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Saturn – A Lesson for CEOs

When GM introduced Saturn with great fanfare back in 1990 I wondered to myself “will this new GM brand ever …

When GM introduced Saturn with great fanfare back in 1990 I wondered to myself “will this new GM brand ever be what it can be, or will it just become another tarnished brand added to the heap along with all the others”?

Remember the “little” Cadillac brand – the Cimarron? Or, the Chevy – Vega? How about the Pontiac – Aztec, so ugly it appealed to no one? Most recently, Oldsmobile – “your fathers Oldsmobile”.

When introduced as a stand-alone company with great promises as GM’s answer to foreign competition, the Saturn brand was embraced by customers looking for a no frills, no haggling, utilitarian offering that “fit” their unique requirements at the time. Even some Toyota and Honda owners traded into the first Saturn models.

Loyal Saturn customers even had “love-in’s” at the Saturn plant in Spring Hill, Tennessee, much like Harley Owners Group (HOG) get togethers.

GM projected annual sales of 500,000 Saturns!

Needless to say that volume never materialized primarily because there just were not enough customers looking for that value proposition. This highlights the first marketing lesson to be learned from the Saturn experience.

Lesson One: There are only so many customers for every value proposition, not an infinite number.

GM has never been good at marketing and branding, and they certainly have never been very customer conscious.

My question is: “where did the 500,000 come from”? In the best year for Saturn (1994) only 286,000 were sold. That’s 43% less than forecast? Saturn sales have hobbled along at about 200,000 a year, plus or minus some since then. This year the Saturn share of the car market here will only be about 1.4%.

The first branding mistake was to reduce spending when it was needed most during the late embryonic and early growth years of the brand. Brand equity results from the continuous investment in promoting the brand, as I have illustrated in earlier columns.

It’s about share of mind. Not only do you have to invest to get a share of mind, you also have to continue to invest to keep it!

Shifting management, the pursuit of other car style trends, and financial stresses doomed the Saturn brand. After having its best year in 1994, Saturn was abruptly relegated from the initial concept of a separate entity with its own identity, to become part of the parent company’s “small-car operations”.

Worse yet, after being relegated to “one of many,” no new Saturn models were developed for the next five years! Guess what happened? All the original Saturn owners and those that they convinced to buy a Saturn, and who were anxiously awaiting the next generation of Saturn models, tired of waiting and bought another foreign brand.

Lesson Two: To sustain and grow brand equity there has to be a next generation of models after the initial model introduction, much like Honda, Toyota and Nissan have mastered so effectively. Without this and a continuing investment in maintaining share of mind, any brand will quickly fade from memory. Aztec?

For the last years, Saturn models have morphed into another nondescript series of cars offered by GM until recently when several new models were introduced like the Aura, the Vue and the Saturn Sky sports car, designed to reincarnate the brand. But, without sufficient promotions to rebuild the brand, or even stem the continuing decline in sales.

Lesson Three: If you are going to invest what it takes to create a new car model, you must also invest at least an equal amount, or more, to regain share of mind. Have you seen many, or any, promotions for these new Saturn models? Or, even the “rethink” slogan that was developed for them?

The real question now is “what is the unique selling proposition for Saturn”? I don’t know – do you?

Unfortunately, one of these new models the mid-size Saturn Aura is probably one of the best unknown brands on the market today. Given market conditions this good American built car may disappear before it has a chance to grow up.

Another amazing fact highlighted by Advertising Age is that in 2007 $4.6 Billion was spent by the U.S. auto makers on advertising their car brands. According to Advertising Age that’s 3.3% of total U.S. advertising spending and 5.9% of total U.S. network TV spending.

In a recent study done by Interbrand of the top 100 of the most valuable brands in the world 52 are from American companies.

However, only one U.S. car brand made the list – Ford. Ten foreign car brands made the list, but none from GM!

What has GM been promoting with all their advertising? Apparently – not their brands. And, certainly not the Saturn brand.

Alex Taylor in his excellent piece on the history of GM in FORTUNE captured the marketing ineptitude at one of the largest firms in the world in his summary: “the story of General Motors since the 1960’s is a tale of accelerating irrelevance”!

The Saturn example is just one of many branding faux pas, but hopefully one that is easy to see and relate to. As I have said before success at branding and creating brand equity is a long term marketing strategy that has to be carefully planned and executed.

If you are struggling with how to build a brand effectively let’s start a dialogue.

Don’t let what happened to Saturn happen to your good brand(s).

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU’s Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.

He is the author of GUIDEBOOK TO PLANNING – A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.  Email Bob at: rmdonnelly@chiefexecutive.net

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