HOW DID GM USE THE MODEL CHANGE IN 1923 TO DEFEAT THE MODEL T BRAND?

HOW DID GM USE THE MODEL CHANGE IN 1923 TO DEFEAT THE MODEL T BRAND?

            Social Media creates great scale and this allows companies to develop competitive advantages that they wouldn’t ordinarily have. A case in point is General Motors. Their strength is social media gave GM a competitive advantage in defeating the Model T brand of 1923.

            It seems ironic that a brand of 1923 would be a benchmark for contemporary social marketers, but that is what happened. Alfred Sloan, the CEO of General Motors in 1923 is a marketer that contemporary marketers should study. General Motors overtaking of the Model T is one of the most exciting stories in American marketing history.  It was done through social media. In 1923, nine out of ten cars on the road was a Model T. Alfred Sloan realized that the only chance he had of overtaking Ford was to use the social media of the day.

            He did what a contemporary social marketer would do to overcome his disadvantage. Sloan created a “friendship” with customers. This friendship allowed him to have conversations with them. He learned that customers did not want just one kind of car, as the Model T was. Customers wanted variety in their cars. They wanted a car that was stylish and fashionable. Customers wanted a car that was “cool”.  Customers showed Sloan the way to defeat Ford.

            Customers wanted a change in the model appearance on a continuing basis. To do this, a company had to have the manufacturing technology to change lines over to different styles. General Motors had this technology and Ford didn’t. The ability to change over gave General Motors a strong competitive advantage over Ford. The yearly model change could only be handled by larger companies. In 1923 there were many niche car companies. The complexity of yearly changeovers ended the existence of tens of thousands of companies. This allowed General Motors to focus their competitive forces on Ford, the industry leader.

            The model change gave General Motors a true competitive advantage. The market of 1923 had changed. “Cool” was now an important issue in marketing cars. People wanted variety and fashion cars. This meant constant change. This was a big difference between General Motors and Ford. General Motors was orientated toward change and Ford was orientated toward continuity.

            The annual model change and diversity of product were incompatible to the way that Ford did business---to their very core as a company.  At Ford’s plants every machine tool and fixture was fitted specially for the production of a single product. Even small changes in the design of the Model T bottlenecked its production. The switch over to Model A production was chaotic. Machine tools highly specialized for Model T production could not be converted to multi model production as was the case at GM. The first model change happened in 1923. General Motors started getting buzz and traction in the market place with their variety model. Ford couldn’t make a changeover until 1927. The result of this was that 32,000 machines used to produce the Model T had to be redesigned and rebuilt and half of the remaining ones had to be scrapped. This cost Ford $250 million to change over. Ford was flatfooted and unable to adjust to GM’s repositioning.  

            Ford had to rearrange all their manufacturing plants to compete with GM’s model change. This cost Ford four years. No market leader lost their position so quickly. Ford has never, to this day, come close to getting even with General Motors in market share.

Dean Hambleton

dnhambleton@gmail.com

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 ALBERT SLOAN AND ALAN MULALLY USED SOCIAL MEDIA TO INSULATE THEMSELVES FROM IN EVOLVING MARKETS

Social media is about technology and techniques. These techniques and technology help us engage people to create deep relationships. The deep relationships created by social media are a tool that a modern marketer uses to insulate themselves from error. Marketing is about making bets in the market place. The size of social media allows a marketer to make better bets. When social media is used properly, the relationships created by engagements insulate a marketer from error. A marketer now can rely on the wisdom of many instead of just himself. There is a wisdom to crowds that insulates from error. Two example of this are Albert Sloan of General Motors in1923 and Alan Mullally of Ford Motor Company in 2011. Both of these CEO’s from different eras used the wisdom of crowds to make critical bets that repositioned their brands and insulated themselves and their companies from error.

Both of these CEOs came from a different era. They both used the social media of their era to adjust to the speed of their markets. This adjustment allowed them to understand the paradigm shifts in their markets that allowed them to adjust and to reposition their products so that they were able to create a brand that was unable for their opponent to compete against.

Henry Ford was autocratic and he made the important decisions for Ford in the early ‘20s. Alfred Sloan at General Motors organized executive committees to collaborate and make the important decisions after deep group discussion. This set up has great impact General Motors to this day. General Motors needed a luxury brand to offset Ford. Sloan had two choices, either the Seville or this thing called Cadillac. Seemingly from a cost standpoint the Seville had a cost advantage. There was a committee meeting that changed everything.

