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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Here's a tip ..........
Re-invest the savings into R&D and design. R&D ansd design adds real value to a product, marketing merely fluff. Marketing groups drain value, add fluff, R&D and Design creates value.
It is very simple , but as most companies are run by marketing folks and they will never get it. It undermines their being.
We don't need a mouse trap in a new package. We need a better mouse trap.
Excellent points on how awful Detroit's ads have been. The few times they've had good ones they soon reverted to the usual forgettable mediocrity.
Dealers--surveys show that Detroit's dealers are often better than import dealers. And Saturn pointed the way. But there's still certainly room for improvement.
Fuel economy--CAFE has always been a stupid solution. It makes no sense to force a company to create products for which there isn't sufficient demand. There's one proven way to improve fuel economy: a higher fuel tax.
The market for the EV1 was nowhere near the size people imagine it to be. Ditto any hybrid with the limited exception of the Prius as long as gas is back under $2.
TrueDelta.
http://www
Better marketing would have helped, but the awful cars of the 1970s drove away huge segments of the market share that have never come back. All consumers were asking for was a car that would get decent mileage, was reasonably sized and didn't cost a fortune to run. A car that didn't diesel on for two minutes after you turned off the key and wouldn't vapor lock all the time would also have been swell, too, as would a car that didn't rust out before you got it off the dealers lot. That they didn't get even one of these is Detroit's biggest failure ever.
Yes, the big three make better cars now, but there isn't one of them that is a world-beater. Where's the Detroit Prius? The Motor City Mini-Cooper? No, the big three fell into their same old pattern of making the same old stuff, and heavily tilted toward the big, high-profit SUVs and pickups. When that market went away, it became painfully apparent that they had nothing else worth buying.
My father worked for American Motors in the 1950s, and got laid off in the recession of 1958. On the way out to the parking lot, he looked critically at all of the Ramblers and realized that there wasn't a single car the company made that he would have bought, even if someone had given him the money. He went into another business, and did far better than he would have with AMC.
Does the "Marketing Department" have the same dual role in "Detroit" as in other companies? That is, they control the advertising, but they also have very strong lines to management to make the decisions about what to build. Marketing isn't just given cars to sell, they help define what is to be produced.
The company can only build what they are told to build. The customers apparently have fairly weak pull in this regard. The sales and marketing side got into the spiral of building what they want to sell, not what the customers want to buy. They tried to shift attention to those models but they failed.
As a previous commenter said, where are the station wagons? GM doesn't even seem to make a minivan any more - not that they, in 25 years, really quite got the formula right.
Oh, hell, where are the Toyota Tundras? Tacomas?
The Ford F 150 and Dodge Ram (with or without a Hemi) are the best full size pickups Detroit's managed in recent memory, none of them hold a candle to a Tundra in mileage, maneuverability or reliability.
And, it's even worse with small pickups. Notice what make & model is most often used by our Arab enemies?
Yep. Toyota Tacoma, terrorist hum-vee. And, it's not because they are all about dissing Detroit. It's because of reliability under adverse conditions.
Good for you dad. Starting over isn't easy. He was dead-on about the cars he once built. In my 59 years on the planet, I've never owned a single American car. In college and for years after, I drove VW's. After that, Subaru wagons because of their economy, space, and four-wheel drive. Now our family is back to Jetta's, a Volvo and an A-3 Audi.
Fact is, American cars, with few exceptions, are zero fun to drive. They still handle like tanks and guzzle fuel in the same fashion. My dad, a WW II bomber pilot, swore by American cars for years. One day, he started swearing at them and never owned another after his first BMW. It's a shame to see this industry in such terrible straights. But they brought it on themselves.
If marketing and management messed up GM, let's advocate for the United Auto Workers to purchase GM. It will be interesting to watch how the UAW would then proceed...
Listen, I do not want to see tax dollars wasted bailing out GM when they will fail anyway, but saying a worker brings home $73 X 40hrs every week is lying as much as others say it is $14/hr. It is about $28. Don't start with the healthcare, pensions for retirees, etc. because that is not what you said. You mentioned average pay, as in what a worker brings home like the rest of us that are not in the auto industry.
I believe it is not their fault that Detroit management does not know how to properly run a company like the Japanese executives do. There are plenty of legitimate reasons not to bail them out. Please stick to those.
