Brand management was a tough sell at GM

Middle managers
Three reasons brand managers lack clout at General Motors


1. Vehicle line executives control product decisions.

2. Brand managers typically only make recommendations up the chain of command on prices, marketing budgets, etc.

3. Brand managers' decisions often are changed by their superiors.

Ron Zarrella arrived in December 1994 on a mission to shake up General Motors' stodgy culture with a dose of brand management.

Seven years later, the president of GM North America has resigned, and brand management has left only a modest mark on the company. Brand managers became mid-level executives at GM, with limited clout in marketing and product decisions.

Zarrella, 52, left GM on Tuesday, Nov. 13, to return to Bausch & Lomb Inc. in Rochester, N.Y., this time as CEO.

He came to recognize the difficulty of adapting classic brand management, as developed at Procter & Gamble Co., to the auto industry, which invests billions of dollars on new products.

"One of the things that we had to change was the notion that we could set up brands to run like independent companies," Zarrella said Nov. 1. "You can't do that. There's gotta be some senior management decision-making in the product portfolio and how resources are allocated."

GM spokesman Terry Sullivan said, "There will be no changes in the near term," in brand management at the company.

No budget, pricing decisions

Zarrella made waves in Detroit when he put in a brand manager for each nameplate in 1996. He even hired a handful from packaged-goods companies who knew little about selling cars.

Brand managers ended up mainly advising their division general managers and vehicle line executives about marketing. The vehicle line executives, typically from GM's engineering and manufacturing staff, are the prime decision makers on the company's products. They report to Vice Chairman Robert Lutz, who last week took on additional duties as chairman of GM North America.

Brand managers initially controlled their own marketing budgets, but eventually that power was taken from them. Sources in some of GM's ad agencies say they've been frustrated because brand managers frequently are overridden.

The success or failure of brand managers often depends on their relationship with their vehicle line executive, who shepherds models from design to production.

For example, Jay Spenchian, brand manager for the Cadillac CTS, says he has a good working relationship with vehicle line executive Jim Taylor. Taylor supported Spenchian all the way to Zarrella when the brand manager suggested knocking down the CTS' sticker price.

"While a brand manager doesn't have a great deal of power when it comes to the final answer, they influence the team to make the right decisions," said Steve Wagg, head of the brand college in GM University and a former Chevrolet Cavalier brand manager. "It's a shared accountability with the VLE. The VLE typically is an engineer and doesn't understand as much about advertising or as much about pricing."Under classic brand management, brand managers have considerable control over pricing. But that's not practical in the auto industry, said Steve Saxty, executive director of the automotive practice at The FutureBrand Co. in New York.

"The price of soap can change weekly by region, but selling cars is so damn different," he said. "You've got national campaigns, legislative issues about changing the price of the car. It would be irresponsible for GM to let one guy decide."

Sullivan said, "Under the Zarrella directives, it was kind of positioned that, in a consumer product world, the brand manager has the ultimate say on the product. But it never ended up being that the brand the manager had the ultimate power. It was really the VLE."

'Drove dealers nuts'

When the brand manager system started at GM, "it drove dealers nuts," said Ed Levy, owner of Golling Pontiac-GMC in Lake Orion, Mich.

"Brand managers were given marketing budgets and made calls on how to spend them," he said. "No two Pontiacs had the same incentives. In subsequent years, brand managers lost the budgets. Now they can only make requests to Middlebrook for another $1,500 on a car."

The bottom line on the brand management era at GM is the company's market share. GM has lost 2.8 points of market share, from 31.3 to 28.5, since 1996, according to the Automotive News Data Center.

- Staff Reporter Dave Guilford contributed to this report

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