SOCIAL MEDIA BRANDING AND STRATEGY; HOW ALFRED SLOAN OF GM USED "COOL" TO OVERCOME THE FORD MODEL T IN 1923

            To create a successful social media brand it is imperative that new material is constantly being created and shared with customers. In creating a brand, image is critical. Brand has two sides. There is a functional side, and there is a side that conveys a symbol. In branding, there is a “cool” factor. Many times it is the “cool” factor that sets a product apart. One of the first C.E.Os to understand this was Albert Sloan. Albert Sloan, though he was leader General Motors in 1923, is an excellent bench mark for contemporary social marketers.

            In 1923, Albert Sloan faced a dilemma that seemed insurmountable. The Model T Ford possessed 60% of the American car market. In terms of numbers of cars, close 9 out of 10 cars that were on the road were Fords. Only 12% of the market belonged to General Motors. Many executives at General Motors in 1923 thought the chance of overtaking Ford impossible. Albert Sloan knew that Ford could be overtaken because he understood social media.

            Albert communicated with customers much like today’s social media world. This engagement was two-fold.   As is the case today on a Facebook Page, Albert learned what customers “liked” in cars.  Times had changed drastically from 1908. There was now a middle class. There were a large group of Americans who had disposable income. The type of car that was driven was the means by which people defined success. The type of car that you had told people what income you were in.

            People wanted variety. In addition, to just supplying a nice ride people also wanted something that looked nice. Style now became important in selecting and buying a car. Sloan understood that image was a deciding factor in the marketing of cars.

            How do you show off variety and style in cars? How do you create buzz?  Albert Sloan decided upon an annual model changeover, a staple in today’s car industry, but a radical new way in 1923.

            The annual model changeover is the means by which General Motors became a social media brand in 1923. Billy Durant, the original creator of General Motors, left Alfred with 5 brands. Alfred had variety built into the GM brand. To enlarge on variety further and to emphasis stylishness and fashion, Albert decided that each brands appearance would change each year---the model change.

            This created buzz and excitement, not only among customers but also among GM personnel. There was a feeling of extreme anticipation on what the new models would look like. This anticipation created important touch points for General Motors. People started talking about the cars. This gave GM advertising that they didn’t have to pay for. The new models created 5 new touch points for GM. If a person bought an entry level Chevrolet, and an Oldsmobile went by while talking to a friend, they would say to their friend, “Look at that Oldsmobile”. Even if the Oldsmobile brand wasn’t bought by the customer, it still got their attention. General Motors wasn’t just one product; it was many products, each creating interest for General Motors.

            The models, the stylishness, the fashion, the brand image, created a new brand for General Motors. The brand of General Motors was that “GM was cool”. General Motors of 1923 became to be seen as Apple is seen today---the company of “cool”.  People wanted to be seen driving a GM car because they were “cool”, just as many people buy Apple products today because they are “cool”, and if you have them you are “cool”.

            “Cool” created a brand for GM in 1923. Ford began to be seen as “old”.

Dean Hambleton

dnhambleton@gmail.com           

HOW DID REVERSE BRANDING CREATE THE MODEL T IN 1908?

HOW DID REVERSE BRANDING CREATE THE MODEL T IN 1908?

Reverse branding occurs when a customer brands the entrepreneur.  This is how the Model T was branded in 1908. How does reverse branding work and why is it so powerful?  The customer chooses the product simply because of the entrepreneur who created the product. This is a powerful form of branding.  An entrepreneur has such a powerful reputation with a customer that this automatically differentiates the product.  It is powerful because the brand is created by the customers themselves. Because of the entrepreneur involved, a product is chosen, to the exclusion of all others, simply because of the entrepreneur who created it.  The entrepreneur creates the product, and the customer creates the brand.  The Model T of 1908 was a successful brand in 1908, because customers had a positive brand for Henry Ford.

       When Henry Ford created a brand for the Model T in 1908, there were 253 auto companies in the US. How did Henry Ford succeed with his Model T.?  Why did the other entrepreneurs fail? Henry Ford offered a low price, but that is not the reason why the Model T went on to become an historic brand. The Model T succeeded because the city of Detroit had a strong brand for Henry Ford. By viewing this two-fold dynamic, modern social media marketers can observe a bench mark for branding. Two things happen when a product is branded. To be successful the product is branded by the marketer.  At the same time, the customer has a brand for the entrepreneur and brands the entrepreneur’s product.

