Mark Ritson on branding: GM is risking death by brand overload

suffers from one of the most prevalent and destructive brand issues of
all: it has too many of them.

If the game of marketing was about owning as many brands as possible, GM
would win hands down. It currently owns 12, from Cadillac and Hummer to
Saab and Opel - and, lest we or GM forget, Vauxhall. Unfortunately, the
overriding rule of brand architecture is that less is very much more,
and it is suffering from all the classic ailments of a company with too
many brands.

GM is struggling to make the marketing investments necessary to maintain
brand equity and generate sales. This may seem curious, given that it
spent more than $4bn (ú2.2bn) on advertising in the US last year alone,
but once you share that amount between 11 marques and more than 80
different models, the budgets for each begin to look much less generous
- especially when you are competing against more parsimonious brands,
including Toyota and Porsche, which have much leaner (and therefore much
more efficient) brand architecture.

GM has also become dangerously addicted to economies of scale at the
expense of brand differentiation. It is over-reliant on building
different branded vehicles from a shared platform. While this is an
excellent way to reduce development and production costs, it results in
ever-more homogeneous products and a rapid reduction in differentiation
and brand equity. The latest Pontiac Torrent, for example, is little
more than a rebadged version of the Chevrolet Equinox, and consumers
know it.

GM is also economising on front-of-house systems, with many dealerships
now merged into cost-efficient, but brand-killing, shared retail points.
Target segmentation and brand differentiation are being replaced by
cannibalisation and commodification as GM gradually destroys itself.

In a recent speech, GM vice-chairman Bob Lutz stated: 'We are not
discussing the elimination of any brands.' The great irony of GM's
plight is that a steadfast belief in maintaining every brand in its
portfolio results in the gradual destruction of them all. Lutz claims GM
'loves all its brands equally', but this is a mistake when it includes
corpse-like Pontiac and high-potential star brand Sa-turn. Brands are
not children; some of them must be killed to help others.

Vauxhall is a perfect illustration of what happens when a company has
too many brands spread too thinly. Its brand is as indistinct and
insipid as the cars it produces. What does Vauxhall have in terms of
brand equity? Nothing. Neglected, ignored, unimportant. The only good
thing about GM's ownership is it will take another couple of years for
the brand-addled management to realise they should close Vauxhall down -
or sell it to the Chinese.

GM's marketing supremo Mark LaNeve recently told BusinessWeek: '(Do) I
think we have too many brands? No, but we have to manage them a lot
better.' And therein lies his, and GM's, problem. The former is linked
to the latter, and one thing cannot be fixed without the other.
30 SECONDS ON ... GENERAL MOTORS

- GM is the world's biggest car maker in terms of sales. Founded in
1908, it is based in Detroit and has 327,000 employees, with
manufacturing facilities in 30 US states and 33 countries around the
world.

- Almost 9.2m GM trucks and cars were sold globally last year under the
Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel,
Pontiac, Saab, Saturn and Vauxhall brands.

- GM lost $10.6bn (ú5.7bn) last year. It is now axing 30,000 jobs,
closing 12 plants and raising cash by selling its shares in other firms
and subsidiaries.

- Last Friday, Kirk Kerkorian, whose Tracinda Corporation is GM's
third-biggest shareholder, proposed a global alliance with the
Renault-Nissan group; Carlos Ghosn, chief executive of Renault and
Nissan, is reported to be interested in acquiring a minority stake of up
to 10% in GM and including it in the Renault-Nissan partnership.