The correct way to look at the GM issue is simply to conclude that if management has caused the problems then we need to petition the UAW to purchase the company. The UAW then could change GM in any way except to come to the taxpayers for another welfare payment. Especially those taxpayers who make less than an average pay PACKAGE of $73/hour. (Benefits are part of their compensation).
If you would like to send your money to Detroit no one will stop you. Since my pay PACKAGE is much, much less than $73/hr., I should not be forced to make this welfare payment.
It isn't $73/hr. You were told a lie. That figure represented all monies paid for wages, insurance and retirement to all workers, former workers (retireees) and survivors of retirees divided by the hours worked by actual workers. Do you see the lie yet?
There is a current article on the WSJ that quotes the same $70/hr wage. whenever that's quoted, an author loses total credibility because it is such a gross lie.
this is the typical partisan critique of the industry - blame the workers. Well, the workers only played a tiny part in the failure of the companies. They didn't design the cars, they didn't chose the advertising agencies, they didn't chose what to makret and to whom, etc.
And, I guarantee you, the workers would be willing to take (additional) pay and benefit cuts to have a job. What company in its right mind would PAY workers to retire, guaranteeing them a pension indefinitely. The people at the top knew this would happen one day and have already positioned themselves. That's why they have the arrogance to refuse to step down. They want the government to allow them to continue as is for another year or two while they sock away a few more million apiece. That's why they had no longterm strategy to present when they went to Washington, and they won't on Dec. 2nd, either. But they know the Fed will bail them out to save 1-3 million jobs.
I am just a regular "Joe the Plumber" and therefore I understand that front-line employees have a huge part to play in the success or failure in companies. If auto workers would have produced quality to the levels of Honda and Toyota then GM would not be very close to failure. I understand that if these workers really wanted the long-term success of GM they either purchase the company and take pay cuts.
Toyota workers have an absentee rate of 2%. What is the rate for GM?
(I think it is over 10%).
Geez, I thought all of the Repuglickin' trolls had gone back to the Rash Windbag, dittohead site.
Having such a diverse ste of posters shows that HuffPo truly is inclusive, but perhaps it should screen for SOME intellectual content, and not for including a post simply to show some inclusion.
After that, I think that having the UAW owning the companies is a capital idea! When workers have input in how the company is run, the company does better, witness Toyota in the US. Workers are encouraged and rewarded for product/ process improvement, and Toyotas built in the US are of higher quality, even when built by former UAW members that come from the Big Three.
It ain't the worker, it's the management that's the problem.
Sorry that my proposal makes too much sense for you. If management is the entire problem then the union must take over.....H
As many commenters here have pointed out, marketing is entirely irrelevant to solving our economic and social problems. I'd go further: the sole purpose of marketing is to deceive people into behaving in ways that are against their economic interests. Usually this is limited to getting people to buy things by associating the product with sex. I love that "Mercury Girl", by the way.
But, there's a much bigger issue. What many people here are missing is that the problem today is with the product itself: the automobile. The 20th century was defined by the exploitation of cheap fossil fuels to power everything from cars to wars. Those days are coming to an end. We can either organize and make a smooth transition, or we can crash and burn.
Detroit are you listening? http://gas
No. Lousy cars first, and lousy marketing a distant second.
Yes, they've improved, but it is too little, too late.
No industry in the world has demonstrated more contempt for its customers than the "Big Three".
The Chevette. The Omni. Even Ford's Escort or Focus have always been better in their European versions.
These companies have always known how to make good cars. They just chose not to make them here, taking advantage of the American public's misguided loyalty. What else is this if not utter contempt for the customer?
Much of this is nonsense. You are focusing on one industry, when its actually the last to survive at all!
Name an industry that we have not lost (ship building, electronics, appliances, textile, pharmacy, computers, software is going).
Its not ADs.. and its not even crap anymore! Over all its trade policies, low wage countries and predatory pricing, yelling free trade when no else plays that game.. they play to win for their country. They have managed long term industrial policies with government paid research and development.
Free trade is not China charging a 22.5% tarrif on your goods or Japan, China and Korea having largely closed markets. Its not Asian car MFGs selling a car here for half of what they sell it for in their protected markets (where they make all of their profist). Its not Europe putting a 20% market share limiting Asian cars to protect their MFGs unlike the U.S.
