Lousy Marketing -- Not Lousy Cars -- Killed Detroit
Long before the CEOs of the Big Three hopped aboard their private jets, they presided over the biggest marketing failure in American history.
Many miles ago, long before Detroit started losing billions a month, it lost something even more important: its roadmap to the American unconscious.
So while we've heard all the arguments for the impending demise, it's high time we took Detroit's slow-motion suicide for what it is: a marketing failure, probably the biggest one in history. It takes years of monumental incompetence to squander the biggest, deepest love affair the American consumer has ever had.
I wasn't surprised when Detroit's million-dollar men cranked up their corporate jets on Friday, popping warm nuts while strategizing about how to land some cold cash.
That 360-horsepower blunder--which may very well have sealed the fate of the Big Three--capped off decades of marketing incompetence.
Car companies have so many levels of creative approval that even a crash dummy would have trouble surviving the process.
The image destruction started when their brands began to exhibit the worst kind of corporatist behavior, summoning up dark memories of the tobacco industry. They battled against every safety initiative, starting with mandatory seat belts. They tried to beat back higher CAFE standards. They lobbied against electric cars and alternative fuel.
As consumers were increasingly making purchase decisions based on the practices of the company behind the product, the domestic auto industry became a loathsome choice.
Detroit's bad actions hurt it with a huge part of the market--the more than 30 million people in Richard Florida's "Creative Class" who work with ideas, live in urban areas, and are more progressive. Even the more traditional consumers who stuck with American cars felt abandoned.
The jerks running the companies didn't help. Your CEO is a marketing statement, and in an era of visionary leaders celebrated by the media--other than Lee Iacocca, who retired in 1979--the guys running the show were overcompensated, colorless zeroes.
From 1974 through 2000, GM was piloted by Tom Murphy, Roger Smith, Bob Stempel, and John Smith, failures whose names are recalled only as poster guys for deck-chair rearrangement.
As these weak-kneed leaders came under pressure for their practices and products, they turned psychologically inward. It all culminated with Michael Moore's Roger and Me in 1989, a national display of corporate paranoia. An industry whose birthright was independence came to represent villainous bureaucracy.
And in a colossal marketing mistake that scraped away any chance for individuality, Detroit's legions of PR firms continued to let its brands be bundled as the Big Three. Can you imagine Apple permitting itself to be bundled with Dell and HP this way?
Ironically, though, as its reputation plummeted, Detroit's cars actually improved. The Detroit Free Press notes that Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers." And J.D. Power ranked Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac, and Lincoln brands' overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, and Volvo.
This is an epic advertising failure, attributable to Detroit's stubbornness and arrogance. The Big Three kept working with a small group of the biggest and most boring ad agencies, refusing, until recently, to work with anyone who didn't have car experience. Leo Burnett has worked with GM since the 1930s; J. Walter Thompson has worked with Ford for more than 60 years.
I've worked in advertising for a while--thankfully, never on a car account. And I will tell you that it's well-known in the industry that working with Detroit is torture. The Big Three's demand for mediocrity is legendary. They have formulaic rules--the "running shot" of the car has to be a certain length in every commercial--and they have so many levels of creative approval that even a crash dummy would have trouble surviving the process intact.
That's why, even though GM, Ford, and Chrysler spend more than $6 billion a year in advertising, it's tough to conjure up a single memorable spot. Their uninspiring advertising speaks to an America that barely exists anymore. We're more diverse, more urban, more media savvy. We appreciate irony and obliqueness, we demand that our sensibilities be respected and indulged. Detroit insults us.
Take this 2008 commercial for the Dodge Grand Caravan. (The way Detroit names its cars--with all the originality of meeting rooms at a Westin--is another story.) Here, some reluctant participants at a family reunion are transformed in a beatific bunch by a ride in the Caravan. (Not exactly the imagination worthy of a bailout.)
Detroit should have sought the best talent in the world. It needed to open up to smaller, independent agencies that are the idea factories for the industry. And it should have commissioned film directors, not car hacks, to direct its spots. It happens in Europe all the time. Turn Judd Apatow, Spike Lee, Spike Jonze, and Michael Gondry loose and see what happens.
I've also believed that smart marketing could have turned Detroit's union hurt into an emotional benefit. It's absolutely amazing to me that for decades, Detroit took the heat for paying decent wages and providing health care and pensions. Hey, isn't that what big companies are supposed to do? Hasn't Wal-Mart been pilloried for precisely the opposite?
Imagine if Detroit had created compelling advertising that showed its workers living the American dream, and had gotten the UAW to pitch in? The sweet stroke of marketing would have made everyone who drives a domestic car feel virtuous, ennobled. Think how much credit Starbucks gets for paying its coffee growers a few measly cents extra.
Finally, Detroit's marketing failure extends all the way to your neighborhood: the dealership network. The retail industry knows that to survive, it needs to amp up the experience and add entertainment. But car dealerships look like post-apocalyptic empty shells that survived a neutron bomb.
Why didn't Detroit push its fat and rich dealers to leverage the power of architecture and hire Frank Gehry to create a new paradigm? Think about the branding statement that would be.