The manager of Cadillac, Nicholas Dreystadt, told the committee that Cadillac had an image with black professionals, which was an important niche market for General Motors,  that other managers weren’t aware of.  Black professionals purchased Cadillac as a symbol of their success. Because of this all blacks desired to purchase a Cadillac, even if they couldn’t afford it. This created a brand for GM among all blacks, a demographic that now becoming important. This information could only be developed through group discussion. It was not information that was common in the general car business. Cadillac was selected, and it is a major GM brand to this day.

In our modern era, General Motors had a technology that Ford had no answer to. It was a patented technology that was only available on General Motor products.  The emergence of social media allowed Ford to create a technology that has repositioned the modern automobile market.

Ford’s C.E.O Allan Mulalley ordered his Vice Presidents to embrace social media as a means to communicate with the customers of their markets.  This has given Ford a great deal of information and insight that they would never have developed on their own.

In talking with customers and in studying the technology, a Ford Vice-President, Doug Van Dagens, made a prescient observation.  He observed that General Motors technology originated inside the car. Social media is about taking your technology and connecting to other devices. This is what Ford has decided to do with its newest models. With the newer Fords, a customer brings their devices with them, and plugs them into the Ford.

Ford had made a major breakthrough in the area of texting. You hook up to a panel, activate voice recognition, dictate your text, and that text is sent out, safely.

Ford has repositioned the car. It is no longer a mechanism of transportation. The car is now a social media platform. Social media is fast markets. Embracing it has allowed Ford to adjust to the speed of the market.

Dean Hambleton

dnhambleton@gmail.com                                  

HOW ALBERT SLOAN USED COLLABORATION TO DEFEAT THE FORD BRAND IN 1923

HOW ALBERT SLOAN USED COLLABORATION TO DEFEAT THE FORD BRAND IN 1923

         Social media creates the wisdom of crowds.  The wisdom of crowds insulates a marketer from error. The purpose of social media is engagement. This engagement is between customer and brand.  Engagement also within the organization itself. This is why General Motors succeeded in creating a brand in 1923. It is the reason why Ford Motor Company failed. Markets change fast in a social media world. This is because there is so much scale. Social media is the tool that modern marketers use to adjust to this speed and scale. There is much material in modern business.  There is great wisdom in crowds. Alfred Sloan, the CEO of General Motors in 1923, understood this. He organized a system in which department heads had a say in how strategy would be developed. Alfred invented modern management. How he ran General Motors is a benchmark, and it is the reason why modern social media strategists should study Alfred Sloan of 1923, today. In 1923, nine out of ten cars on the road were Model T Fords. By 1926, General Motors gained the lead in market share. The reason why this happened is because Mr. Sloan created collaboration through the social media that was available to him in that era.

            In contrasting Albert Sloan and Henry Ford, and explaining why General Motors created a brand, let me quote Dr. Yogi Berra.  Yogi once said, “You can see an awful lot just by watching”.  Mr. Sloan created a brand at GM because he saw that Mr. Ford was making a significant mistake.

                   To be successful in social media marketing a professional has to be both humble and flexible. Albert Sloan of General Motors in 1923 was both of these. Henry Ford was neither and this is why his story had such a tragic ending. Henry Ford was autocratic. One man made the decisions in that company. Anyone who had an idea different than Mr. Ford’s was fired. This is why the Ford Motor Company missed the vast paradigm shifts in the American auto market in 1923.  

            Mr. Sloan was a brilliant man and the reason he was so brilliant is that he understood that he didn’t know everything. To offset this, to create policy and strategy, and to insulate himself from error, he created an executive committee in which the heads of the departments would get together and discuss things. This was the beginning of modern management. It was the beginning of modern social media. Mr. Sloan did not have Facebook or Twitter, but he used the social media of the day. He engaged his employees who had engaged their employees, who had engaged their employees. Today, people would send Mr. Sloan a wall post, or a tweet. In his day, Mr. Sloan’s Facebook page was talking to people face to face.. Mr. Sloan collaborated with his “friends”.  Issues were discussed; there was a meeting of the minds.

            From these committee meetings, Mr. Sloan realized that a strong middle class was developing in the United States. Women and African-Americans were now a significant market for a car producer. Mr. Sloan understood this through group discussion.   Mr. Ford wasn’t aware of these changes, and everyone at Ford was afraid to tell him.

