June 7, 2009 in Business

GM takes reinvention message to public

Automaker attempts to offer reassurance to consumers
Emily Fredrix Associated Press
 
Associated Press photo

This photo from a video is part of a GM television ad pledging a “reinvention.”
(Full-size photo)

After filing for bankruptcy protection, General Motors is pushing a new ad campaign promising it will emerge from its financial troubles leaner and stronger.

Is this a good marketing approach? Will it allay consumer fears about buying from a carmaker with an uncertain future?

Advertising experts say GM – and fellow Chapter 11 filer Chrysler – should move past the negative and focus on their brands as they try to get car sales rolling again. Consumers are staunchly loyal to their car brands, they say.

GM says its brands are key to emerging from these tough times. But first it has to tell consumers how it will remake itself and what to expect, Jay Spenchian, GM executive director of corporate advertising strategy, said.

“There are lots of questions,” he said. “The best thing we can do is quickly get out there and assure them.”

Here’s a look at what GM is saying to consumers right now and how it’s delivering the message – think social media – followed by some thoughts by marketing experts on whether the company’s approach will likely work.

What GM is doing

Detroit-based GM wasted no time acknowledging its problems to consumers. Shortly after it filed for bankruptcy protection on Monday, GM launched a Web site with a message built into its address: www.gmreinvention.com. The site is forward-looking, showing videos of satisfied consumers – like a former Jaguar owner who never thought he’d own a GM product – and engineers talking about new technologies.

But it doesn’t ignore the company’s current situation. There are links to financial filings under the header “progress,” and articles with headlines like, “What happens to my warranty if GM files for bankruptcy?”

The company has released a 60-second ad on the site that began airing nationally on TV Wednesday, pledging a “reinvention.”

“Let’s be completely honest, no company wants to go through this,” the ad begins. “But we’re not witnessing the end of the American car. We’re witnessing the rebirth of the American car.”

Among the images in the ad: city skylines, shots of Detroit, a sun rising, plants growing, people raising a house’s frame, athletes commiserating – and later celebrating.

Also on Wednesday, GM printed a letter to customers from chief executive Fritz Henderson in major newspapers in markets including New York, Cleveland, San Francisco and Miami. He tells customers the company cannot afford to lose their business, “or your trust. You have our word.”

Key to the pledged “reinvention” will be an effort to leverage social media, GM’s Spenchian said. The company has links to social media staples like Twitter and Facebook on its new site, which will also host a Web chat later this week with Henderson.

One major advantage of this approach: It’s a lot cheaper than traditional advertising.

“We believe it’s an easy way to engage a lot of consumers and be able to tell a story and have them help us tell a story in a very short period of time,” he said. “We need to change opinions very rapidly and get people to think differently.”

What the experts think

How effective will this be? It’s a mixed bag, the experts say.

The GM newspaper and TV ads could hurt more than they will help since they harp on negativity surrounding corporate GM, said Deborah Mitchell, a marketing professor at Wisconsin School of Business.

She said consumers are worried about risking such a big purchase on a company that may not be around to honor their warranties. GM has said warranty coverage, service and customer support will continue, and the Obama administration has said it will back warranties of Chrysler and GM – but that doesn’t mean potential customers won’t be nervous.

Automakers shouldn’t dwell on the negative, Mitchell said. Even if they’re offering reassurances, she said, the message will make people remember that GM is hurting.

Instead, carmakers need to focus on their brands – like GM staples Chevrolet and Cadillac – that people already know and feel loyalty to, she said.

“When you buy one of these cars, you’re buying a Chevrolet. You’re not buying a GM,” said Mitchell, who has consulted in the automotive industry since the 1990s. “In terms of consumer memory, where the positive associations lie are primarily with the brands.”

And that’s what they need to leverage, she says.

Spenchian said GM will tout its brands – and new models – after its current campaign of reassuring customers ends in a couple of weeks. But GM wanted to be as open as possible with customers about its problems first, before showing new models, he said.

“The brands are going to tell the reinvention story for GM,” he said. “Cadillac, Chevrolet, GMC, they’re going to lead the way out.”

At least one marketing expert saw a lot of positive in the decision to advertise through social media.

By using that approach, the carmakers can be active in the conversation about their company, even if it’s negative, said Jeremiah Owyang, a senior analyst at Forrester Research. He likened GM’s pledge of transparency and use of social media to Obama’s presidential campaign and said it can be crucial in keeping customers as it changes its ways.

“To win back trust, you need to have an open conversation,” he said. “It’s really important that they live what they’re saying, that they want to change their company.”

He said Ford is doing something similar with its site www.thefordstory.com/. The automaker hasn’t filed for bankruptcy protection but it’s undergoing changes, too, and highlighting them and current industry issues in videos and stories on its site.

Brands that go deep into social media face more intense scrutiny from their customers, who will talk about them and analyze their changes, said David Reis, chief executive of social media agency Dei Worldwide. But the payoff could be bigger than traditional marketing if they win over consumers this way, since consumers tend to be more passionate when interacting online, he said.

Other carmakers have tried to be so open and it hasn’t worked out well, he said, citing a short-lived social media campaign he worked on for Chrysler last year after it entered bankruptcy protection. The company promised change but consumers didn’t see substance in its pledges and Chrysler stopped the campaign.

He said GM should commit to this new way of marketing and stay in. Leaving, he said, could turn consumers off even more.

“The big question is going to be are they committed to staying in the space,” he said. “They’re going to be exposing themselves, scabs and all, to the world, if they want to do it right.”

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