The services leave something to be desired, too, falling alarmingly short of what you get in comparable imported dealerships. Quick example: I checked the hours of my local Buick and VW dealers. Buick's service department is closed on Saturday; how thoughtful of them. VW is open on Saturday, and also opens earlier and closes later during the week.
Seems like a basic marketing equation to me: If you're not going to be there for your customer, your customers won't be there for you.
Adam Hanft is a decoder of the consumer culture and our branded planet. He blogs for The Huffington Post and FastCompany.com, and has been published extensively, including in The Wall Street Journal, Slate, Civilization, Radar, and the back-page column for Inc. He has appeared on CNN, the Today show, and many other media outlets. He is also the co-author of Dictionary of the Future. Adam also decodes the culture as founder and CEO of the marketing and branding firm Hanft Raboy.
This piece appeared in the Daily Beast on November 24th, 2008.
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They tried to beat back higher CAFE standards. They lobbied against electric cars and alternative fuel.
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This is because of their collusion with the oil industry. Why do you think they've been so adamant against improved fuel standards in the U.S. when all along they've been producing better and flex fuel cars in other countries?
http://www
- Tom
Sorry, this just will not wash. The Big Three have make so many lousy cars for so long that most all of us have had at least one experience with a Ford or GM lemon. Then we experience Detroit's legendary service after the sale (i.e., they couldn't care less), and that clenches the deal.
Having owned a GM car for 14 years now, and a 5 year-old Chrysler product, I contend they are every bit as good as anything made by Asian or German rivals. Aside from normal maintenance and sensible care, I haven't spent a penny on unusual repairs for either of them. I've had the same mechanic for almost 20 years now, and he considers them both very reliable vehicles. Don't get me wrong, Toyota, Honda & Nissan also make fine automobiles, but I'll put my two up against of theirs.
Like a rock
Floating down the river
Like a rock.
Good marketing begins with effective research. A manufacturer, particularly those with heavy capital requirements, must know not just what their customers want but what they will need. Detroit went for the first and ignored the second.
It is no surprise the first hybrids came from foreign makers, and Detroit played catchup. That was no fluke. Toyota and Honda knew hybrids would help address not just efficiency and a greener ethic, but overall cost of operating the vehicles as well.
It is no surprise that along the slush belt in the Mid-Atlantic and the Midwest, Subaru dominates in all-wheel drive for traction and control in modest size offerings. No need to buy a tank to address the margnal winter weather we experience.
The solution to poor sales is not simply porr marketing, but knowing your market as well. A sow's ear can't be fashioned into a silk purse to carry home the money Detroit is asking for.
It's all about the money. Retooling and innovation are expensive. Wrapping the same old package in a new skin is not quite as hard to sell to shareholders. Corporate America has no long term thought process!
First, about "quality". The way auto-testers (like Consumer Reports & other agencies) mean "quality", is that if a switch works, it is "Quality".
However, GM especially is infamous for switches & interior parts made of cheap plastic that feel - cheap. But as long as they all work in the first month(s) of testing, they can win an "Initial Quality" award, for example, from JD Powers.
The acid test is of course long-term quality, and here is where switches, sensors, and mechanical devices that work in the first months show their true quality.
And, sadly, the fact that the Big 3 give warranties that only cover full bumper-to-bumper problems for the first 36 months, indicates that
#1. these manufacturers are not at all confident about the quality of their parts after that factory warranty runs out;
#2. that, with most auto loans being in the 60 month range, the Big 3 want consumers to either pay for repairs before they have paid off the car, or trade it in on a new model;
#3. see #2. above - GM and the "Big 3" WANT American consumers to PAY FOR REPAIRS, while they are still making payments on the original car loan!
To cite a specific example, the Mazda small pickup is produced ON THE FORD ASSEMBLY LINE, but offers a 48 month, 48,000 mile warranty, while the identical Ford Ranger offers only 36,000 mile warranty for the same product.
Can you say "WE HAVE NO CONFIDENCE in OUR OWN product"??
Part 3
The execs are out of touch, trapped in boxes of lack of imagination, have no vision for the greater good of the world, and do not have the work ethic or practicality to do what is needed. They have accomplished the difficult task of ruining their good brand name and, so, they and their brand name should be retired in shame.
Part 2
Maybe the people wanted SUVs, but it was the job of the company's leaders to see how much more demand for oil that would cause and should have understood the effects on the country and the world economy. But, no, they were too worried about how they were doing in the next quarter in order to get that bonus, than to be able to allow themselves to reinvest their earnings toward the company's future. Perhaps, companies' doing quarterly reports should be ended and changed to yearly. Within that time, it would be up to the company to explain its plan over the year for the simple reason that substantive changes and gains cannot happen within a quarter. Without consistently excellent products, any company takes the risk of severing the strong bonds of brand loyalty that, once broken, are almost impossible to get back. The big three are in such disgrace, not only for having put out inconsistent products that don't look good and don't fit any demographic, but for allowing themselves not to envision that everybody wants to save money at the gas tank and everybody wants to save the environment. The choice that the big 3 has given is always one or the other while countries around the world have had the vision to try to have it all.
