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It's not your father's Oldsmobile anymore!
...GM Chief Executive Wagoner, in December, on the death of the Oldsmobile brand after 103 years.
The announcement that General Motors was to kill the Oldsmobile brand caught me off guard. Wait, this is a mistake. That's a top brand, a household word, a quality car. It's founder, Ransom Olds, was an early innovator of car design and mass production methods in a new industry.
Easily forgotten, like the Studebaker, I suppose, business observers and customers will be lamenting this for a while, citing the positioning and growth of the brand, and the decline, and then death. Covering the human side, I liked the piece in the Washington Post by Frank Ahrens which caught the emotion and loyalty this brand captured over nine decades. He summarizes the decline and why his dad stopped being loyal to the brand, "First, Oldsmobile made its big cars not big. Then, front-wheel drive. In 1985, it replaced the V-8 with a V-6. In 1988, Olds stopped calling it the Delta 88, opting instead for 88 Royale. Sales plummeted. The '90s were bad. In 1999, the company simply euthanized the emasculated, truncated, V-6'd, de-Delta'd 88. The last 88 Dad bought was a 1990 model. He has maniacally refused to trade it in on something smaller, smarter, more efficient."
The question for business strategists is "what happened?" How did such a dominant leading car brand get sick and die?
Here are some observations:
They lost sight of their competitive advantage and their position in their customers' minds. It boils down to these two simple questions:
So what happened? Simply put, they tried to reposition the brand and target an entirely different customer segment, foregoing their loyal customers (Dad's), in favor of a younger, more "slick, hip, and cool" segment. Thus, the model name changes, and that most memorable of destructive advertising themes, "It isn't your father's Oldsmobile anymore" turned off its existing loyal customers and failed to win the minds of new ones.
Key lesson here: Retargeting a successfully seeded brand almost never works. In the same way, the Olds brand line extensions degraded their brand equity. Simply, it confuses consumers. In the case of Olds, their infamous ad campaign said to existing customers "This car is different than the car you've liked for years." And to the new, younger segment it didn't connect well enough.
Olds went from being a top positioned brand within the target segment, to being one of many competitors in the performance car category. In my view, this attempted repositioning was their most serious problem. It took them away from their core strategy, and their loyal target. Instead of staying locked on that winning segment -- a segment they owned -- they changed their aim. They forgot about one strategic principle: a product or company must be Number One to somebody.
They changed the product profile sufficiently that the core customer could no longer find the Olds he expected. Olds in the 70's meant a powerful big family car, with plenty of options, and styling changes that kept it interesting. Sure, trends and preferences changed since 1980 -- smaller cars, SUVs, mini-vans -- yet Olds had a brand equity position among a significant target segment. The core model names within the line could have delivered product in new design configurations, say SUVs, but retained the fundamental benefits sought by the target. Some line extensions would have been necessary to accomplish this, for example branding an "88 SUV", or "Delta Rover." The end result would have been retention of the core Olds benefits vital to the target segment while keeping product fresh and up with overall changing buyer preferences.
Did they misdesign or misinterpret the market research? I don't have direct facts on this, however the evidence says yes. Back to that campaign again. Apparently they had research that said the Olds name connoted "old". Believe me, if you conduct enough focus groups (see "Why focus groups") you will hear anything; as you will if you are persistent in interview probes. In market research, I call it the fake response. For example, if I were to ask the question, "What comes to mind when you hear the name Olds?... What else? What else? What else?", some people will begin to say "old" merely from the phonetics, and from the pressure to provide an answer to the research interviewer. Reports are that research showed that the brand was seen as "old". Hmmmm. Perhaps the "old" idea, mistakenly uncovered in focus groups, was "confirmed" by quantitative data that showed the Oldsmobile brand was preferred most heavily by men, 40 to 55. Ah, says the brand manager, "we've got a problem, the brand is seen as old, and our buyers are old; we must change the target and the image, and discontinue (the very successful) Delta 88......" You get the picture. My solution: explain the rich heritage of the brand name, and concentrate on the winning target: product, message, and promotion to family dads, Olds' proven and loyal buyers.
Rest in peace.
Xerox had it all!
If there ever was a company that invented and then dominated a product category and a market, it was Xerox. Plain paper xerography transformed document duplication and eradicated competing categories (mimeograph, carbon paper, wet transfer copying.) They not only invented the category, they innovated in the channel by perfecting one of the best personal selling skills training programs ever. (Their internal training was so good that they built a separate business around it.) Too, their Palo Alto Research Center developed the idea of windows-type software which they gladly showed to Steve Jobs. So, they clearly were smart folks who developed great products and concepts, and they knew how to manage.
While Xerox is far from dead the one-time hot glamour stock has in two years dropped from 60 to 5. The business press reports that while the category pie is getting smaller, competitors like Canon and Ricoh continue to slice into Xerox's wedge. Why? The surface problem is that Xerox is now grappling with operational problems in its sales force and customer service operations and with customer fears that it may face another liquidity crisis.
On a deeper level, however, the problem seems to be rooted in their failure to maintain their once powerhouse position, and to look to the future, and anticipate the evolution of technology as the convenience of true replication file transfers with software like Adobe Acrobat begin to shrink the need for paper copies. Without question, their advertising slogan, The Document Company, gets to point but are they too late in releasing their maniacal grasp on their original technology to anticipate the next generation of customer needs and use systems?
What can we learn?
Perhaps Xerox, awash with its success, forgot to keep asking these questions of itself in a way that would have kept them in the forefront in meeting their customers' needs.
Montgomery Ward invented mail order selling.
"Wards regrets to announce that due to poor sales and low Christmas sales, we are filing Chapter 11 Bankruptcy effective January 1, 2001. We thank you for your continued support and want you to know that we loved offering you the best values over the past 128 years. Sincerely, David Hogan CEO/President, Wards, Inc."(Message on Wards website 12/28/00)The first shall be last.
The Wards demise has been long and agonizing. Somehow, very slowly -- so they hardly noticed -- they took their eye off the ball. For Wards, they invented catalog mail order merchandising. They invented in 1888 the idea of 'satisfaction guaranteed or your money back'. Then Sears came along with their catalog and their stores. Sears became the focus of attention, not the customer.
What can we learn?
Keeping your 'eye on the ball' means having a hard-hitting focus on your unique competitive advantage. While Wards invented mail order, you'd never know it today unless you read the history. Today, when thinking of direct marketers you may think of instead Land's End, or Amazon.
A firm must be Number One at something. This is the essence of having a dominant position. Competing on multiple fronts, or having too much focus on the competition rather than the customer.
Solid strategic intelligence delivers better decisions. Tom Brown, founder of Power Decisions Group, helps clients make important market, product, branding and market entry and repositioning decisions using his straight-forward Decision Pathway model and well-conceived marketing research to quickly move clients to decision points and be faster and smarter in the marketplace. An MBA from UC Berkeley-Haas, Tom counts among his clients many Fortune 500, and mid-sized companies in financial services, manufacturing, technology, and health care.
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