Some of the biggest challenges facing executives during this recession are related to the retention of customer confidence in their brands. Some of the biggest casualties of the economic turmoil have been some of the biggest brands.
North American auto brands make an interesting case in point. GM’s current advertising suggests that managing eight brands was just impractical these days. I’m not sure just how accurate that is, as other companies seem to be doing just fine managing many more than eight brands. What is true is that GM has been singularly unsuccessful in managing the appeal of THEIR brands.
With all of the changes in organization and ownership at the “Big Three” in particular, important questions are raised about their remaining brands and how those brands should be positioned and about how new owners should manage the brands that they have acquired. What equity remains in North American car brands?
The reborn GM will have shed its Pontiac, Hummer, Opel and Saturn brands and will, one hopes, emerge from the ashes leaner and stronger. But a very real concern remains as to whether GM will be able to regain the confidence of the buying public around the remaining four brands.
Will Chevrolet retain (or regain) its formerly-iconic place as the “heartbeat of America” when GM finally emerges from Chapter 11 and is owned by government and its unions? Will Americans feel any loyalty to GM brands simply because they own them? Will Buick and Cadillac, both of which have traditionally targeted older buyers, be seen as “your father’s brands” and go the way of Pontiac and Oldsmobile after all? Can the new GM pull off for their remaining brands what they were unable to do for those they have cut loose?
It looks like Hummer is off to China. This represents an interesting branding challenge for the new owners. It can hardly be said that Hummer is a brand for the times. Customers who want to minimize their carbon footprint are not going to buy a Hummer any time soon. It is the antithesis of “green.” So, how will the new owners position the new Hummer? What should its brand appeal be?
Saturn on the other hand is a brand whose entire history has been connected to customer service and the building of communities. In that sense, it was a brand ahead of its time. It may be that Saturn was never directly connected to the GM family of brands in the minds of the buying public. Although customers knew there was a connection, Saturn actually behaved like a different kind of car company. It may be that Roger Penske can salvage the equity in the Saturn brand more easily than the new owners can for Hummer or the new GM can for its remaining brands. His best strategy may be to distance the new Saturn completely from GM.
Will customers treat Ford any more kindly and be predisposed to that brand simply because it has not bellied up to the bar for bailout billions? Does its apparently better fiscal management and genuine attempts to put product on the road that is both attractive and relevant to today’s customer earn Ford any kudos, or will North American customers lump its brands in with those of GM and Chrysler and opt in even greater numbers for Asian and European brands that have done a better job of earning their loyalty? Ford, after all, did little to maintain the formerly world-class brands of Land Rover and Jaguar, now both owned by Tata, or of Volvo, now rumored to be sold soon to yet another Chinese automaker.
In financial services, the other sector that has been the recipient of billions in bailout money, the branding situation is much the same. In a survey of wealthy Americans released last week by The Luxury Institute, leading brands such as Merrill Lynch, Smith Barney, UBS, Wachovia and Goldman Sachs had slipped badly from a year ago in brand credibility.
Such developments raise fundamental branding questions. How should these badly bruised brands be positioned and managed so as to restore their luster? What does the financial crisis do, for example, to naming rights? How do sports fans feel about going to games at the Wachovia Centre or GM Place? Does the diminished equity in the sponsor’s brands negatively affect the appeal of the professional teams that play in such venues?
These are interesting questions for companies that have to navigate through a marketplace where their world has shifted. They must figure out how to rid themselves of the negatives and to harvest the positive features of brands that had made them successful in the first place. This is a formidable challenge. We will be handing out branding awards ten years from now to those companies that can pull it off.