            General Motors created a strong brand among women and blacks. This demographic was an important reason why General Motors became the market share leader in 1926. The committee set-up allowed Mr. Sloan to function in a world of change. Mr. Sloan made this observation about Mr. Ford, meant in honest and respectful manner. “The creator of change didn‘t realize when change had come”. Every modern social media strategist should understand how Mr. Sloan created a brand in 1923. I would like to end with a quote from Dr. Yogi Berra, “The future sure ain’t what it used to be”.

Dean Hambleton

dnhambleton@gmail

HOW ALFRED SLOAN OF GM USED BRAND IMAGE TO CREATE A BRAND FOR CADILLAC IN 1923

HOW ALFRED SLOAN OF GM USED BRAND IMAGE TO CREATE THE CADILLAC BRAND IN 1923

            Brand image is the means by which products make speeches. This is a critical fact to know in creating a brand, especially in a social media era. The essence of social media is communication. A brand and its customer communicate to one another in an almost human dimension. A person selects a brand to make a speech. You select a brand to convey your position in life.

            Alfred Sloan, the CEO of General Motors in 1923, understood this. He is probably one of the first CEO’s to understand how important image is in creating a brand. He understood that brand image is a subjective thing---it is in a person’s mind. It has no functional value---but it is a critical factor in creating a brand. Brand image is a critical factor in having a product selected. This is why the Cadillac brand was a central factor in Sloan’s strategy of overtaking the Model T and becoming the pre-eminent brand in cars in the 1920s.

            As 1923 began, Mr. Sloan looked to be fighting a no win uphill battle against Ford Motor Company. The model T was one of the most successful brands of all time. When Mr. Sloan looked out of his office window, nine out of 10 cars he saw was a Model T. He knew that the only way he could compete against Ford would be to create a social media brand.

            In our day and age, “social media” conjures up the images of large social media platforms. In its purest essence, social media is the personal conversation between a brand and its customers. The two create a human relationship. They become friends. Friends speak to someone openly. This is what Mr. Sloan did in creating his social media brand circa 1923. To create his social media brand for General Motors, he traveled extensively.

            Mr. Sloan traveled the country, talking to people, listening to people. He wanted to find out what were the deciding factors that people experienced in buying a car. He discovered a critical fact about the America of 1923.

            In 1923, America now had a middle class, it had a leisure class. People had disposable income. Women were now entering the workforce. This was a big impact for two reasons. This meant there was now a second paycheck in the house. It also meant that women now exerted a bigger influence in buying decisions. A car is a major for a family.

            Another important fact that Mr. Sloan learned in his personal social media was that people used a car to explain their financial position in life. People entering the workforce drive Chevrolets. People who are successful drive Cadillac. This is why Sloan knew that Cadillac was critical in his branding. Few people could afford Cadillac----but all WANTED TO. Cadillac was the brand of success. By extension, General Motor products were driven by successful people.

            Sloan was also the first automotive CEO to advertise heavily. In his advertising he emphasized the “success” factor;  he emphasized the “cool” factor.

This campaign worked. By 1926, General Motors had overtaken Ford as the pre-eminent brand in America---mainly because of brand image. The point to be made in observing Mr. Sloan in 1923, is the critical importance that brand image has on our modern social media brands.

            The importance of brand image can be best explained in a story about Mr. Ford.  Henry Ford, Thomas Edison, and Henry Firestone were the best of friends. Each year they took a camping trip together. One year their car, a Model T, broke down. It was near a farm, and Mr. Ford roused the farmer to help him get his car started. This farmer did Mr. Ford a favor. The farmer didn’t recognize Mr. Ford. Mr. Ford gave the farmer a rather large gratituity. The farmer, still not recognizing the three men, could not accept the large amount money. Being as humble as he could, Mr. Ford said, ”farmer, we three are somewhat successful. We can afford this, please take this”. The farmer looked at them and said, “You fellows can’t be too successful. After all, you’re just driving a Ford “.  

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  

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

HOW ALBERT SLOAN CREATED A WOMAN'S SEGMENT FOR GENERAL MOTORS IN 1923 USING SOCIAL MEDIA

HOW ALBERT SLOAN CREATED A WOMAN’S SEGMENT FOR GENERAL MOTORS IN 1923 USING SOCIAL MEDIA

           

            Social media platforms are an important tool for modern marketers because they tell a marketer, in real time, when a market has evolved. In modern marketing, markets move very quickly. To have a strong brand, a marketer must understand what the main drivers of a consumer buying decision are. Drivers evolve quickly. Social medial platforms allow a marketer to engage with a great many consumers at one time. This scale creates the ability that a marketer needs to understand when a market has changed in real time.

