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Shrinking General Motors

April 1, 2009

“General Motors” just sounds big. It sounds like a company that is trying to make and sell something for everyone. When I ask my marketing class about their perceptual associations of General Motors, something I do when I teach the case “General Motors: OnStar,” invariably words like “big,” “old,” “outdated,” and “low-tech.” come first to my students minds.  This may or may not be a fair set of thoughts, but in many respects that is quite irrelevant. These first thoughts govern a whole lot of buying behavior.

But at some point in the conversation, after all of these negative comments have worked their way out of their heads and onto the blackboard, I ask if this is their perception of GM trucks. The psychology takes a sharp turn at that point. Many of the students have a completely different view of their trucks, believing them to be rugged and reliable.

GM is spending a great deal of money trying to recreate themselves as the kind of car company that could successfully make and market the “Volt,” a new type of electric vehicle. It won’t work. Once people have made up their minds what a company and brand is about it is exceedingly hard to change their view.  As GM looks to shrink itself, and most certainly that is what is going to occur, it should take a hard and realistic look not just at its union contracts but also what people will actually consider buying from them.

General Motors could become a profitable truck company. It will never be a profitable small car company. The cognitive stretch between what people think GM is and what they would need people to believe is simply too large.

The truck market is not going away anytime soon.  The Spanish-speaking market, a group that represents the next generation of American craftsman and contractors, will buy trucks from GM if GM focuses more than a token amount of their marketing efforts towards them.  That market would represent a regrowth opportunity for a smaller more-focused company. Those who work in the construction trades want big, tough and, yes, fuel efficient trucks.  They typcially put a lot of miles on their vehicles and fuel costs are very real to them. The “Volt” won’t sell, but GM can build these kinds of trucks — and perhaps more importantly, most people will believe they can.

So here’s to the General Truck Company. It at least has half a chance of survival. General Motors does not.

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One comment

  1. I agree with you that GM should focus on their unique reputation for producing well made trucks. They can’t complete in the sedan hybrid market because Toyota and Honda are already lowering the prices on their respective hybrids and GM is too late to the party. The Volt (a plug in hybrid) costs 40k compared with the Prius costs 22K. Many consumers feel even that is too expensive given the lower price of fuel now.



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