could get away with it, but those “takes” aren’t consistant with the brand in the US.
By the same token, I’m not really interested in Cadillac’s “take” on an econobox (Cimmaron) or pickup trucks, or SUVs. Go ahead and tell me how much money they are making on the Escalade – I’m still unconvinced that it’s a good brand move for Caddy.
Likewise I’m not anxious to see Tata’s interpretation of a classic English touring car. So they’d better keep the Tata name far far away from their newly aquired milstone.
Katie,
A brand can have several different versions of its product, as long as its core values are adhered to; case in point, Toyota. Reliability and quality are fundamentals in all Toyota cars, from the Aygo to the Tundra. If you start having one brand for sports cars, one for cars, one for SUV’s etc, you end up with the mess at GM.
I think you fundamentally misunderstand the branding problem at GM. It’s not that they have a brand for sports cars, a brand for pickups, a brand for econoboxes, etc., but precisely the opposite. All of their lines have almost everything available. At least 3 division sell pickups. At least 3 sell sports cars. I’m not sure but I think all divisions have a CUV/SUV. Their problem is that they can’t make any one division stand for any one type of vehicle or any one market niche. The mess at GM should convince any reasonable person that brand extension is dangerous. All their divisions sell things in several market niches. IOW, none of their divisions stands for anything.
Oh, and while “The Truth About” makes a nice title for any website, it’s not a good idea for RF to extend his brand to say The Truth About Motor Scooters, or The Truth About Genetically Engineered Crops”.
Based upon what has worked and hasn’t worked thus far, I think that you can make these generalizations about car branding, at least in the US:
-Exotics (top, top end cars ala Ferrari and Aston Martin) are in their own class, completely separate and apart from everyone else. No mixing allowed, period.
-It is possible to use a standard car brand (i.e. Toyota, Ford) to sell a variety of trucks at all price levels, as well as low- to medium-tiered cars. But near-luxury and luxury cars require their own separate branding if they wish to fetch a price premium.
-Luxury car brands cannot sell pickups without harming their brands, BUT it is possible to sell SUV’s and some specialty off-road vehicles within the confines of the luxury brand without harming the brand. However, the brand emphasis and styling cues need to remain founded on the cars in order for the branding to remain effective, and the SUV’s probably won’t help the branding. So it can be done, but the impact on branding will be negative or neutral, not positive.
-Luxury brands that try to move downmarket are certain to kill their branding. Mainstream brands that attempt to move upward into the luxury category probably won’t harm their branding, but the luxury products are likely to fail.
@Dynamic88
I think you fundamentally misunderstand the branding problem at GM. It’s not that they have a brand for sports cars, a brand for pickups, a brand for econoboxes, etc., but precisely the opposite. All of their lines have almost everything available.
Yup. They were so fixed on this idea that they couldn’t even leave Saturn alone – had to create a range of models for that brand, as well.
It’s a Piñata we’ve flogged a lot here, but their obsession with cross-platform synergies had them thinking they had to interbreed all their platforms with all their brands. Combine that with their desire to create a masterbrand called GM and phoooyt, out goes the magic.
Look at Alfa – GM got out of the building, and the brand is picking itself up off the floor and starting to look good again. How? By focusing.
Honda, and Hyundai are NOT brand names these major industrial corporations that also happen to manufacture automobiles!
When a company build up a reputation for EXCELLENCE people generally are happy to purchase whatever they happen to produce.
With many Japanese companies you wil find this. Just think of how many places and on how many things you will see the Mitsubishi or Toshiba names.
Hyundai also is a major shipbuilder, I doubt this hurts their car “brand” in anyway.
I think we Americans have a much different perspective on branding and marketing than the rest of teh world. That is why companies see the need to rename stuff before they sell it here.
We are a shallow lot you know.
This is why the USA get things like an Acura NSX instead of a Honda NSX when it actually is the Honda name that embodies the excellence of that company and its engineering. Only for Americans did Honda feel the need to hide their real name.
Nevermind that Honda had already won many F1 races and constructor titles.
How a person veiws branding speak a great deal about their exposure to the world. If you work in serious technical and engineering enviornments you will see many company names in odd places and on products you would have never expected.
Dynamic88,
The way I see GM’s branding is like this:
GM have far too many brands. Having one for this and one for that doesn’t work (in the long run) and devalues your portfolio of brands. I’ve always contested that Alfred P Sloan’s model never worked to start with. Now why do I say this?
Look at Europe, GM (up until recently) only had 2 brands in Europe Vauxhall/Opel and SAAB. Vauxhall/Opel had, and still has got, a large market share despite the abundance of competition available (Peugeot, Citroen, Renault, FIAT, SEAT, VW, Toyota, Nissan, Honda, Mitsubishi, to name but a few). Because GM concentrated on using one brand and one brand only, it expanded organically. The end result is a very valuable brand. At least, in Europe. But this is soon to be cocked up by introducing more brands (i.e Chevrolet, Cadillac and Hummer)
Now let’s look at North America, prior to the 60’s/70’s, GM were the market share leaders due to many marques on sale. Because there was very little competition, GM stayed on top. But slowly, but surely, the imports whittled away at GM’s market share and have done for the past 30 years. Because the imports grew organically, their brands (say Toyota) became more valuable and had more equity. The moment competition came to North America, GM faltered and never stopped faltering.
We always talk about how GM should kill some brands. Now I can’t speak for anyone else, but the reason I think GM should kill some brands is to make the brands worth saving more valuable (A good halfway house would be to have a brand within a brand. For example, Give Pontiac’s range to Chevrolet, but use the Pontiac brand as a “performance” marque for other brands, much like what AMG is to Mercedes-Benz or the M Series is to BMW. Imagine someone buying a Cadillac CTS, but paying $3K more for the Pontiac sports package upgrade? Just a thought.). If GM made Chevrolet its worldwide brand (much like Toyota) then imagine how valuable it could be. Instead, they have marques which are partly of value depending on what part of the world you are talking about (For instance, Buick, means jack in the US, but in China? That’s another story….)
We talk a lot about sales cannibalisation, which is why GM needs to kill it’s dead brands (i.e GMC, SAAB (as much as I hate to say it) etc) and move customers over to the bigger brands (i.e Chverolet and Cadillac) and give them the sales expansion they need to create value.
Look at 1985, Roger Smith was worried about import cars, so what did he do? Did he issue a mandate to managers to focus on making Chevrolet cars as good as imports? No! He created a new brand! Is that GM’s answer to everything? Make a new brand? They should have concentrated on growing the Chevrolet brand organically (again, like Toyota have with their brand), not create a new one like a form of misdirection!
Look at it this way, how many people go to one shop to buy their fruit and vegetables, another shop for their meat and another shop for cleaning stuff? Now, how many people go to Wal-Mart where they can get all of those things under one roof? Wal-Mart stands for low cost, convenient shopping and that’s why loads of customers go there and unfortunately, smaller branded shops can’t compete*.
