Wednesday, December 10, 2008

No Wonder The Big 3 Are Screwed

With this kind of brilliant advice.

Walter S. McManus, the head of the Automotive Analysis Division of the University of Michigan Transportation Research Institute, says he could see it coming.

"Brand loyalty is overrated," McManus stated flatly. "It is costly to do all the fuzzies, and Saturn's example is clear that it doesn't pay off for what is essentially an economy-car company. Women especially appreciated the Saturn way, but Honda sells more cars to women, despite having a less female-friendly approach."

Jeepers. What a pin-headed bit of logic. Honda isn't particularly 'female friendly' (any more than other car makes, really), but they've earned that market by producing cars that work. For a long time.

No, Honda's cars aren't the most exciting out there - but they work, they are well made and they've had a solid reputation for decades. Yes, the early models were - well - crude. But once they hit the mid-80s, the company hit its stride - especially with the Accords.

I can't count the number of people I work with whose first car was a Honda Civic, or they bought one for their daughter's first car (often with the thought that it was a reliable car that wouldn't strand their daughter somewhere in the dead of night).

Myself, I'm on my second Honda; my father is on his second (in fifteen years!) - brand loyalty isn't worth much? Horsefeathers. Chances are that I'll give whatever Honda has on the floor in another few years a serious look when I go to replace my current car. Why? Because the cars have treated me well, the service department at the dealership has been fair to me, and Honda has stood behind their product. Loyalty is earned.

Saturn set out on the right track in the late 80s - it was a lack of vision and persistence on GM's part that undermined the first initiative that company had which was going in the right direction. Those that I know that have owned Saturns have spoken well of their experiences with the dealers (in the early years), even if the car itself was "average" quality.


Anonymous said...

I will disagree. I think that somebodies in the Big 3 have been projecting sales by saying that there are x number of B3 cars out there now, and when it comes time to replace them, those owners will obviously buy the same make of car (brand loyalty). This guy is pointing out that people will buy non-B3 cars if they feel they that B3 cars don't measure up.


kingpin said...

Mr. Cracked,

You may have misinterpreted my statement. Saturn instilled loyalty at too high a cost for a company that sells inexpensive cars. Saturn was especially concerned that their dealerships treat women differently that the old stereotype ("What car does your husband want you to have, girlie?"). Saturn had national television commercials on this theme.

Walter McManus
The Extraamundane Economist

MgS said...

"Kingpin" - if you are in fact who you claim to be - I don't think I misread what you wrote at all.

In essence you stated that "it's too expensive to build brand loyalty". That's nonsense. Saturn made some mistakes, yes. But instead of refining the approach, GM execs simply killed it off. That wasn't smart, it was incredibly short sighted.

Lastly, there are many ways to build brand loyalty. If the product is only "average" (as the early Saturns were), then you make it up in making the dealership experience something people like.

Bungle-Lord: I agree with your comments about forecasting, but I still stand by my position that GM - and the rest of the big 3 - have suffered from some of the most myopic marketing and policies I have ever seen in the last fifteen years.

Saturn represented an honest effort to do things differently - until GM's bean counters freaked out about margins.

quixote said...

There can be no brand loyalty when you spend lots of effort telling people that you can't do something.

Government: Make more fuel efficient cars.
Japan & Germany: Ok, we can do that.
America: OMGWTF! We can't do that!

Do it long enough and people get the message.