Brands in the Crosshairs: Pontiac

The loss of Pontiac, the iconic brand from General Motors is a terrible thing for the thousands of employees who'll see their paychecks disappear along with the stylized arrowhead logo. But from a brand perspective, it's the best possible move for GM - a company that long ago lost the capacity to effectively design/build/market so many different brands.

Alfred Sloan's brilliant strategy, to combine different brands under one roof, maximize synergies while meeting the needs for every conceivable market niche or category, has run its course. Pontiac for the sporty car enthusiast, Chevrolet for the working folks, Buick for those moving up, Cadillac for the truly upscale (and lately Saturn for those who'd rather own a Toyota). This brand management model helped the company to own over 50% market share - once.

But the drive for "synergy" led the company to use a very limited number of platforms and simply rebadge car models, add leather seats and call a Chevy a Buick or a Pontiac, or, gasp, a Cadillac. Simple-minded customers that we are, we eventually saw through the deception. We can't be fooled forever (Really, did some executive actually think that this strategy would be a good thing? That brands with whole different philosophical foundations could share models with no real differentiation. Really?)

The loss of Pontiac provides GM with a couple of opportunities. First, of course, it helps the company remain in business. Second, it can balance production to actual demand, and with fewer models, the company will be able to differentiate the remaining lineup better. Other benefits include reduction in the dealer force and saving millions on marketing the brand.

The lesson for the rest of us is simple. Don't phone it in. That's right, General Motors has absolutely been phoning it in for nearly forty years. If you're going to support a brand/product, then do it right from the ground up. Build your product to meet the needs of specific customers. Don't think that simple modifications to existing products shipped with a flashy new package will give you a pass into a new market segment. At best that thinking can get you into the game, but you'd better come with game changing products PDQ or you'll find yourself Pontiacked before you know what hit you. Are you listening Saturn?

Amazing how the largest company in America managed to completely fumble their advantage. If you've managed to develop a defensible competitive advantage, study it, understand it, defend it, then evolve it. But don't take it for granted.