HOW GENERAL MOTORS USED CADILLAC TO CREATE A BRAND

            Brand image is important separating one product from another. Brand image revolves around perception. It is this perception that creates world class brands. Brand image is significant in a social media era because there are just so many brands. A marketer must do something to set their product apart. Image is a powerful medium to do this.

            Brand image is speech. Through image, a brand talks to their customers. Brand image says “success” as in the case of Cadillac in 1923.  A famous brand image in contemporary marketing is an insurance company’s claim that “you are in good hands with…” followed by an image of a house in two hands. Another image from this company is “….the goods hand people”.  This is a strong speech. It tells people that if they sign for this company’s insurance, they can depend on this company if times go bad. In 1923, if you drove a Cadillac, it meant that you were “successful”.

            Albert Sloan was one of the first CEOs who understood the importance of brand image in creating brand. This is significant. In 1923, nine out of 10 cars on the road was a Ford. It seemed that GM would never overtake Ford. Mr. Sloan knew better.  In engaging with people, his social media of the day, Mr. Sloan knew that the market was changing.

            America now had a middle class. People used their car purchases as a means to define their professional state. Cars were no more than just a means of transportation.  Customers were looking for more than just a low cost car. People wanted a car that would brand them, as it were. Entry level people drove Chevrolet, supervisors drove Oldsmobile, and very successful people drove Cadillac.

            Mr. Sloan understood that brand image would help him overtake Ford. Ford had one car, the Model T. People bought his car because it was inexpensive and it provided cheap transportation. In 1923, people wanted more than that.

            Cadillac was a key brand in overtaking Ford because of the brand image Cadillac conveyed. The image that Cadillac conveyed was success. This cut two ways. Some people drove Cadillac---BUT ALL PEOPLE WANTED TO.  This created a brand for the entire GM family of brands---“GM drivers are successful, I want a GM car”.

            This image was significant in the Black community. Black people were now coming north. In the North, there was an enclave of blacks who were getting some opportunity. Though small, there was a group of blacks that were becoming doctors, lawyers, and business owners---successful people. These blacks wanted a car that would reflect that. To these people, who had to overcome significant obstacles to reach their state in life, a Cadillac was an important symbol.

            This was a significant niche in the car market for GM. The black professional niche created a dependable group of people who would buy Cadillac on a recurring cycle.  This created a significant brand in the black community, which was now beginning to become an important market segment. The importance of Cadillac transcended more than just the people who actually bought the car. It created an important touch point and symbol that helped GM create a significant brand in the entire black community.

            Not all blacks could own a Cadillac, BUT THEY ALL COULD ASPIRE TO owning one.  General Motors brand image was now “success”. Blacks now began to gravitate toward GM because “successful people drive GM”.

Dean Hambleton

dnhambleton@gmail.com

  

"VUN FOR VUN"--HOW ALFRED SLOAN USED CHEVROLET TO OVERCOME FORD'S MODEL T IN 1923

“Alfred Sloan used the social media of his time to overcome Ford’s seemingly insurmountable lead in 1923. When Mr. Sloan took over GM, he realized that to overtake Ford and to become the pre-eminent brand in cars, he would need a strong brand at the entry level and at the top level.

            He would need a strong entry level because the Ford Model T was predicated on a low price.  The Model T owned the entry level market. Sloan needed an entry level car to build a brand for GM. People’s initial car purchase was always a Model T. This initial purchase created a bond between customer and product that is hard to break. To create long-term customer value, an attractive entry level car was essential for GM. He needed a strong luxury brand because this segment that is not influenced by the national economy. The people in this demographic bought a car, without fail, every two years. A strong brand in Cadillac would give GM a dependable revenue stream that would help fund the rest of the organization.

            Sloan targeted the lower and upper segments. T he middle segments would take care of themselves. If people originally purchased an entry level Chevy, they would move into middle segments for subsequent purchases. Ford did not compete in the middle segments. Chevrolet was the critical piece in Alfred Sloan’s strategy.

            “Okay”,  Alfred said to himself in 1923. How do I get this strategy to work?  How he answered this question should be studied by contemporary social media marketers. Alfred used social media to create a social brand at GM that is equivalent to today’s strong social media brands.

  A simple definition of 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 Sloan became head of General Motors, he traveled the country talking with customers. He engaged with them. In 1923, the General Motors brand created friendships with their market. These conversations allowed Mr. Sloan to realize that the car market was now different than it was in 1908. These differences changed the entire paradigm that the car market was based. This allowed Mr. Sloan to understand that he could overtake Ford with the right strategy.

America now had a middle class. This was in contrast to 1908, when the Model T began. People now had disposable income. They would pay extra for a good product. No longer was a low price the deciding factor in choosing a car. People wanted a car that was easy to operate and that would give them a comfortable ride. People wanted a car that looked nice. People wanted a “cool car”.  Manufacturing technology had also changed. In 1923, an assembly line could be shut down and rebuilt to offer customers variety in car options. This shut down could be done in such a way that the company would not lose any money.

