Zarrella learned expensive lessons at GM

Ron Zarrella decided in 1996 to buck tradition at General Motors by de-emphasizing divisional brands in advertising, instead pouring money into individual nameplates. In other words, the Grand Prix counted more than Pontiac.

But this year, tradition prevailed. GM reversed the strategy and re-emphasized divisional advertising.

In his farewell press conference last week, Zarrella acknowledged he learned many things the hard way during his seven years in Detroit. The outgoing president of GM North America discovered that the company's practices, odd to outsiders, often have their own logic.

Zarrella is returning to Bausch & Lomb Inc., this time as chairman and CEO.

Some of his auto industry lessons follow:

1. Product is king

With his background in brand marketing, Zarrella often emphasized marketing solutions to GM's falling market share.

Bob Lutz, new chairman of GM North America, has "a philosophy that you shouldn't look at any piece of research until you get the exterior of the car right, and we didn't always do that," Zarrella said. "Bob's got a philosophy that that if they don't like the exterior, they'll never get in it to try it, regardless of how good the marketing is. It may be considered an extreme position, but I think an important one."

2. GM could have trucked in more profits

"I wish we, as a company, moved faster on trucks than we did," Zarrella said. "It's taken us a long time to get to the position that we are in. We gave up a lot of years of big margin and big market share, hanging onto a car business that was getting smaller."

Gordon Wangers, a managing partner at Automotive Marketing Consultants in San Diego, said GM lost hundreds of millions of dollars in the truck delay.

"GM got trucks out about two or three years too late," he said. "They just didn't read the tea leaves properly, and Zarrella was in a position to make it happen."

3. GM needs happy dealers

Dealers say Zarrella made a huge mistake in 1999 when, as president of GM North America, he ditched the company's 954 dealer ad groups, which planned local advertising. In February, the company swallowed its pride and brought back the groups, now at more than 360.

Also in 1999, the company proposed to buy about 10 percent of its dealerships, which outraged dealers, who didn't want to compete with the factory. The plan was dropped.

"If I had anything to do differently, I would have gotten much more dealer involvement in some of the actions that we took early on in my tenure at GM," Zarrella said. "I think that's been remedied over the course of the last couple of years … largely through what Bill Lovejoy's been able to do."

Zarrella had few dealer fans from the start, said Ed Levy, owner of Golling Pontiac-GMC in Lake Orion, Mich.

"He was heading VSSM (vehicles sales, service and marketing). There were eight or nine hot buttons with us and, right or wrong, Ron got blamed for them," Levy said. "Ron was a forceful manager - he was not what I'd call a consensus-building manager - and that was one disadvantage."

4. PR goes a long way

Zarrella was surprised to discover that public relations is as important as advertising in Detroit.

Said Zarrella: "There is an enormous public relations influence in the auto business, more so than in any other business I've ever seen. And it is frankly as important as all the advertising and sales promotion that you do. That's something I didn't realize coming in."

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