June 23, 2005General Moaners
Filed Under: New Marketing
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"You pay what we pay. Not a cent more." That's the rallying cry from every single piece of communication coming out of General Motors offering consumers the same discounted rates that are offered and available to their employees.
The unprecedented promotion came out incidentally the same week (or thereabouts) that GM announced they were letting over 21,000 employees go (at least they'll still be able to pay what they used to pay)
I've really restrained myself from commenting on this for the simple reason that I don't want to "bash" or kick the slumbering giant when its down and trying to recover. That being said, I do feel that I need to say a few words and if I didn't, I wouldn't be being true to my charge and certainly to the readers of my blog. So here goes...
Let's start with the price wars - the deep discounts and seemingly never ending undercutting - which are starving the dealers. Make no mistake, the consumer wins...but I feel everyone else loses in the process.
From a strategic perspective, continuous discounts and price cuts only devalues and dilutes the brand offering, whereas the ability to command a premium price typically signifies strong brand value (think Starbucks)
In the case of YPWWP (you pay what we pay), it's a precedent which is pretty impossible to follow. How do you beat that? How do you follow that? It reminds me of the story of one trader who says, "times are so tough, I'm selling my inventory at a 10% loss?" A fellow trader says to him, "So how do you make money?" "Don't worry," says the first, "I make it up on volume"
On the flipside, let me defend this (perhaps I'm reaching and perhaps I'm not) with a notion from my book about "Flux Branding" - in a nutshell, I believe the concept of "Lifetime Value of the Customer" is overrated, outdated and unrealistic. Is it LVC or the time of their lives?
In this case, GM will no doubt move a lot of product and once it's in the hands of the thousands of customers who will purchase or lease GM automobiles, there is the hope that the product will sell itself and the satisfaction (Onstar, Satellite, DVD et al) will carry over to the next purchase. In fact GM has 3.2 years to figure out what to do next, and not 3.2 months after the promotion ends.
As reported in Ad Age, the promotion has found the hearts and minds of consumers and GM's competitors are reacting/retaliating:
GM's "employee discount" hype on all its 2005 models is attracting more consumers who had Ford, Chrysler or other non-GM brands on their shopping lists, according to CNW Marketing/Research. CNW found that while 57% of all people who entered a GM dealership last June were already GM "intenders," just 37% were intenders this June. That means, CNW President Art Spinella explained, that the new program is drawing increased numbers of non-GM consumers, and that the showroom traffic is less reliant on those who already own GM vehicles.
The piece also mentions that "savvy consumers can probably negotiate with GM dealers for a better deal than the employee discount."
So in a nutshell, the focused and singular message is resonating and despite some of the competitive overtures, YPWWP is the benchmark or reference point.
My real concern here is the message it sends out to employees of GM. Their employee discount was/is no doubt a huge perk of working for the automaker, and this promotion essentially minimizes or marginalizes this by tearing down the walls between employees and customers. It's a morale issue...especially when I read this morning that GM is now looking to scale back health benefits.
I guess the real issue is whether GM has been able to rally the troops in the process and successfully been able to convince (or fool) them that this promotion is a good thing for the company and for them in the long run. To be honest, I don't even know if the "employees" in the TV spots are in fact real employees...and even if so, I wonder if this "love" is pervasive throughout the corporation.
So that's my take in a nutshell...good for consumers, bad for employees and jury's out with respect to the billion dollar question: will this give the ailing company the jumpstart it needs to get back on track.
Time will tell. I'm off to my local SAAB dealership :)
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» Employee Discount from Richard Robertson asks "What Now?"
One of my heroes, Joe Jaffee, has a post today about the GM Employee Discount. He takes exception with it, but I must say, I love it. Surely you've seen the commercials where a GM employee promises that new car buyers will now get the Employee Discount... [Read More]
Tracked on Jun 23, 2005 9:10:15 AM
Comments
First, I want to tell you that I love Jaffe Juice and read it every day. And I love your book and have plugged it on my own blog (haven't sent you my $.10 yet, but I will, I promise). Today may be the first instance that I have to disagree with you (you seem grumpy today, what's wrong?). The new GM Employee Discount offer has certainly got my attention (and I live in NYC with absolutely no need for a car). But I love the idea that I'm being offered the employee discount, because to my way of thinking, that's the very best discount available. It cuts through the myriad of "no financing" offers and special rebate offers and so on. It tells me plain and simple that this is the very best offer I'm probably ever going to get. And if I was a GM employee and watching thousands of other GM employees being laid off, I'd want to know that the company was doing everything in its power to sell cars, and if that meant giving them the employee discount (or better, for a limited period), then so be it. I doubt that there are too many people who take the job just for the car discount, but rather because they need a j-o-b and a paycheck. Anyway, thanks for keeping it interesting!