The new Chevrolet came in a variety of colors. It had headlights for night driving. It had indoor heaters to offset cold weather. It had windshield wipers to offset bad weather.  The Chevrolet was entry level, but it was stylish, easy to drive, with options that an average customer would really need on a drive. Next to the Chevy, the Model T looked old, and dowdy, …”just so ‘08”.

Still, the Model T had a strong brand. In 1923, nine out of ten cars on the road were Model Ts.  Chevrolet dealers had to be energized and convinced that the Chevy could now compete with the Model T. Again, Sloan used social media of the day.  Social media is used, not just to engage customers, but to motivate workers in an organization. This is how Mr. Sloan used the social media of the day.

Bill Knudsen was a Danish gentlemen how headed the Chevrolet division. Mr. Sloan sent Bill Knudsen to dealerships around the country to excite them about the product.  One meeting changed the dealer’s outlook. When asked what his goals were for Chevrolet, Mr. Knudsen answered in his thick Danish accent, “I want vun for vun”---I want one for one. “Vun for Vun” became the rallying cry for the new Chevrolet division and soon the historic Model T brand was overtaken.

Dean Hambleton

dnhambleton@gmail.com

ANALOGIES BETWEEN ALFRED SLOAN OF GM AND COACH BILL BELICHICK

ANALOGIES BETWEEN ALFRED SLOAN OF GENERAL MOTORS  AND BILL BELICHICK

            In researching articles about Albert Sloan, the CEO of General Motors in the 1920s-1930, I found some significant analogies between Mr. Sloan and Bill  Belichick, coach of the New England Patriots of the National Football League. Both achieved their greatest victories against a foe which seemed unbeatable.  Those victories were achieved by taking their opponents greatest strengths and turning those strengths into weakness that allowed them to defeat that opponent.

            This is why social marketers should study both of these great leaders. An important fact about social media marketing is that many times a brand’s great strength is great weakness that an opponent can use to defeat that brand in the market place. Conversely, a great strength can also become a great weakness.

            Before their greatest victories, each leader had to defeat a foe which seemed unbeatable. Each used social media, engagement with customers, to create branding for their organizations. Each used their biggest weakness, and created their biggest strength.  

            In the case of Mr. Sloan, his opponent was The Ford Motor Company. In 1923, Ford autos made up 90% of the cars on the road.  Most business experts, including some executives inside of General Motors, thought that GM had no chance at ever overtaking Ford.  Albert Sloan, spent a great deal of time talking to people.  Because he engaged people, Mr. Sloan knew that Ford was extremely vulnerable in its greatest strength. 

            Coach Belichick’s greatest victory was the 2002 Super Bowl against the St. Louis Rams, “The Greatest Show on Turf”. This victory is the biggest upset in Super Bowl history.  They were talented, they were experienced. Just as in Mr. Sloan’s case at General Motors, no one thought that the Patriots would have a chance at beating the Rams.

Like Mr. Sloan, Coach Belichick used social media, in this case, intensive engagement was used to create a brand---in Coach Belichick’s case, intensive use of video was the means by which he created his “brand”.  Think of it like this in terms of analogy, NFL teams are social media brands because of their intensive use of video to create their brands.

In Mr. Sloan’s case, he engaged people in personal conversation about what they liked in a car.  From this engagement he knew that the car market had changed. The paradigm of the market didn’t revolve around low cost, but upon variety, comfort, enjoyment, as well as low cost. He also realized that people bought cars to define their financial position in relation to other people. Entry level people buy Chevrolet, successful business owners buy Cadillac.

Ford had no variety, and was looked up on as a very stodgy old brand. People in 1923 in comparison to 1908 wanted an attractive, cool product. They wanted a car that had an emphasis on image and styling. Knowing this, Sloan created a group of very stylish cars. Ford’s strength in low price, which seemed so insurmountable, was only a paper tiger in a world of social media.  Social media professionals should understand this in studying the case of Alfred Sloan at GM in 1923. Alfred Sloan did not have Facebook, Twitter, and YouTube. If had, he might have overtaken that 90% share in a couple of months, instead of the 3 years that it took him.

In Coach Belichick’s case, after watching film, he noticed that the Ram offense, “The Greatest Show on Turf”, revolved around two players----Kurt Warner and Marshall Faulk. He decided, just as Mr. Sloan in 1923, to make the Rams strength their biggest weakness, the means by which the Patriots would win the game.

Belichick did not want these two players out of the game. He wanted them in the game. He decided to have linebacker Teddy Bruschi shadow Faulk.  Teddy’s job was to go where Faulk went and to hit him every chance he had, legally. By doing this Faulk was worn out by the second quarter. Just as the 1923 Ford Motor Company, the Rams biggest strength was now their biggest liability. Faulk hurt the Rams during the game.  He wanted Warner to pass, because the more he passed, the greater the risk that a game changing, big play would be made.  

