General Motors, I have the answer. My first installment in to what I believe is GM’s biggest errors.

Let me first establish that I am a self proclaimed car guy. I am no expert. However, I do have a lot of experience with cars such as building motors, installing suspension components, routine maintenance etc. I am also studying advertising, marketing, brand building and things of that nature. Because of this, I believe I have a unique view of General Motors’ plight. While I offer these rants and solutions, I am in no way stating that these “problems” or “solutions” are the entire way to fix the current economic status of the company. Obviously I am not an insider of the company. I do not work in the day-to-day financial negotiations and I am not a brand manager. All of my “insights” come from a consumer with marketing/advertising experience point of view.

In my opinion, the biggest error facing General Motors is ignoring brand leverage. As of January 2009 General Motors is the parent company of 8 automotive brands, Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, Saab and Saturn. Looking at this large number of companies the first thing that comes to mind is that it is simply too many automotive “brands.” While there is a point to this, (currently Ford is selling off a lot of its brands) I do not think it is necessarily true. To use a loose fitting example, Cincinnati based Proctor and Gamble owns more brands than I can count. Despite this, P&G is not in danger of going bankrupt. Why is P&G so successful despite their large number of brands?

To put it simply, in some product categories, P&G owns two parts of the market share. For example, if you look at the product category of laundry detergent, if I buy premium I am buying Tide and therefore I am purchasing P&G. However, if I buy the cheap version there is a very good chance I am also buying P&G. While P&G does not necessarily hide the fact that they own both products, it is also not well known. This brings us to a side mistake that I think GM is currently making with their current campaign demonstrating the many vehicles of GM. Those consumers who were unaware GM made all these vehicles are now painfully aware of this fact. You are throwing brand equity and brand parody out the window.

Before I explain my solution of brand equity for GM it is important that I loosely define brand equity. If I wanted to buy Coca-Cola tomorrow JUST THE NAME, how much would it cost me? If I was not interested in all of Coke’s tangible assets, its trucks, bottles, plants, syrups etc. just the rights to own the name Coca-Cola how much would I pay? That figure would be astronomical if I could even place a value on the name. At this point with the history of Coca-Cola and the amount of customer base, just the name Coca-Cola carries may be priceless. That is brand equity, the value a brand has. This equity is not built over night. It takes years and years to create this equity and there are a variety of ways to do it. Obviously at some point in the history of General Motors, someone has brought this idea to their attention. There are numerous examples of General Motors attempting to build one of their many brands.

I will begin with Saturn. The reason I chose Saturn is because it sticks out most to me. General Motors was on the right track with Saturn. Do you remember the old Saturn commercials? They were marketed as dent-free econo-box cars. It was the ultimate first car. It was an extremely affordable car that would last. Saturn had a cult following. Saturn followed up these commercials positioning themselves as a low cost high longevity brand with commercials advertising their Saturn nation where people could come to the factory and take a tour and see how their car was made. A cult was born. People loved these cars, they were affordable, they were reliable and people rallied around the product. Saturn was a hit! General Motors was even experiencing some “free press” with their Saturn meets and plant tours. There were instances where local newspapers were running the story. There is no more efficient way to advertise than to do so for free.

So I have to ask GM, what the hell did you do? For a while the Saturn line stuck with this economy car concept and it was working well. Saturn was aimed squarely at the current Scion market. For those that do not know, Scion is Toyota’s low cost brand that is aimed at people who need a low priced affordable car and want to customize it to their needs. Scion has a HUGE cult following and is a big hit among the target consumer Saturn previously NAILED in the early 90s. So how did Saturn and ultimately General Motors lose those consumers? Saturn is now selling a sports car. Seriously? You want me to buy a Saturn sports car? General Motors just threw away millions of dollars in advertising spending. More than that, GM also threw away all that brand equity they created positioning Saturn as a low-cost, reliable, economically friendly car. GM’s current commercials feature a person asking if all these cars are Saturn. Yes, it is perplexing because General Motors and Saturn is going against their brand building efforts and destroying everything intangible asset they have built. Sure, the Saturn Sky is a slick looking car. As a matter of fact, I like it. I would buy one as a weekend play toy. I would be willing to bet GM might sell a few more if the car was simply renamed “Cadillac Sky.”