Posted by: Richard
For a discount program that digs deep, YPWWP is as good as any. It's personal and inviting. Yes, the layoffs are bad and we know that the "employees" in the ads are either actors or management, but that's life.
GM's problems go MUCH deeper than their latest "hair on fire" pricing strategy. If this allows them time to make necessary changes or to continue to turn the big boat around - cool.
Here's a suggestion: become THE American Auto Maker with the highest tech, low mileage vehicles available. Go after Toyota and Honda with the american flag. Make it a race to the efficient like we raced to the Moon. Take the gloves off and make it public.
Posted by: Bruce DeBoer
Richard - thanks for your thoughts. Slept really badly last night so very likely that I'm a bit grumpy, and thank you for disagreeing with me...agreement is nice, but disagreement is the best kind of dialogue. Things are never quite black or white.
That being said, I thought I was being fairly kind...or at the minimum, represented a balanced point of view.
It all comes down to the "now what you got" challenge for the brand and company. How exactly do you follow this kind of promotion?
It could be the kind of drastic shot of adrenalin needed, although there's a fine line between drastic and desperate.
Posted by: jJ
Bruce - you bring up some interesting points.
So with your inspiration, let me throw out this (gulp) big idea for GM.
Now that you've opened up your employee discount to all, why not do the same with your marketing?
Create an open source marketing invitation for all your passionate consumers/marketers who want you to succeed to co-create the next (new) marketing drive (pun not intended)
I will say that the "drive American" value proposition isn't exactly a given these days. It's more of a "give consumers what they want" (e.g. hybrid) first and message second approach, as opposed to the other way round.
Posted by: jJ
GM will climb out of the hole it's in the day they recognize that their customers are more interested in driving a high-quality, aesthetically appealing automobile than they are in Tiger Woods/Meat Loaf/Aerosmith/the next cheesy borrowed-interest ad gimmick. If they had spent the money they threw at Steven Tyler on an updated powertrain for the Lacrosse, they might not have been compelled to hawk it like day-old bread. Maybe next year!
Posted by: DV
I wanted to just make two quick points that may change some opinions. First, the people in the ads are real employees (you'll have to take my word on it). Second, I know some employees get a GM car as part of their employeement already (at least managment and corporate employees. This still doesnt help line workers, dealers, and suppliers, but the overall success of the promotion does good for the company as a whole. And I agree it may not pay off for brand value in the long run, it may starve off immediate pains GM faces, and even save some jobs in the short term.
Posted by: Doug
Yeah, I know they're real...but do they represent the typical GM employee, or just those that look good on TV?
Here's another thought...do consumers care about GM - the parent or umbrella brand - or do they care about a specific make + model? Bundling SAAB with Hummer with Cadillac with Pontiac just makes no sense?
To what extent does the umbrella communications strategy add/detract to the overall equity versus focusing on the individual brands?
Posted by: jJ
Some thoughts from inside the world of GM on all of this (without revelaing any secrets).
Firstly, even GM acknowledges it has a pricing issue - to much time spent on deal and nto enough fair market pricing. That is the right solution for them - price the vehicles at what people will pay for them for now and build value in the brand over the longer term with product and amrketing to support it.
Secondly, Bruce it the nail on the head when he said GM's problems are bigger than this pormo. The best for them to do would be to get out of Detroit and hire some non-automotive people who might bring a fresh perspective to the situation. That might stop the terrible Buick marketing (though not the terrible Buicks - but that's another issue entirely).
Finally, you can kick GM, but tis not all bad in terms of marketing. Pontiac won a media lion at Cannes, Cadillac gets cited in Blogs for its Cadillac Under 5 work, Hummer's work is talked about as was some of the Saturn launch work by Goodby. Not to shabby
Posted by: Mark
One GM Employee Full Discount, worth about 16% off sticker. First Come First Served.
Send me your valid birthdate, zip code, and email addy to the address shown on mu url. I will activate the code for 24 hours then cancel & offer to the next taker. Get Busy!
Posted by: gm employee