Warner did pass. He passed for 365 yards in the game, which is the second largest in Super Bowl history, but he also passed for two interceptions that lead to touchdowns, plus a big fumble. Belichick took the Rams strengths, made them into weaknesses that the Patriots used to win the game.

This is the message for social media strategists. There are no perfect brands. Each time you compete with a brand, understand that the brand has a weakness that you can exploit, with social media

Dean Hambleton

dnhambleton@gmail.com  

SOCIAL MEDIA STRATEGY AND BRANDING: HOW HENRY FORD MISSED THE PARADIGM SHIFT IN THE AUTO MARKET IN 1923

SOCIAL MEDIA BRANDING AND STRATEGY: HOW HENRY FORD MISSED THE PARADIGM SHIFT IN THE AUTO MARKET IN 1923

            The great fact of social media marketing is that the markets move so quickly. To be a great social media marketer you must be humble. A social media marketer must understand that the great scale that social media creates also causes markets to be repositioned quickly. This repositioning sometimes happens overnight. A social marketer must understand what Yogi Berra said, “It ain’t over to its over…and then it ain’t over”.  Henry Ford was probably the greatest social media marketer that ever lived but his brand failed because he failed to see how quickly the car market and the American society was changing in 1923. It is a sad tale. Perhaps by reliving it, contemporary social media strategists can avoid the terrible fate that fell upon Henry Ford.

            The Model T automobile is one of the greatest brands of all time. The reason why this brand was so successful is because Henry Ford made key observations about the car market in 1908.  It was through social media that Henry was able to do this. Social media is about brands and customers engaging. Henry did this. Because of this engagement with customers, Henry knew that America was thirsty for a car that all could afford. The market of 1908 revolved around price. By 1923, the paradigm had changed. It was Alfred Sloan of GM who used social media of the day to grasp the paradigm shift.

            As 1923 dawned the prospects dId not bode well for Mr. Sloan and GM. His story is an example for social media marketers. The analytics were absolutely in favor of Ford. In 1923, 13 Model Ts were sold for each Chevrolet. This did not phase Mr. Sloan. Why?   Through the social media that Mr. Sloan had available to him, Mr. Sloan knew that he had a great opportunity available to him.

            Mr. Sloan’s social media was engaging with customers. Mr. Sloan traveled extensively. He talked with many customers about cars. Through this engagement, which is what social marketers do today on greater scale through social media networks, Mr. Sloan knew that GM, by leveraging their strengths and by being creative, could overtake Ford. Sloan’s greatest asset was Henry Ford’s arrogance.

            Ford didn’t see that the engineering improvements and the innovations  of his competition were inevitably eroding the Model T’s appeal. These created real paradigm shifts in the auto market. Ford was an expert in driving costs down low, but this was not now an asset in 1923. The paradigm shifts in the market off set this. Mr. Ford could not grasp this. Mr. Sloan did. Mr. Sloan grasped this because he expertly used the social media of the day---which was talking to customers  and to car dealers.

            The Ford story of 1923 was a sad story because Henry Ford was a tragic victim to his own success. In 1913, Ford instituted the $5 a day wage. This act revolutionized American society. Other industries had to follow suit, and by 1923 there was a strong middle class who had much disposal income. In 1923 people wanted more from a car than just transportation. They wanted a car in more colors than black.

            By 1923, most people had already owned a car.  This changed the dynamic of the car market. Because there were so many cars around, the market at the lower end could be satisfied with used cars. In 1923, used car purchases started becoming a significant market dynamic. There was strong competition now at the lower end, which is the space that the Model T occupied.

            The big change was the development of the middle class. Dealers would now accept the trade in of a used car to be discounted for purchase of a new one from a higher price bracket. The higher bracket cars had more appearance, performance, and comfort than the Model T. By 1923, people were using the car to define their place in society. If a person were successful, he wanted to communicate that. He did this communication through the car that he drove. The car market had changed. The Model T was seen as an entry level car for people from the lower levels of society. Sloan grasped this.

            A new dynamic that was coming into play was development of loans to purchase cars.  In 1908, seldom did people take out loans to buy a car. With more disposable income, car buyers were more confident in taking out loans. In this area, General Motors was a pioneer.

            General Motors created their own financing arm in 1919---the General Motors Acceptance Corporation (GMAC). Ford refused to help dealers by creating their own financing arm.  Financing became major paradigm shift car marketing. It happened because of the countless conversations that Mr. Sloan had with customers that he met at the many dealerships that he visited around the country. By 1926, thanks to GMAC, three out of every four cars in the United States were bought on credit. In 1926 only 13 of the more than 130,000 banks in the country had more money available to lend than GMAC.

            Financing also changed something else involving the purchase of a car. Because people now had disposable income, a small monthly payment allowed people to feel that they could “move up” in their choice of a car.  Installment credit allowed individuals to purchase cars that were beyond their means in years past.  They could now afford to purchase 2 or 3 cars for a family, instead of just one.  Most of the time, those 2 or 3 were GMs and not Fords.

Dean Hambleton

dnhambleton@gmail.com