That’s what I think, anyway….
P.S. Although, I respect your comments totally, I found this one rather patronising.
P.P.S Toyota started out making sewing machines. They got so good at it, it funded their foray into cars. Imagine if they listened to someone telling them “Not to expand their brand”….
* = Incidentally, Wal-Mart bunch of a gits and I hate them.
Argue with me all you like about platforms and engineering differences, but I’m telling you that the I think of Accura as an overpriced Honda.
@dynamic88:
Fixed it for ya.
For one thing, luxury makers can’t go down market w/o destroying the brand. Part of luxury is exclusivity, and you don’t get exclusivity at $30K. Cadillac and Lexus are going to find that out.
-Luxury brands that try to move downmarket are certain to kill their branding.
Bull. The entry level luxury segment can’t hurt anyone’s brand if they do it right. If a product fails, it’s could very well be because of the company’s own mistakes dying in the competitive atmosphere. All “moving downmarket” is is making a right-sized version of the same ideas that spawned their bigger cars. Lexus’s IS isn’t so much less quiet or refined that it hurts their image. The 3-Series isn’t a less entertaining drive. Most say the opposite. If you think the Mercedes C-Class or Jaguar X-Type aren’t good, that’s Mercedes and Audi’s fault, not the segment’s. And the biggest seller of all the entry levelers is the 3-Series. Why aren’t you crapping on BMW, dynamic88? Both of your statements are just more examples of people using the info we have and shaping it around their own personal biases and opinions and coming up with something that makes no good sense.
Yamaha makes guitars, pianos and tubas. And V8’s for Volvo. That does not make them unfocused on who their customers are.
Isn’t brand really about knowing your customer? Know what they expect, want and will pay for?
If a great brand makes a crappy product, it ain’t selling.
Is everybody forgetting that Toyota (in the US) isn’t just Toyota? They also have Scion and Lexus. Lexus is a huge success. Toyota could not have sold Lexus-like vehicles under the Toyota name. Scion, in terms of success, is a little more questionable-it started off strong, but it’s second generation isn’t doing nearly as well as the first, for obvious reasons.
Now, as for the multi-branding mess than is GM, most of it exists for historical reasons only, and can’t be gotten rid of easily. If GM was just Chevy today, they wouldn’t create GMC, Pontiac, Buick, Saab, Hummer, and Saturn. They would create Cadillac, because you need a seperate luxury brand if you want to compete up there. Saab and Hummer were fairly recent purchases of brands created by others. Pontiac, Buick, and GMC exist for historical reasons. Saturn too, although it never should have been created in the first place, but that dumb decision was made more than twenty years ago.
As for Porsche, the Cayenne isn’t too bad. It’s a “sports luxury SUV”. Yes, that’s a contradiction in terms, but it’s a “sports vehicle”, so it fits under the Porsche name. Barely.
Ahhhh, it felt SOOOOOO good to hear someone finally speak intelligently about the Cayenne and the concept of branding itself. Farago, in my oh so humble opinion, has been dead wrong on this issue. While I usually am firmly in agreement with him, on this one he’s just been off in journalistic la la land… :) A little too much “I love Porsche and I HATE SUV’s” coolaid sippin I’m afraid.
Please note, I’m NOT flaming Farago, I think he’s great! Most of the time.
Robert,
I’d argue Honda selling outdoor power equipment/motorcycles/ boat engines/ cars is a VERY good thing. Some of the most ardent BUY AMERICAN CARS folks I know will have nothing but Honda equipment, especially the generators (for construction sites). For them, it’s like DeWalt vs. anything else power tool-wise. They’re probably never trading in their American truck on a Ridgeline, but when it comes time to get a minivan for the wifey and babies, or a car for the kids in college, a Honda that would otherwise not be on the list is now considered. They’re willing to pay more if they perceive value/quality.
I won’t offend any Harley folks because I don’t want to flame that, but I do know of two Harley Owners who bought Goldwings because they were getting older and wanted to make it cross-country more reliably and comfortably (their words, not mine). Both sets of them BUY AMERICAN CARS OR DIE people, but it can do nothing but help their view of Honda the longer they have their bikes. They were interested in Hondas because of the reliability they witnessed on the open road.
In Hondas case, I think it is a good thing just to associate the name with reliability/quality, whether it be a 1000 watt generator or S2000. If someone is in the market for a new car, and reliability/quality is a criteria, Honda will come to mind. Just like for so many other people who need a new pushmower. It won’t cheapen the brand at all for them buying a car. If it was a P.O.$, it certainly might.
If I knew more about them and had personal tidbits, I’d make the same argument for Toyota forklifts, which I do believe are one of the best and possibly most reliable.
Dibs on The Truth About Tractors… 400k in ad revenue per year, though, please. I can start tomorrow. I want to be near the top of “the truth about-” pyramid! Amway!
It’s still important to me to get references and opinions about a lot of products before committing to buy. Its simply looking out for my self when making important decisions. Although its only human to not want to reference purchases sometimes.
I have expectations from many brands, but I do not have an intimate relationship with most any company. I trust Honda, but I know little about the inner workings of the company. Still I understand my trust is my responsibility.
I too disagree with the editorial. Again as the prime example, Honda sells the brand of well engineered engines/motors (NetGenHoon: answer to your question?). So no, I do not grant that it’s brand dilution for Honda to sell generators next to automobiles next to personal jets. Do not all these products have engines or motors beating at their hearts? This company endlessly champions its status as the number one engine manufacturer in the world. Make no mistake: engines are Honda’s brand. The stick against Honda then, if one wants to point to the company’s product wanderlust, is this: what’s its business bioengineering soy beans in Midwest America? What’s its business building stair-climbing robots or solar panel factories? What on earth is Acura doing these days chasing Aston Martin and Bentley?! Acura: now that’s a make that’s lost the plot.
I see Michael’s point….there is probably a good reason it’s called the Honda Motor Company. Just this past weekend as I as straightening out my garage….Honda pressure washer, Honda lawn mower, Odyssey minivan, Acura TL, S2000, and that used-to-be Honda weed whacker thingy we converted to a blender base for when it’s Happy Hour at Sebring. Since it’s always Happy Hour at Sebring it had better start and run the first time every time. The point I’m trying to make is as a former all-Chevy-all-the-time guy, if someone makes a product or a group of products whose quality is perceived to be impeccable, they will sell them (and I will buy them)no matter what they are. I don’t have a problem with Porsche making the Cayenne although it seems to have a lot of the Porsche snobs foaming at the mouth…..if it enabled them to banksome cash to be able to offer the 911 GT3 why does it matter?
The entry level luxury segment can’t hurt anyone’s brand if they do it right. If a product fails, it’s could very well be because of the company’s own mistakes dying in the competitive atmosphere.
I never said otherwise. But luxury brands cannot transition downward into products positioned at the mainstream without destroying their brand value.
