"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my book about "Flux Branding" - in a nutshell, I believe the concept of "Lifetime Value of the Customer" is overrated, outdated and unrealistic.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 :)