 The Model T of 1908 was successful because it was a modern social media brand. A social media brand is created when the customer and brand create a personal friendship. The two become friends. The brand becomes friends to the product. The customer becomes friends to the brand. In a social media context, a relationship is created that is two-fold. The Model T became an historic brand because it “friended” the public. A two-fold conversation was created between brand and customer.

 It is interesting to study the world that Henry Ford functioned in because there are analogies between our era and his. In 1908, the automobile was seen as the next big thing. Detroit was the center of the action---much as Silicone Valley is the center of our technology world. Inside the car community, Henry Ford had a sterling personal brand. Detroit of 1908 was a machine town and Henry Ford was an ace mechanic. He was also a champion race driver. The lesson for contemporary marketers is that to create a strong social media brand, it helps you immeasurably if you have strong credibility within your community. In creating a brand, ask yourself this question, why should people listen to me? To create a brand, a marketer must have credibility with their customers.

            Because of his credibility, Henry Ford was like Steven Jobs in terms of his personal brand in that era. When the iPhone was first launched, it was highly anticipated because Steven Jobs was personally involved. This was the equivalent situation in 1908 before the Model T was launched. The Model T had strong, initial brand with the public because it was Henry Ford’s car. In a town of ace mechanics, Henry was the ace of aces. Henry was also one of them. Henry worked in machine shops right next to them. They knew that Henry wanted to create a car that would aid them, a “car for the masses”.  They knew that Henry wanted to create a car that would run well, that they could afford, that would be easy to repair. They knew this because Henry was their neighbor.  His car was for them. This sent him apart from Billy Durant and Ransome Olds, and other car entrepreneurs of the time. The other entrepreneurs positioned the car as a toy for the rich. Henry targeted working people.  Detroit created a brand for Henry Ford that the other entrepreneurs didn’t possess.

            The reason why the Model T stood out as a brand is that it had parts that were interchangeable, making repairs easy. Its frame used a new steel from Europe called vanadium that was strong but light, so that the Model T weighed about 25 per cent less than a comparable Buick. Most cars of the day, including the Buick, used ultra-heavy frames to cope with America’s rough and rutted roads, which made them prone to getting stuck.  Henry Ford had a brand for the Model T and this is why it stood out. Detroit had a brand for Henry Ford, which is why they were interested in his unique car creation. The fact that the Model T was Henry Ford’s car instantly gave it credibility. The Model T flexed the road. This allowed it to go places that other cars couldn’t. People had faith in this car because it was Henry’s car.

                        Social media brands are created when brands and customers create a friendship with one another. This is the relationship that developed between the public and Henry Ford.  Henry Ford’s product “friended” the public in 1908.

Dean Hambleton

dnhambleton@gmail.com

HOW ALBERT SLOAN OF GENERAL MOTORS USED A PRODUCT MIX STRATEGY IN 1923 TO OVERCOME THE MODEL T INSURMONTABLE LEAD IN 1923

HOW ALBERT SLOAN OF GENERAL MOTORS USED A PRODUCT MIX STRATEGY IN 1923 TO OVERCOME FORD’S INSURMONTABLE LEAD

            In 1923, Albert Sloan of General Motors used a product mix strategy to become the preeminent brand in cars. This is a case that every social media marketer should follow.  At the time this happened the Ford Model T was the most significant and successful brand that has ever been created. Using the Social Media of the day, General Motors was able to quickly overcome Ford’s seeming overwhelming market lead. Studying the 1923 General Motors brand and social media strategy is important for two reasons. 

            To be a successful social marketer, you must be humble. You must realize that no matter how strong your brand is, it is vulnerable and can be easily overtaken with the proper strategy.  On the other hand, if you are an entry level brand, you must never feel ambivalent in confronting a major brand that is well- established. There are no perfect brands. In social media, any brand can be overtaken under the right kind of circumstances. Ford vs. GM in 1923 is a perfect example.

            As 1923 began, the Ford Model T had a brand that seemed insurmountable for a competitor to overtake. Ford had 60% of the overall market. Ford only possessed 12%.  In the entire auto market for the U.S. at the beginning of 1923, 90% of the cars that were on the road, belonged to Ford. No one thought that it was possible for GM to overtake Ford’s lead. Albert Sloan used the social media of the day. Because he did he knew that Ford was a very vulnerable brand.