The most obvious example of this mistake is Cadillac. Selling a badge-engineer Chevy Cavalier with a Cadillac logo did incredible damage to the Cadillac brand.
Luxury brands tend to start their lineups with a near-luxury product to provide a leg-up to customers who they want to transition into the brand. That can work, just so long as they don’t go overboard by lowering the price too much.
If BMW or Audi were to introduce products slotted below the 1-series or the A3 in the US, that would be a tremendous mistake. The 3-series and A4 are their bread-and-butter, and obviously integral to their brand, not detrimental to it.
The most obvious example of this mistake is Cadillac. Selling a badge-engineer Chevy Cavalier with a Cadillac logo did incredible damage to the Cadillac brand.
But I’m wondering why some people (most notably Farago) lump the fantastic mid-size CTS into that same category. And he’s levied the same criticism against the new compact sight unseen and without having turned a key. I don’t hear anybody complaining about the Aston Martin V8 Vantage or the Lamborghini Gallardo or the Bentley Continental.
As i read the editorial, it seems that Mr. Martinek doesn’t disagree about the concept of branding, but rather what porsche’s branding is and whether the Cayenne falls under that definition of a brand. As other’s have stated, Honda to me is a great engine builder/ engineering excellence brand. Porsche, to me, is the German supercar. Hence, I feel that the Cayenne is a mistake for that reason. However, I don’t think that a single model will dilute the brand very much. Now, a full line-up will devolve it into BMW. I can see Porsche going after Maserati with sleek sedan or building a coupe/sedan combo without hurting the brand.
As for the Jag x-type – the only thing that sticks in my memory about this car is that when it was first introduced, it was the only luxury car without a standard cd player. Hell, even the Corolla came with one!
But I’m wondering why some people (most notably Farago) lump the fantastic mid-size CTS into that same category.
I can’t speak for Mr. Farago, but assuming that is his argument, I will guess that in the context of GM’s current branding arrangement that he would believe that a car positioned and priced like a CTS should be offered as a Buick, and that Cadillac should sell only at higher price points.
If that’s his position, then I would disagree with it. I don’t see Cadillac ever becoming an uber-premium brand ala AMG. They need a $30k vehicle as a starting point, if they are to be a luxury brand that can compete with Lexus, Mercedes, etc. The implication here is to kill off Buick, not to move Cadillac into the stratosphere (where it will run out of oxygen.)
Pch101 :
Thanks for arguing my point for me, and then shooting me down. That said, you’re right and right-ish.
I do believe that the CTS is a natural-born Buick or Pontiac. I also think Caddy belongs at the top of the tree, far removed from the next branch down. The V16 showed it could be done. It just wasn’t.
“Moving from tractors to pumps to Formula One cars is quite an accomplishment…”
Right! As with Coventry Climax engines, and with the David Brown industries. The “DB” Aston-Martins are for David Brown–who ironically, drove Jags.
Honda’s original brand proposition for car buyers in the US was “We Make It Simple.” While this can arguably be thought of as fitting in the “design/engineering” rubric, it was more than that. In the 1970s, when Honda made their initial push for market share in the United States, “We Make It Simple” was as present and persistent in their messaging as “The Ultimate Driving Machine” was in BMW’s. Simple is how large numbers of people outside of the motorcycle/motorscooter subculture experienced Honda, whether or not they bought a Honda automobile. “We Keep It Simple” was a unifying promise and brand concept that easily extended to lawn mowers, powerboat engines, generators, etc., even before they’d been here long enough to establish a record of reliability. At a time when cars were becoming more complex, more difficult to repair, *less* reliable (in the awkward years between mid-sixties consistency and mid-eighties digital engine management), Hondas were eminently simple cars. They looked it, drove it, cost it. And their non-automotive line extensions easily inherited that well-funded automotive proposition.
Porsche retains a subculture of knowledgeable owners who have direct and informed appreciation for the engineering (or sometimes lack thereof) in its products, but that is long past the primary perception driving the brand’s acceptance by the majority of the company’s buyers. The brand is now propelled by ego, envy, elitism and proof of wealth. The vast majority of its customers are ignorant of the brands’ vehicles’ engineering attributes, and display on average no better than prosaic driving competence, if that. Under that rubric, almost anything can find acceptance so long as public expectations of the brand experience (including, obviously, high social acceptance by your intended peer group) are met.
In the US, the basic Boxster is a “chick car”, as much so as a Miata. The perception is exacerbated by the fact that in a place where there is a high correlation between success and height, at least up to about 6’4″, only those considerably smaller can fit in a Boxster’s cramped and unforgiving interior. A 911 fares better in this respect, but it nevertheless remains an unaccommodating sports car for taller (generally more successful) people, so it’s no surprise that Porsche’s SUV has similarly poor interior space utilization.
Porsche as a brand can’t be driven strictly on engineering perceptions, or else a Corvette Z06 wouldn’t outperform a price-peer 911 or Boxster S, nor would a Honda S2000 so favorably compare with a Boxster. The Z06 outperforms a peer+ 911, but it doesn’t *feel* like the pendulum swinger a certain psychographic prefers to own. Porsche is selling experience, not engineering, in 2008. It’s in this respect that the Cayenne, 911 and Boxster are unified by a common thread. Notwithstanding the added useless bulk of the Cayenne compared to a svelte 911, all the Porsche vehicles share the cramped interiors, rich materials in a spartan setting, silken steering, and broadband chassis communication. Even people who have no idea how to drive a 911 beyond 4/10ths of its performance potential perceive the tactile differences between a 911 and its competitors. Porsche’s brand is driven in the US by feel, experience and social perception — all of which are easily extensible to SUVs and sedans that preserve that essence. This is why the company’s hard-core subculture of sports car buyers views the deviant vehicles with disdain while at the same time Porsche tallies mounting profits in continuing rebound from their existential crisis circa 1991.
Porsche Design has stretched a definable (though unexceptional) aesthetic over a range of non-automotive products with mixed results. The Bauhaus influence sometimes clashes with usability, and certainly has drained some of their design work of both emotion and domain insight. For every ergonomically-improved forklift, there are 10 derivative and uninteresting watches using commodity Swiss movements. Again, at least in the US, if you could delete the social acceptance drivers for the Porsche brand, the design group’s work would be far less notable.
In the same way that the central effort of Corvette development has always been to overcome the initial decision to build the car with a non-structural fiberglass (later SMC) body, Porsche has spent decades engineering corrections to its iconic car’s fundamental defect: an engine mounted aft of the rear axle. Arguably the greatest advance in mitigating this defect came not from Porsche but from tiremakers. That decision to put the engine in the wrong location is both a continuing engineering folly and the defining iconography of the car. It’s irony that the company’s continuing creativity in overcoming a boneheaded engineering decision is the source of their myth, along with the results documented in racing. But it’s also the reason that Porsche’s brand isn’t really anchored in engineering but instead in “feel” and a highly-specific driver experience. That experience is not sports car specific. In that respect, the Porsche brand *is* focused today. It’s just not focused by the incorrect view that it is a sports car brand.
