HOW ALBERT SLOAN'S PRODUCT STRATEGY OF 1923 OVERTOOK THE MODEL T

HOW ALBERT SLOAN’S PRODUCT STRATEGY OF 1923 OVERTOOK THE MODEL T

           

            Based upon Social Media, Albert Sloan’s product strategy of 1923 overtook the Model T. This is a bench mark marketing strategy. This was the beginning of conventional, modern marketing strategy.  After this campaign, marketers understood how important conventional marketing was in branding a product.

               In 1923, for the first time, targeting, segmenting, and differentiation were used to brand a product.   Albert Sloan was an executive at General Motors for forty years.  Mr. Sloan has much to teach contemporary social media marketers because he understood how to integrate social media into his marketing strategy.

When Mr. Sloan first took the leadership of General Motors in 1920, he was faced with a daunting task. At this time, the Ford Model T dominated the automobile market. The numbers were staggering. The Model T controlled 60% of the market. General Motors only had 12%. To overcome this, Mr. Sloan used social media to create a brand. Remember, social Media is a conversation between two friends---the consumer and the brand.

This is what Mr. Sloan did. He toured the country and spoke to American consumers. He conversed with them. This is a benchmark for what modern marketers should do today.  This engagement with consumers allowed Mr. Sloan to detect how the car market was changing. This is a benchmark that contemporary marketers should follow as they use social media. To effectively brand products, the brands have to relate to the people in the markets.

The thing to learn from Mr. Sloan is this.  In our contemporary markets, because there are so many products and so much information, the markets evolve quickly. This is why social media platforms are such a great tool. By listening to customers, you know just when game changing factors have occurred that change the entire nature of a market.

Through customer engagement, Mr. Sloan understood some very important details.  America now, in 1923, had a middle class, with disposal income. Americans had more money available to them to purchase cars. They needed a car, as Mr. Ford had discovered in 1908, but they needed a car that was easy to drive, enjoyable to ride in, and easy to fix when it broke down. Mr. Sloan realized that product quality was a key factor in purchasing a car. Low price was no longer the key, deciding factor in purchasing a car.

A critical factor that Mr. Sloan realized about the American society was that people use their cars to define their state in life for everyone else to see. If people were rich and successful, they wanted to drive a car that reflected that. People wanted variety in their cars. They wanted more than just a black car. Armed with this information, Mr. Sloan realized that the Model T, even though it seemed to have an insurmountable market share, was a very venerable car.   

Mr. Sloan began to target, segment, and differentiate the car market. He began to brand General Motor cars. In 1923, a group of factors came together at one time which created a good brand for General Motors. The man who led General Motors before Mr. Sloan, Billy Durant left Mr. Sloan in a good position. Mr. Durant was a man ahead of his time. Mr. Durant gave Alfred many assets in confronting Ford. The market was now evolving to GM’s favor. General Motor’s cars now had technology that the average customer wanted.  The self starter was developed in 1913. Ford only could start with a hand crank, a very hard and dangerous act. Over the years, Billy Durand bought a lot of different brands, and put them under GM’s umbrella. It times past, they couldn’t compete with the Model T on an individual basis. The market wasn’t ready in 1908. The market had evolved. Now people wanted variety.

The GM lineup had Chevrolet as the entry level vehicle. This was the low cost car to compete with the Model T. People progress through life with better jobs, and better incomes. General Motors’ product lineup, allowed people  to reflect that.  The next step after Chevy, was the Pontiac, which were for people who weren’t entry level, but were lower-middle class.  For people on a career roll, but not truly top level, the Oldsmobile was the choice. For people getting work promotions, there was the Buick.  For those who made it, there was the Cadillac.

The strength of Sloan’s strategy is that he had a car for every niche. He had cars of quality.  People were now willing and able to pay a little more for quality. Ford had one car for everyone---and this is what killed the Model T. A rich successful man will not buy a Model T. He wants to communicate his success. He will buy a Cadillac and pay extra for the chance to proclaim his life success. 

Sloan created a strategy that the Model T had no answer for. Because of an emphasis on quality, GM could compete against Ford, and charge a premium. General Motors could now compete in both the high and low end, and make a lot of money each area.  Sloan’s product strategy allowed him to create a brand in each market segment, and still make premium amounts of money. This was all created because Sloan knew how to use the social media of the day.

Dean Hambleton

dnhambleton@gmail.com