            Social media is when the brand and the consumer engage one another. The two develop a close, almost human relationship. The two become “friends”. This friendship creates many touch points between brand and the consumer. These multiple touch points create the consumer buying decision. When Alfred became head of GM, he traveled the country talking with customers. He realized that some very important things had occurred in the American society and this changed the entire makeup of the American car market.

            In 1908, when Henry Ford first developed the Model T, the average American citizen did not make a middle class wage. Few people made good money at their jobs. Even Henry Ford only paid $.39 @ hour. Henry made an historic observation. He observed that the brand that developed a low cost car, a car for the masses, would become the pre-eminent brand in cars. Henry bet that low cost would be the key factor in purchasing a car. Ford developed the Model T and sales simply took off.

            By 1923, in engaging people, Alfred Sloan realized that things had changed. There was now a middle class in America. “Morning had come to America”. They had disposable income. The American market wanted something more than just cheap transportation. They wanted a car that was enjoyable and comfortable to ride. Driver comfort was a critical touch point in the consumer buying decision.

            An important fact that Alfred discovered, through his social media, was that people used a car to define their economic position in life.  In the American society, there were entry level people, middle class people, and there were very successful people. People wanted a car that would reflect that. The Model T was now seen, in 1923, as a car “for farmers”.

            The difference between Henry Ford and Billy Durant, the creator of General Motors, in 1908 was that Henry thought that people only wanted low cost. Billy thought that people wanted affordable cost, but variety in their car products. Billy Durant decided to have several brands under one big umbrella brand. Billy understood how the long-term car market would develop. He made available the tools that Albert Sloan would need in 1923.

            Albert’s strategy was a “car for every purse”. His strategy also revolved around the fact that GM “made money not cars”.  People would begin their lives by buying a Chevrolet. Once they were at a job for a while and had some pay raises, they traded the Chevy in for a Pontiac. As they developed in their job and began to move up, they moved up to an Oldsmobile. When they became supervisors, they bought a Buick.  When they became a vice-President, when they were successful, people bought a Cadillac.

            This was a brilliant strategy---a strategy that simply offset Ford. GM’s product mix strategy left Ford with nowhere to go  It was a strategy that Ford had no answer for because Ford had just one large entry for the entire market---the Model T. The Chevy could now compete against Ford in the low cost market. Besides a low cost, the Chevy had a self-starter, headlights, had a closed body, and had interior heating. It appealed to women who were just now entering the work force.  Ford made a few Lincolns, but it had no major luxury brand in 1923 to compete with Cadillac. GM now owned the luxury market.. This market created an intense brand for GM and created a strong revenue stream which supported the entire General Motor organization. This branding created an important touch point in the consumer buying decision

            With this strategy, GM did the unthinkable. It overcame Ford by 1926. To this day, Ford has always lagged behind GM. The lesson for contemporary marketers is this. In a social media age you must be humble.  Irregardless of your market share, because of the size of social media platforms, your market share can easily and quickly be overcome if your opponent has a compelling competing product. In 1923, Ford had 90% of the car market. By 1926, General Motors had the leading market share. Albert Sloan did not have Facebook, Twitter, and YouTube. If he had, he could have taken away Ford’s 90% market share in a matter of months, or even weeks.

Dean Hambleton

dnhambleton@gmail.com

SOCIAL MEDIA AND BRANDING: THE BENEFITS OF AN UMBRELLA BRAND

SOCIAL MEDIA STRATEGY AND BRANDING: THE BENEFITS OF AN UMBRELLA BRAND

                        A salient fact about social media marketing is the fact that markets move so very fast. Social media creates great scale. The scale creates the great speed that we find in contemporary markets.  The way that social media brands are created is that first a product is positioned. The scale of the market makes it evolve. This means that the product is repositioned. As the brand continues, the repositioning creates a new positioning.

            The way that the early car industry was branded is an example. Two great giants of this era were Henry Ford of the Ford Motor Company and Billy Durant who created General Motors. Both understood that the original market would depend upon low price. Durant also felt that the low price should also have variant brands to target different groups. Henry thought that price was the key and he created a world class brand in the Model T. For a time, Henry’s bet was the correct one.