Porsche, the brand, is built with superb engineering. In fact, that is what it is. Superb design and execution that happens to result in some really cool cars.
Obviously, what’s “cool” varies from person to person. I don’t know what’s cool about a Porsche today. Certainly in the 356 era Porsches were cool and probably up to the early 1970s. But no longer. It’s an arrogance brand today, at least in the US. Even the company’s own messaging drives this. Outside of its hard-core sentimental buyers, who often buy used, new Porsche owners in the US mostly buy the badge. The typical metropolitan personality encountered behind the wheel of a Porsche has pretty much crushed the cool out of the brand. You have to spend some time at Lime Rock or Buttonwillow to find the archaic echo of the Porsche brand as the sports car faithful define it. It’s an ancien regime, fading fast . In other words, if you’re lamenting looming danger to the sports car identity of the Porsche brand, save your breath for it’s already dead. Porsche is an arrogance brand that happens to field a few sports cars, and that proposition is profitable in the socially fracturing early 21st century.
Moreover, despite the Porsche brands’ exclusionary stance, people who actually *are* exclusive or in some way exceptional now eschew Porsche automobiles in favor of more genuine scarcity and taste. Again outside of its sentimental hard core old school buyer, Porsche is merely a willing tool for projecting the arrogance of mass exclusivity — a faux affectation if ever there was one.
Brands are anchored in emotion, not rationale. A Porsche Cayenne — fat, cramped, ridiculous and engineered to mitigate those faults — is nevertheless a Porsche because it makes its owners *feel* just as fast, exclusive and successful as a 911 does. The same people who drive a Porsche to only 4/10ths of its potential do the same with a Cayenne. They didn’t buy the car for performance; they bought it for the illusions it supports.
Honda’s “We Make It Simple” was the central emotion that underpinned their early automotive acceptance in America. The cars, the messaging, the iconography all supported the emotional relief offered by that proposition, and it continues to resonate and inform everything Honda, even though it’s no longer explicitly expressed in the company’s communications. Honda has lived “We Make It Simple” in-the-metal as persistently as BMW has expressed “The Ultimate Driving Machine”. Honda was Apple to the automotive market before Apple made good on its own proposition via the MacIntosh.
In the 1960s, the GM Mark of Excellence was affixed to every car they made. Explicit GM Mark of Excellence TV advertising hammered home the proposition. And in the context of smoky Mercs, odd little BMWs that looked the same coming and going, strange Chryslers and funky Fords, the Bill Mitchell cars made it a persuasive proposition. Circa 1966, GM cars really were better than most, and certainly were on average considerably more dramatic than competitors’ cars. The GM Mark of Excellence was quietly retired just as the company’s divisions began losing their distinctive missions, components and product portfolios. All the brand equity in the GM marque that was paid for in the prior 20 or so years was trashed between about 1973 – 1993, without intent or any conscious decision to waste it. GM’s management just stopped thinking it was important to maintain and cultivate, and many of their product decisions stomped out any notion of excellence coming from their trademark. The sub-brands and sub-sub-brands proved more durable. Chevrolet, Pontiac, Buick, GMC and Cadillac each retain living traces of their essence to nurture revival.
People who believe GM has too many brands don’t understand the US market. The reality is that if there were only Chevrolet and Cadillac, GM would be selling fewer vehicles than they do today, even if products were further improved. The US is not Europe, and vice-versa. The automobile is a more emotional proposition here. It’s not intrinsically wrong for GM to field the Malibu, G6, and LaCrosse, for instance. But they must be sufficiently differentiated by user experience to fit the umbrella brand’s emotion. For decades, Chevys were appliances of utilitarian value. That changed with the bright 1955 models, when Chevrolet became a truly stylish car common laborers could afford. That sense of attainable style and economy prevailed for about 20 years, until the downsized post-oil-apocalypse Caprice in 1976. The new Malibu is back in that 1955 – 1975 fold of distinctive brand value. Pontiacs should look and feel a little hipper, a little lighter on their feet, more responsive. Pontiac should (and does) have coupes. Buicks are serene, with roadgoing serenity central to their appeal. GM is getting pretty close to restoring this differentiation, though is furthest from nailing it in current Pontiacs.
Terminating Oldsmobile was a mistake still reverberating through GM. The ’90s Oldsmobiles were the best sedans GM was producing at the time, by far. They were poorly marketed but well-executed. Those owners were not retained by GM. Oldsmobile was a strong brand proposition to its drivers, that couldn’t be satisfied by other GM products. The Aurora was so much more polished and distinctive than same-platform Pontiac, Buick and Chevrolet alternatives that moving to an import was the only successor step for owners. I still see many of these cars in pristine condition in Southern California, and when I have a chance to speak with an owner, their appreciation for the car is extreme. Even moving “up” to a Cadillac of the same vintage felt like a step down in terms how being in the car made one *feel*.
There is a delusion among certain autophiles that engineering underpins their favorite brand, but it’s just not so. Emotion anchors and infuses brands. Engineering is secondary or tertiary. You might say that the emotion of Ferrari is impossible without the engineering that creates it, but that’s equally true of Tata’s entry car. Is Lamborghini’s brand powered more by styling, performance or engineering? For the most part, the market knows little about the latter and assumes the middle by suggestion of the former. The brand power of Mustang equals that of Porsche, but via a much more lightly-engineered car. “Engineering” gives us porky modern Mercedes cars that sometimes carry a quarter ton of useless mass relative to competitors, and yet they sell. Corvette engineering puts $200,000 performance in a ~$65,000 car, but that’s not the lead reason people buy it. Emotion and experience, not engineering.
This is why Cayenne can be a Porsche, an Escalade can be a Cadillac, a Land Rover Sport can be a Land Rover, but a Phaeton cannot be a VW and the NSX will never meet sales expectations.
Phil
“People who believe GM has too many brands don’t understand the US market. The reality is that if there were only Chevrolet and Cadillac, GM would be selling fewer vehicles than they do today, even if products were further improved.”
I’m not sure that I agree with that supposition. Using last months sales figures for the United States, GM sold 282,732 cars over 8 brands (Chevrolet, Cadillac, GMC, Hummer, Pontiac, SAAB, Saturn and Buick). Yet, Toyota sold 192,791 cars over one brand (the “Toyota” brand). This means that Toyota achieved 68.19% of the total GM sales. Please bear in mind that I included Cadillac in GM’s sales figures and excluded Lexus (Which, incidentally, sold just 4831 cars less than Cadillac AND Buick put together) from Toyota’s. So, if I made the comparision fairer (Because Cadillac is a direct competitor to Lexus and not the Toyota marque) and added Lexus’ figures (24,939) into the calculations, then Toyota sold 77.01% of GM’s total sales using 2 brands (Toyota and Lexus) compared to GM’s 8 marques.