Part 1
Many good ideas in this piece. It goes without saying that the execs, to quote the author, are zeros. The only thing that makes us believe they are alive is how they continually put us in a state of disbelief by their incredible sense of entitlement. They have so damaged their companies over the years that their brand names have been ruined beyond repair. No more Ford, no more Chrysler, no more GM. A new name is needed, like Revolution. A leader of a company must have vision or the company and most importantly its product will, sooner rather than later, find itself obsolete. Marketing is extremely important in the creative process because the leaders of the company must understand the palette, the desires, and needs of the customer that the company is trying to target. Again, the vehicle must appear, feel, perform, comfort, help organize, and even entertain the driver and the number of people being transported. It is that simple. However, marketing is not just selling a product, or designing a product, but marketing has also much to do with the cold hard facts about the world we live in. Ecology and economy cannot be ignored by the leaders of these companies. So, I respectfully disagree with the author of this piece. Leaders must also have vision about the limits of their product and plan for the future.
FYI : "product" happens to be part of the marketing mix.
lack of vision and strategy, that's what killed Detroit.
There is some truth to all of the reasons mentioned here but I will tell you what killed all of Americas industries and the word is inevitability.
It happens to all world powers in the end, you cannot have the worlds highest standard of living the worlds largest military the worlds largest ego without paying a price.
People cannot afford to ignore low prices when they try to live beyond their means and to the artificial standards set by advertising companies, inevitably these products are made by cheaper labor overseas and your good jobs disappear, it happened to Great Britain 70 years ago and you mostly laughed, where is your sense of humor now.
Oh, one other thought on the US Auto industry, when company advertising places a higher value on the number of cup holders rather than the engineering of the car or fuel efficiency the end is clearly in sight.
Do they HAVE to come out with new models in a confusing line-up of options EVERY YEAR? Stupid names, patronizing ads and -- hate to disagree with the original premise -- US cars in the middle to low end are crap. Almost all of them sitting in dealerships today are also TOO F*&%#-ing big.
I think Hanft is on to something, but his understanding is a bit shallow. The marketing failure extends beyond how the vehicles are advertised and sold, it goes to what vehicles are built. Engineering and build quality are good, but what the Big 3 are building is a problem. The herd mentaity, and fear that is built into every SUV and pickup truck is as thick as the smell of vinyl and urethane in a Hummer. Detroit is, in fact, building crappy cars. Well engineered, well built, crappy cars. The concepts, the ideas are crap. Bloated platforms, ersatz utility , ersatz performance, and ersatz efficiency. The engineers and line workers should not get the blame for this crap, it comes from the deadwood at the top.
The marketing misfire goes deep, the deadwood is thick, and clearing is needed.
What say we break up GM, Chrysler , and Ford into their component companies, and have those smaller companies compete against each other, and not turn out cheezy clones.
I have to isolate Ford here, in your comments. The Focus and Fusion are world class small and mid sized cars. They are exhilarating to drive and are very well built. GM (Cobalt and it's clones) and Chrysler (Caliber and it's Jeep clone) are not. GM, in particular, hasn't a clue about small cars. They are cheap looking, and feeling, and drive like, well, like you have no idea you're riding in a car. It's like a cheap sofa in motion.
I would recommend taking a Toyota or Honda our for a spin. I've had the misfortune to drive a Focus and the last thing I would call it is exhilarating or very well built. They feel cheap and clunky, like most of the other domestic vehicles that I've tried.
Reading posts and comments I see a common thread. People are telling a middle age overweight smoker that he should have stayed in shape and never lit up. That's true. But it doesn't solve the problem that the person now needs a heart/lung transplant to live. These companies need the freedom of a BK to renegotiate not just labor contracts but dealership and other contracts as well. I am not sure how this could be achieved, perhaps through legislation. BK would mean liquidation and death to the big 3. But leaving all the arcane contracts will cause the big 3 to go belly up no matter how good or green their products are.
Now Bill,
let me explain how this thing worked. The companies, with the full knowlege and compliance of the legal and accounting departments, signed these CONTRACTS with the workers as a way to cut costs of producing autos in the past. It simply was cheaper to promise future benefits than to pay an hourly wage that was an inducement to work in that mind numbing and confrontational industry. Now that the bills have come due, much as someone who has used his credit cards to keep his small business afloat, disaster looms.
I say without any doubt or fear, we should take these companies over as taxpayers, liquidate them, or sell them to the competitors, and use the proceeds to pay off the pension plans, benefits packages and other CONTRACTUAL responsibilities. Contracts need to be binding on corporations as well as on individuals, not just on those who cannot afford to lobby Congress. This is the basis on how a society should act and will make a more responsible world.
OK! Mr. Brainiac liberal guy-- Show us where in these contracts does it state that taxpayers have the obligation to bail out management or union workers. You can develop a spine and personally bailout GM but leave the rest of us out of this scheme.
How these guys couldn't see that buying a car is generally an awful, sleazy experience is beyond me.
This must be the most F'ed up industry on the planet
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