            The market evolved overtime. As the decade of the 1910’s progressed a middle class developed. With more resources available, people began to want more than just a low price in a car. The variance of income created different targets for the car. This created the necessity for the car to be branded in different ways. Luckily, for GM, Billy Durant had created these different brands. In the General Motors model, Chevy was the entry level for low income people. Ponitac was the next level. This is for people who start a job, and start receiving  early career promotions. For the mature mid career there is the Oldsmobile. For those people know on the fast track there is the Buick. Finally, for the people who have made it, there is the Cadillac. I think the GM model is the model that modern social marketing should follow.  Different income groups define their products in a different manner. The brands help them define themselves. This is the beginning of what is called the “umbrella” brand. This is several brands of the same product, under the roof of one company. It is this strategy that allowed General Motors to overcome a seemingly insurmountable lead by Ford in the 1920’s to become the pre-eminent brand in cars.  What are the benefits to having an umbrella brand in relation to having just one big brand like the Model T.

                        As in the case of General Motors, a big benefit is MARKET GROWTH. There is strength in numbers.  With many brands, like the GM family, there is constant engagement with the General Motors brand, instead of the singular General Motors “car”.  As In the GM case, no one brand can control the entire market. This is the genius of Albert Sloan. It was Albert Sloan that has taught marketers the importance of targeting, segmenting, differentiation, and branding. This is in clear contrast to Mr. Ford’s assertion that you can have any color you want as long as it is black.

            Multi brands PREVENT BRAND EXTENSION. In 1923, there were many car companies, most with one brand. By having multi brands, Mr. Sloan was able to consolidate the market and to dissuade the smaller struggling companies not to extend their brand and to get out of the market, allowing General Motors to concentrate on Ford.

            Multi brands PROTECT THE BRAND IMAGE. Everyone knows that Chevy, Ponitac, Olds, Buick, and Cadillac were General Motor brands. Each of the cars contributed to the GM image. Ford singular brand in the Model T worked against Ford.  Because it had only one brand, Mr. Sloan was able to portray the Model T as a brand “built by farmers for farmers”.

SOCIAL MEDIA STRATEGY AND BRANDING: DECIDING BETWEEN A SINGLE OR MULTI-BRAND

Social media platforms create great scale. If Facebook were a nation, it would be the third largest in the world. When using a social media platform, because there is so many people in one place, a marketer must decide something early in their branding strategy.  Are we going to have a single brand or are we going to have multiple renditions of the same brand?

            The classic case of this is how the early car business was branded. In the early 1900’s, Henry Ford of Ford Motor and Billy Durant at General Motors had to make a decision on how the car should be branded. Both knew that the pre-eminent brand in automobiles would be company that could produce a low cost car that the masses could purchase.  If a single brand were created, this would contain costs. However, people want variety. Henry and Billy branded their products in different ways. Their dilemma is the dilemma of the modern social media marketer. Do we go with single or multiple brands for the same product?

            The early car business is an excellent benchmark because what happened from 1908-1928 is a barometer of how moden products develop their brands. In the social media age, in general, a brand is created in three ways. A product is positioned. It is then repositioned. It is the positioned again. This happened in the car business.

            Henry Ford made a brilliant assessment of the car market of 1908. At this time, there was a weak middle class. People were struggling. Henry Ford himself only paid his workers  $.39 an hour.  Creating a car for the masses hinged on one thing---the lowest cost. Henry created the greatest brand of all time, the Model T. Billy didn’t see this. He created multiple brands at GM. As the market evolved, this assessment turned out to be as brilliant as Henry’s.

            By 1923, the market had changed. Now there was now  a middle class in America.   People had disposable income. Albert Sloan, the new CEO of General Motors understood this. People wanted variety and they had the ability to pay for it. The car market was now repositioned. A new paradigm had developed in the car market. People now purchased cars to define their financial state in life. The new market would be based on making cars that people could afford, but low cost transportation was not the where the brand hinged.  There was a car for entry level people. There was a car for middle class people. There was also a car for rich people Alfred Sloan coined the phrase, “A car for every purse”. This contrasted to Henry Ford’s phrase of 1908, “you can have any color you want as long as it is black”. Rich people would not buy a poor man’s car.

            Henry didn’t understand this. Ford Motor Company almost went bankrupt because he didn’t realize how markets had evolved.  As a rule, in general, single brands are not effective in the long-term. As markets evolve, different renditions of a brand are created.  In many cases, you enter the market with a single brand, and then you expand. The great thing about social media is that its scale allows you to monitor the speed of the market. You now have a tool to monitor your markets in real time.