So, there is clearly a market for a vanilla, everyday brand in the United States, without having to sell different styles of cars to different niche markets. The section of the market who buy Toyota branded cars are there for Chevrolet to take, if they want to build cars to compete with Toyota……
Also, (sorry to labour my point) Toyota’s model makes its 2 brands far more valuable, than GM’s 8 marques. So, I don’t think the United States is that much different to Europe.
P.S. If any one is wondering, yes, I did study the figures and did the calculations! I’m waiting for the Liverpool Vs Arsenal football game to begin and I had a little time on my hands! I’m not that much of a loser….! lol
P.P.S Don’t think I’m picking on GM regarding “dead brands”. When I was in the United States in January (I loved driving out there!), I saw an Acura TSX. It was just a re-badged version of the European Honda Accord! Which makes me wonder the following:
If Acura is supposed to the “Upscale, luxury” brand of Honda, then, logically, Honda are saying to its American customers “Look, the European version of the Honda Accord is far more luxurious, than the crap one we sell you!”
Honda better bury Acura and give Americans a better product!
So, if I made the comparision fairer (Because Cadillac is a direct competitor to Lexus and not the Toyota marque) and added Lexus’ figures (24,939) into the calculations, then Toyota sold 77.01% of GM’s total sales using 2 brands (Toyota and Lexus) compared to GM’s 8 marques.
Toyota is not GM, and vice-versa. Toyota is a far younger brand in the US than any of GM’s sub-brands except for Saturn. The emotional content of GM’s brands is informed by a much longer line of tradition and perception than Toyota’s, and are not easily transferred from one to the other.
If GM kills more of its American brands (leave the confused Saab out of it), it will accelerate migration to imports or possibly Ford. The Chevrolet buyer will find more resonance in Camry than in Buick. The Buick buyer will be more at home with Lexus or Avalon than with Cadillac. Maintaining its brands is elemental to GM defending market share in the US.
Now, if GM were intentionally shrunk faster than projected share decline to pare it down to a hard core, and the company were relaunched with fewer brands, it’s possible that it could regrow itself with Toyota-like “brand efficiency” over the next several decades. Emotionally, Toyota and Honda are monobrands, while GM’s emotional range is considerably broader and a bigger tent. The company just has to reinvigorate its brands with products that are consistent with the brand propositions of each.
Last, GM is the traded company, not its dba sub-brands. The individual brand efficiencies in driving value are irrelevant if the traded entity accumulates value competitively. For GM, the path back requires retention of its corporate-wide brand scope, not in becoming more like Toyota.
Phil
People who believe GM has too many brands don’t understand the US market.
With GM losing more money than a troop of drunken sailors in a casino, I wouldn’t be turning to them for advice on how to operate a business.
Toyota and Honda sell fewer cars, yet generate more profit in absolute and relative terms, so clearly they are on to something. And they have far fewer brands and more cogent brand messages (although Honda is not perfect in this respect, either.)
GM’s problems are extensive, of course, but mismanaged channels are clearly toward the top of that list. There is too much overlap to maintain distinctive brand identities. No way at this point that they’ll ever get those back.
Toyota and Honda sell fewer cars, yet generate more profit in absolute and relative terms, so clearly they are on to something. And they have far fewer brands and more cogent brand messages (although Honda is not perfect in this respect, either.)
While this is true, it doesn’t follow that GM’s route to renewed success will be through cutting brands. Having more brands simply requires a higher level of marketing acumen and discipline to make — and keep — those brand propositions and their expressions concise, cogent and meaningful to buyers. The emotional depth and long trajectories of GM’s brands are assets, not burdens, if properly revived. Abandoning them will shrink GM more rapidly, strip it of a foundation for broad market resurgence, but could hasten return to profitability while truncating long-term relevance and scope. I think they can drive profitable growth and renew value accumulation while retaining status as the major market driver in North America if they choose the more difficult route of reflating the brands they have and packing the necessary managerial competence around them. If.
Phil
I also agree with Michael. (Only not about the Cayenne…)
The BRAND on both Honda and Toyota is reliability, economy, and the rather vague “quality”. Little detours of product in these companies is fine, as long as it stays with the BRAND of reliability, economy, and “quality”. This does not fit Robert’s strict definition of brand.
The BRAND on Ferrari is of course sports cars. Robert’s view is true with that company, as it’s hard to stray from that narrow brand.
But the Cayenne? I’m not so sure the BRAND for Porsche is “superb engineering”. I think the brand for Porsche is pretty close to what it is for Ferrari, just more livable day to day.
And where I agree with Robert, is that the American car companies have muddied their brand so much that no one knows what a Ford or a Mercury or a Chevy or a Chrysler stands for.
Toyota is not GM, and vice-versa. Toyota is a far younger brand in the US than any of GM’s sub-brands except for Saturn. The emotional content of GM’s brands is informed by a much longer line of tradition and perception than Toyota’s, and are not easily transferred from one to the other.
If I’m understanding you correctly, then, you’re saying that GM brands have a long heritage and can’t tinkered with too much. If that is the case, I disagree, partially. Yes, GM brands DO have a pedigree, but what’s the point of this pedigree, if customers are leaving in their droves? I’ve heard the story thousands of times before, “GM/Ford/Chrysler, burnt me with shoddy products, I moved over to Toyota/Honda/Nissan and never looked back”. Customers don’t seem too bothered about brand heritage. They just moved to a marque which gave them what they wanted, something GM couldn’t do.
If GM kills more of its American brands (leave the confused Saab out of it), it will accelerate migration to imports or possibly Ford. The Chevrolet buyer will find more resonance in Camry than in Buick. The Buick buyer will be more at home with Lexus or Avalon than with Cadillac. Maintaining its brands is elemental to GM defending market share in the US.
Chevrolet’s market demographic are the people who buy Hondas, Toyotas and Nissans. There is CLEARLY a market there for Chevrolet to steal sales. If Chevrolet expanded organically (like the Toyota model I described earlier) then, GM wouldn’t need the sales of brands like GMC, Pontiac and Buick. Toyota did a similar thing in Europe where they got rid of the Celica because is just wasn’t generating enough sales to warrant a place in the line up. Naturally, a few petrolheads, were annoyed, but Toyota’s main market carried on buying Toyota cars. I said earlier in this thread that a example of how GM could transfer customers over to bigger brands would be for Pontiac to hand over it’s portfolio (Solstice, G6, etc) over to Chevrolet, but use the Pontiac brand as a sort of “sports” branded package, much like Mercedes-Benz, use AMG. Someone could buy a Chevrolet Solstice, but pay $3K more for the “Pontiac” package, which could be, stiffer suspension, tighter brakes, lower profile wheels, etc. They could even transfer that idea over to Cadillac. Imagine a CTS with a “Pontiac” package?