Its not countries paying for their workers healthcare while us not doing the same.
Its has been placing low consummer prices over long term high paying jobs and balanced budgets.
Regards
I agree that "free trade" is the real issue, but "they" are not foreigners. The 500 or so home-grown American billionaires are the ones who have profited immensely from a generation of outsourcing, first manufacturing and now top-skilled engineering and other technical work.
You are right that the U.S. auto industry is one of the last holdouts. American capitalists are now poised to kill off the last strong labor union in America, by letting the auto companies go bankrupt.
I've owned a Saturn SL1 for almost ten years. It's been reasonably reliable, and the service was proactive. (At least initially; now, not so much. They used to change the oil without my asking; now they don't.) A couple of years ago I asked them when they were coming out with a hybrid, which I said was a natural for the Saturn market. The salesman responded by touting their new SUV (nonhybrid). Now at least they have a hybrid SUV and a hybrid sedan.
Adam what are you smoking? Our cars are overpriced, and they under perform.
Over priced..pl
Regards
Marketing; isn't that what you call putting lipstick on a pig?
I was a head copywriter on the BMW account for several terrific years. Detroit's advertising was a joke to us and a reflection of its cars: occasional flashes of inspiration (i.e. Iacocca’s Mustang), followed by years of bland sameness--I never could tell the difference between a Pontiac and a Buick. Everyone in my creative group understood the problem. Giant corporations are a pyramid of pencil pushers. Risk and creativity are the last things they want. Play it safe is the corporate watchword and it permeates every aspect of their bloated culture; bottom to the very top.
The damn shame of it is, assembly-line folks had little to do with these problems yet they are the ones destined to suffer the most.
Creativity and vision make the business world go around. The dinosaurs from Detroit, both their vehicles and management, are doomed.
If so then we are doomed. Since 1980 our MFG has dropped from 32% of GDP to under 10%. Half of whats remaining is the BIG 3.
BMW is in a partially protected market where they limit the percentage of Asian built cars, to protect their car MFGs unlike us. Besides they build 50K cars!
Regards
Marketing has never added one penny of value to ANY product it has touched. Marketing is nothing but propaganda trying to persuade people that what they really want is what has been deemed most profitable for the producer. Marketing is an after-thought. It guilds the lily.
American auto makers have been led astray by their marketing "gurus". The engineering department has nowhere near the clout of the marketing department. The main problem with American autos is they are designed to suit the advertising people NOT the consumer.
Put the engineers back in charge and can the entire marketing/
We are going the way of the British auto industry. It was once the cream of the crop but then the MBA's got hold of them and drove them right out of business while the Germans and then the Japanese companies were run by engineers who understood cars and what worked.
I see the Germans headed in the same direction with the Chinese and Indians positioning themselves to fill in. Close all the business schools and have their students take up something productive. We just cannot afford their idiocy any longer.
Sorry, but you don't know what you're talking about. MBA's killed the British auto industry? Who told you that? Like the British motorcycle business, crummy products, many with lousy electrical systems by Lucas, contributed mightily to their fall.
I've created advertising for 25 years (some for BMW), and as with any business there are terrific marketing people and dopes. However, one thing is certain. Having worked with engineers from start-ups to big companies, I’ve only met one who had a clue about marketing their own products. It’s just not their thing
.
It will be nice to see the American auto industry revamp its cars so that one feels safe purchasing a small compact fuel efficient little putter. Who wants to drive that tiny thing while there are still gas guzzlin steel giants rolling around the highways that will crush you like a tin can should there be a collision?
You raise excellent points, among them the unwillingness to try newer approaches to advertising involving the use of smaller, more creative firms. Truly, many ads for American cars conjured up images of the Republican Party to me: refusal to consider higher mileage as a value Americans would want, happy blonde families almost waving the flag, vehicles roaring over pristine areas like Moab (who would want to do this?). It all seemed so dated. Although a lot of this had to do with the choices made by Detroit before any ad campaigns launched, it is interesting how the two worked together, giving Detroit a behind the times appearance.
And, you have to wonder why they wouldn't have wanted to try newer ad agencies just on principle. When you're trying to project an image of modernity and change it seems silly to stick with agencies you have used for 60 years.
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