Last, GM is the traded company, not its dba sub-brands. The individual brand efficiencies in driving value are irrelevant if the traded entity accumulates value competitively. For GM, the path back requires retention of its corporate-wide brand scope, not in becoming more like Toyota.
But GM does have its “brand scope” model now and it isn’t working. They have several brands all of which (supposedly) say something. Whereas, Toyota have 2 (main) brands and are generating more brand equity, more money, more customers and a sustainable future. 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.
P.S For the record, all of my babblings are in the knowledge that GM CAN’T do any of this (i.e the furore with Oldsmobile). I’m just hypothesising, in an ideal world.
Phil Ressler: Terminating Oldsmobile was a mistake still reverberating through GM. The ’90s Oldsmobiles were the best sedans GM was producing at the time, by far. They were poorly marketed but well-executed. Those owners were not retained by GM. Oldsmobile was a strong brand proposition to its drivers, that couldn’t be satisfied by other GM products. The Aurora was so much more polished and distinctive than same-platform Pontiac, Buick and Chevrolet alternatives that moving to an import was the only successor step for owners.
In the 1990s, as Oldsmobile was attempting to remake itself, my family had owned Oldsmobiles for decades, I was a member of the Oldsmobile Club of America, and had a 1972 Cutlass Supreme Holiday coupe. I watched the entire process with keen interest.
GM fumbled that makeover badly.
The Aurora arrived in 1994…and the next “new generation” Oldsmobile, the Intrigue, didn’t arrive until the summer of 1997. For three years, the Aurora shared showroom space with the dumpy Cutlass Ciera and the old-school Eighty-Eight. Not exactly the best way to attract import-oriented buyers.
The cars were plagued by quality bugs that weren’t found in most competitive imports at the time. The Aurora, in particular, had problems with its transmission and air conditioning compressors that each would guarantee a four-figure repair bill. These problems generally occurred after the warranty had expired.
The cars were a cut above the typical GM fare, but not really good enought to get satisfied customers out of their Acuras, Lexuses, BMWs and Infinitis. At the same time, they turned off loyal Oldsmobile owners.
GM’s marketing support for Oldsmobile was spotty, and the dealers really didn’t know how to appeal to import-oriented buyers.
Overall, I would give GM an “F” for the turnaround effort (Oldsmobile is no longer here, after all), while the cars mostly earn a “B-” or “C+”, which wasn’t good enough for the competitive market at that time.
Phil Ressler: If GM kills more of its American brands (leave the confused Saab out of it), it will accelerate migration to imports or possibly Ford. The Chevrolet buyer will find more resonance in Camry than in Buick. The Buick buyer will be more at home with Lexus or Avalon than with Cadillac. Maintaining its brands is elemental to GM defending market share in the US.
Here lies the crux of GM’s problem – loyal GM customers perceive real differences between the various GM brands, but owners of other makes of cars don’t see the distinctions.
GM risks losing market share if it shutters another brand. But owners of, say, a Honda or a BMW, look at all of those products of GM divisions – with the possible exception of the Corvette and some Cadillacs – and view them simply as GM cars. And they have no desire to own any of them. For them, there is no real difference in a Saturn, Chevrolet, Buick or Pontiac.
GM is stuck between Scylla and Charybdis – it can’t risk losing market share by phasing out a brand, but it can’t afford to give those brands the distinctive styling, drivetrains and equipment that would really make them stand out from each other. GM is saddled with the expense of styling, producing and marketing more variations without really gaining any advantage in sales. This added expense in maintaining these minor differences also means that less money is available for basic engineering or quality components. A good example is the Lambda trio, which, together, barely outsell the Ford Edge.
GM’s plethora of models also means that it can’t support them with the marketing that will keep them in the public eye. Note that the advertisements for the Saturn Aura have virtually disappeared since the Malibu’s debut.
GM is basically a prisoner of its past success. But what worked in 1960 doesn’t necessarily work today.
I’ve said it before in this thread, that Alfred P Sloan’s model never worked to start with.
That’s wrong, actually. For a time, it worked quite nicely.
It stopped working because the car market evolved in such a way that the modifications that used to create brand differentiation don’t work anymore.
Once upon a time, you could strip a car of content and put a smaller engine in it, and voila! you’ve just created a budget brand. Add some chrome, radio, better tires, big fins and a V8, and poof! a near luxury car.
That doesn’t work anymore. Today, even lowly econoboxes have more features and better performance than many a specialty car in the past. Differentiation has a lot more to do with nuance and subtlety than just the basics.
Meanwhile, at the top, the lines between sportiness and luxury have been blurred, so the tendency is to carry sport and luxury variants under the same brand, with the sport version as a sub-brand, not to keep them apart.
It used to be genuinely possible to maintain six or seven different distinctive tiers, but no longer. It’s pretty clear that now, there are at most four (entry-level, mainstream, luxury, exotic) to choose from. You might be able to differentiate a bit more based upon functionality (i.e. trucks), but that doesn’t provide much more room, that’s about it.
Times changed; GM didn’t. Explains a lot.
Phil,
You make a good argument about what Porsche offers, but you do so with an unnecessary condescension, IMO.
Yes, the vast majority of the owners will not drive it to it’s abilities, and they can’t fully appreciate it’s engineering. However, it’s not the illusion they are buying, but the very things that they aren’t fully appreciating. I can’t read sheet music, but I rarely disagree with the experts on one symphony being better than another.
It is easy to recognize a 911 as a well engineered design with classic roots. I think this sells. I think the fact that it is fast sells to people who won’t break the speed limit. People want, and value things they can’t fully appreciate. What needs to be shouted out is the goodness of that fact, not the shame of it. It’s a good thing that people value the finer engineering even though they don’t understand how it works or why it’s better. The fact that they do means that the better engineers and manufacturers make more money, thus encouraging more and better work in the industry.
The bad thing is when a company, like Cadillac, produces a phony product that is badly engineered. There is no phoniness in a Porsche Cayenne, but there sure as hell is in an early eighties Cadillac.
PCH,
This last bit was spot on. We can all disagree a lot about the nuances of Branding, but I think you really hit the nail on the head about how the market has changed. It changed in a way especially tough for GM, and they failed to do much about it for a long time. They then got spoiled with SUV sales, and that masked their failure to adapt for an even longer time.
Geeber, you said: GM’s plethora of models also means that it can’t support them with the marketing that will keep them in the public eye. Note that the advertisements for the Saturn Aura have virtually disappeared since the Malibu’s debut.
I think the issue this sparks from was already mentioned somewhere in these eight pages of comments. But I’ll bring it up again.
This is a result of GM’s lack of focus. They come up with a relatively good thing and ride it for a while, but then drop it for the next big thing. They went from the Aura to the Malibu. Anyways, GM’s plethora of models doesn’t inherently mean that they can’t support them with the proper marketing but they fail to.
This is detrimental to their branding as well as to their sales. How is the average consumer supposed to know what to think of a brand that they don’t see anything about? How is anyone supposed to be aware of a model’s existence when their are only two on the road (I may exaggerate a little) and there is no marketing support?
But marketing is expensive. My guess is that GM can’t keep focus and support for models because they lack the funds to maintain that support.
My solution for this is for GM to scale back on its number of models, not brands. With fewer models per brand they may be able to have better marketing support for each model and therefore improve their branding a bit.
On a completely unrelated note. I understand why some people think the CTS is a poor vehicle for Cadillac. I imagine Cadillac to be big cars with big, powerful engines. A large, truck based SUV I think could fit it their brand. But they need to keep the CUVs and small sedans out.
Katie.
P.S. Although, I respect your comments totally, I found this one rather patronising.
I’m sorry, it wasn’t meant to be. I’ve always enjoyed your insights and consider you one of the most intelligent and interesting posters on TTAC. My apologies if I offended.
P.P.S Toyota started out making sewing machines. They got so good at it, it funded their foray into cars. Imagine if they listened to someone telling them “Not to expand their brand”….
As I said before, Toyota has a brand that can extend (as does Honda) because the message is that it’s built well. And their expertise is in mechanical engineering. Imagine if they’d tried to extend the brand into clothing – probably wouldn’t work.
GM have far too many brands. Having one for this and one for that doesn’t work (in the long run) and devalues your portfolio of brands. I’ve always contested that Alfred P Sloan’s model never worked to start with. Now why do I say this?
Look at Europe, GM (up until recently) only had 2 brands in Europe Vauxhall/Opel and SAAB. Vauxhall/Opel had, and still has got, a large market share despite the abundance of competition available (Peugeot, Citroen, Renault, FIAT, SEAT, VW, Toyota, Nissan, Honda, Mitsubishi, to name but a few). Because GM concentrated on using one brand and one brand only, it expanded organically. The end result is a very valuable brand. At least, in Europe. But this is soon to be cocked up by introducing more brands (i.e Chevrolet, Cadillac and Hummer)
But Vauxhall/Opel are not trying to sell Porsche level sports cars, Merc level luxury cars, Uber-engineered driving machines, and so on. They’ve stayed focused on their market. Cars for the masses. But if GM want’s to sell luxury cars or high end sports cars in Europe, do you think they can do that with the Vauxhall name? Should Vauxhall come out with a competitor for Ferrari? Would anyone want a Vauxhall supercar? Would anyone want an Opel ultimate driving machine?
Now let’s look at North America, prior to the 60’s/70’s, GM were the market share leaders due to many marques on sale. Because there was very little competition, GM stayed on top. But slowly, but surely, the imports whittled away at GM’s market share and have done for the past 30 years. Because the imports grew organically, their brands (say Toyota) became more valuable and had more equity. The moment competition came to North America, GM faltered and never stopped faltering.
Respectfully, I disagree. In number of brands, there was plenty of competition. Even Chrysler used to have 5 different brands. And of course I could list various “orphan” makes which are now defunct. GM did loose to the Japanese competition, but it wasn’t because GM had too many brands, it was because they didn’t care about quality. Nobody traded their Sedan De Ville in for a Corolla. When Toyota wanted to take sales from Caddy, they came out with a new brand – Lexus.
Chevrolet had already grown organically, in exactly the way that you describe Toyota growing. The problem is, they don’t have a reputation – for anything. They are not the reliability car (and we can argue all day about perception/reality 50/50, 60/40 etc. but I think you and I are generally in agreement that GM just isn’t up to par with ToyoHon). Neither is Chevrolet a cheap car. Priced a ‘Vette lately? Or one of their big fully loaded SUVs? Of course they aren’t a luxury car, and they aren’t really sports car makers, even though the ‘vette is a very good sports car in many ways you just can’t make pickups and family sedans and still have a rep as a premier sports car builder. If you’re going to be a full line automaker, then you better have a “schtick” -reliability, quality, cheapest price… something that people can identify your product with. The one thing no brand can do is say to the customer “We make everything, in every niche, at many different price levels”.
Chevrolet used to enjoy a reputation very similar to that of Toyota today. And it’s arguable that their products are a lot better than the public perception of them. But all the American automakers spent a couple decades building crap, so no they are suffering. Immagine what will happen to Toyota when it no longer stands above everyone else in reliability. Right now there’s room for 2 reliability makers (ToyoHon) But when the day comes that everyone is as reliable as Toyota, and everyone has the rep for being that reliable, Toyota no longer has a brand message.
I’m old enough to have a sense of what GM’s various brands used to mean – though I can certainly see why younger people feel the brands mean nothing. Caddy used to be for Doctors, Lawyers, Well to do businessmen. Now teachers with a little seniority can buy a new one. The CTS, while a nice car in many respects, is just priced too cheap to be a Caddy. It lacks the exclusivity that is needed for a luxury brand. IOW, somewhere between Chevrolet – cars for the proletarian masses, and Caddy – cars for the high mucky mucks, there is room for another brand.
Let me put this branding idea in a different context. My wife has been talking to me about shoes – though I’ve begged her not to. You have Prada at one end, and Keds at the other. It’s not a good idea for Keds to try to sell their brand at $500 per pair, and it’s not good for Prada to sell at $17.50 a pair. IOW, there are no entry level Prada shoes – they’re all expensive. Likewise there are no uber-premium Keds. Somewhere between $17.50 and $500 there is room for one (or several) more brands.
Or one more example – I don’t really care if Global Conglomerate Watch Corp. buys up Timex and Rolex and a dozen other watch companies. But I’m not paying $8,000 for anything branded Timex, and though I’d probably jump at a $21.95 Rolex, I don’t think they could later persuade me I ought to pay $8k for one.
But it’s not just price points. As Phil said, brands have emotional appeal as well. But the emotion has to be real. Pontiac does not build excitement. If they actually did, they’d have a reason to exist. But they sell Chevies with a different badge on them. I’m sorry but there just isn’t an exciting “take” on a minivan.
“Look at 1985, Roger Smith was worried about import cars, so what did he do? Did he issue a mandate to managers to focus on making Chevrolet cars as good as imports? No! He created a new brand! Is that GM’s answer to everything? Make a new brand? They should have concentrated on growing the Chevrolet brand organically (again, like Toyota have with their brand), not create a new one like a form of misdirection!”
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.
Look at it this way, how many people go to one shop to buy their fruit and vegetables, another shop for their meat and another shop for cleaning stuff? Now, how many people go to Wal-Mart where they can get all of those things under one roof? Wal-Mart stands for low cost, convenient shopping and that’s why loads of customers go there and unfortunately, smaller branded shops can’t compete*.
They can compete, but not head on. Walmart has all of the groceries you mentioned, but no one pretends that these are high quality items. People shop there because it’s cheap. That is Walmart’s brand image. The meat is cheap, the cheese is cheap, the apples are cheap, … But you can’t tell me some specialty cheese shop on the high street doesn’t have better quality (and more expensive) cheese. The Fromager has a different brand. A different reason for existing.
A typical Yank like myself who doesn’t really care much about cheese and just wants American slices for cheeseburgers will buy at WallyWorld. No self-respecting Frenchman who can afford better is going to buy cheese at Walmart.
In the 1990s, as Oldsmobile was attempting to remake itself, my family had owned Oldsmobiles for decades, I was a member of the Oldsmobile Club of America, and had a 1972 Cutlass Supreme Holiday coupe. I watched the entire process with keen interest.
GM fumbled that makeover badly.
Yup. But the fact is, most Auroras worked just fine, and the Intrigue, while late, was a gem with its DOHC 6. The Ciera and lingering 88 were dogs and everything about the marketing of the transition cars was imept. Still, killing the brand has been a net loss in market share, cash and opportunity.
GM is stuck between Scylla and Charybdis – it can’t risk losing market share by phasing out a brand, but it can’t afford to give those brands the distinctive styling, drivetrains and equipment that would really make them stand out from each other.
GM could sell more of what it has if it invested in differentiating interiors. That is to say, not only upgrade interiors across the board as they have been, but to design, develop and deploy brand-differentiating interior experiences that are sharply distinct. Even with cross-brand drivetrains, tuning specific driving experiences via suspension components and software changes is quite cheap.
GM’s plethora of models also means that it can’t support them with the marketing that will keep them in the public eye. Note that the advertisements for the Saturn Aura have virtually disappeared since the Malibu’s debut.
They can afford to promote more brands and models if they were making better use of their huge advertising spend. Marketing incompetence is the premier failure of the moment, with products on the mend.
You make a good argument about what Porsche offers, but you do so with an unnecessary condescension, IMO.
I mean to be coldly descriptive, rather than condescending. People can buy cars for whatever reason motivates them to, including admiration for craft, engineering, design or all three without actually tapping them to maximum advantage. But it remains an experiential driver for brand, not substantive. It’s perceptual. I’m not assigning a value to this, positive or negative. I am, however, taking the position that judging Porsche product on its “sportscarness” is a past proposition long since superseded by something else.
Phil
Americans can’t buy the A-Class or A2 so we really can’t complain about them.
The X-Type looked pretty cool IMO but Jaguar has a poor reputation here. MB is still cruising on it’s rep from the 70s and 80s but things are getting worse there too.
I don’t think Honda making lawnmowers ruins their brand. Everyone knows they make diverse products, it’s one of the things Honda fans love. There are people who own Honda cars, Honda dirt bikes, Honda lawnmowers, and have Honda engines on their boat.
Besides wouldn’t that mean that Honda’s cars have ruined their motorcycle branding?
Still as far as Porsche is concerned I don’t think the Cayenne is needed or warranted.
Jaguar OTOH most definitely should have developed a crossover SUV like the Cayenne or Audi Q7.
I mean to be coldly descriptive, rather than condescending. People can buy cars for whatever reason motivates them to, including admiration for craft, engineering, design or all three without actually tapping them to maximum advantage. But it remains an experiential driver for brand, not substantive. It’s perceptual. I’m not assigning a value to this, positive or negative. I am, however, taking the position that judging Porsche product on its “sportscarness” is a past proposition long since superseded by something else.
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.
But GM does have its “brand scope” model now and it isn’t working. They have several brands all of which (supposedly) say something.
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….
Dynamic, I think you’ve hit it right on the nose. It’s almost entirely perceptual for a lot of people. Why else do Bentleys not only have plush interiors and gadgets but also stupid power? Well, Mr. Ego has got to be able to put the teenager in his Civic in his proper place on the green light. But how often do Civics and Bentleys drive on the same streets?
Pch101 :
April 2nd, 2008 at 3:14 pm
People who believe GM has too many brands don’t understand the US market.
With GM losing more money than a troop of drunken sailors in a casino, I wouldn’t be turning to them for advice on how to operate a business.
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).
Dynamic88,
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…..
This discussion while very entertaining is also quite ridiculous. To me there is no deep mystery why Porsche Cayenne sold well. Every truck/SUV has sold well during the time Cayenne sold, from Suzuki Samurai to Porsche and Cadillac SUVs. The only possible exception I can think of was Tourag and that’s because it was way overpriced for it’s brand. If a truck was priced within its brand price range it sold during the heydays of low gas prices and ballooning real estate values. Just as the gas started to go up all truck sales started going down some a bit some a bit less. In short Cayenne caught the SUV bubble or trend and rode it all the way to the bank. It came later than most but still early enough to make some serious money. Another few years of rising gas prices and Cayenne will be history regardless how well engineered it is (Martineck’s point) or how well it projects Porsche sensory delights to its owners (Ressler’s point). Wiedeking didn’t need to be a genius to grasp this simple market dynamic, most people who could read sales charts would have figured it out. Nevertheless Wiedeking deserves either kudos or eternal damnation, depending on you point of view, for having the audacity to create this thing.
Katie
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.
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.
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.
This reminds me…….
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.
Oh, and I agree with RF – the CTS is a Pontiac.
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.
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. …
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.
pch101
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.
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.
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.
OK, so we agree that 4 brands isn’t too many. I submit that 8 isn’t too many in theory, if there is actually a reason for them to exist. Let’s split the difference, and say 6.
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.
I like asking my clients what their purpose is with the product(s) they are offering to buyers. This often makes them understand that they may have too many such purposes, and often also find themselves at cross-purposes.
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.
All this talk of branding seems an appropriate place for this link. It is a survey of people’s brand perception. Quite a few auto industry brands showed up under different questions. I think most telling are “If you could re-brand any brand, which would it be?”, where responses include USA and Ford, and “If you were to describe yourself as being a brand, which would it be?”, where people answered Coca-Cola, Apple, and BMW.
I have to disagree that entry level luxury is $30K.
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.
KatiePuckrik :
April 1st, 2008 at 9:43 am
TexasAg03,
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
It seems fairly obvious to me, whether you agree or disagree with the philosophy, that the premium paid for BMWs and Audis is directly related to their (a) history of technological sohpistication and (b) their brand cache, as derived from it. Jaguar just doesn’t have either.
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.
6G74
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.
GM could have 20 different brands under its umbrella, if each of these was tightly focused according to a purpose.
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.
GM has too many UNDIFFERENTIATED brands.
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.
Caddy doesn’t need a near luxury car, that’s what Buick is for.
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.
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.
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.
“Look at 1985, Roger Smith was worried about import cars, so what did he do? Did he issue a mandate to managers to focus on making Chevrolet cars as good as imports? No! He created a new brand! Is that GM’s answer to everything? Make a new brand? They should have concentrated on growing the Chevrolet brand organically (again, like Toyota have with their brand), not create a new one like a form of misdirection!”
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.