            A perfect example of this is General Motors in 1923.  Think about just what social media is. Social media is a conversation between two “friends”. The two friends are the brand and the consumer.  Friends don’t have walls between them. They speak openly. When this happens great brands are created.

            Friends support one another. In speaking to a friend, you understand what they need in real time. If your car breaks down, you call a friend to pick you up. This is what happens on social media sights.  A consumer explains what they need or in what way they have changed. A brand adjusts quickly because they have real time information. In the 1920’s, women were beginning to become an important marketing niche for car companies. General Motors was able to create an important woman’s market through a strong social media platform---their C.E. O. Alfred Sloan.

            At this time, the Model T of Ford had what looked like an insurmountable lead over GM. Mr. Sloan hit the road and began to have conversations with consumers to find out what they needed from a GM car. Looking at like this, General Motors was a modern social media brand in 1923.

            In speaking to customers, Sloan realized that there was a paradigm shift in American culture beginning in the 1920’s. World War I changed things. For the first time, women began appearing in the job market. They needed transportation to work. They became to be a more important factor in the buying of a car---either for themselves or for the family.

            Woman began to head households. Many veterans from World War I did not come back. In these Gold Star families, women were known faced with being the bread winner. Because women had to work on assembly lines during the Great War, they began earning their own money. When the husbands came home, they discovered their wives being more demanding.  The divorce rate would triple between 1890 and 1930.

            This created changes in the market. These changes caused the car market to evolve. General Motors, through social media, talking to customers, picked up on this evolution. In times past, with the Model T, a crank was the means by which a car started. This was hard physically and very dangerous. With the advent of women, a self starter was mandatory. Women wanted a closed exterior on the car. Because of the physical makeup of women, lower axles and running boards were necessary. Women preferred car with lower roof ceilings. Women needed easy of steering, and gear shifts. The whole concept of the car changed. Under men, a car was a utility. Under women, the car was a social vehicle.  This changed things. A car had to look nice and sound nice.

            Men were concerned for the comfort of their wives. This was the beginning of front head lights for safe night driving, heaters in cars for winter warmth, and electrical signals. General Motors understood these subtle changes that were taking place in American society much better than Ford did. This is one reason why General Motors overcame an almost insurmountable lead that Ford had in market share. This was done because General Motors knew how to use the social media of the 1920’s.

Dean Hambleton

dnhambleton@gmail.com

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   

OPERATING IN FAST MARKETS; HOW DO WE KNOW WHEN THERE HAS BEEN A PARDIGM SHIFT IN MARKETS

OPERATING IN FAST MARKETS: HOW DO WE KNOW WHEN THERE HAS BEEN A PARDIGM SHIFT IN MARKETS?

            A paradigm is the operating foundation of a market. It defines what is the one thing that drives the functioning of a market. The paradigm that drove the car market in 1904 was low price. Henry Ford understood this. This is why the Model T became one of the greatest brands in American history. The paradigm that drove the American car market was that most people could only afford an entry level vehicle.  In 1923, Albert Sloan of General Motors understood that America had changed. America now had a significant middle-class. This changed how cars had to be marketed successfully in the United States. Albert Sloan picked up the paradigm shift.

            How Albert knew that there had been a paradigm shift in the market is instructive for today’s modern marketers. Albert understood the paradigm shift because of his wise use of social media. When Albert took over as CEO of General Motors, he toured the country and spoke to countless people. Social media is the engagement between brand and product. Albert Sloan created a social media brand at GM through his engagement of people in conversation---not unlike using a Facebook page in our era.  By coming into contact with all this information, Albert realized that people now had disposable income. Because of this, they would be willing to pay more for a car if the car was more comfortable to use. General Motors installed windshield wipers, lights for evening driving,  heaters to warm passengers during cold weather months. A critical element in General Motors marketing was that they offered self-starters.

            Prior to this, driving a car was a physically demanding experience. To start a car, a driver had to crank it. It took a certain amount of physical strength and stamina to do this. This is why few women drove cars before 1923. Sloan understood this by talking to women. These conversations, this engagement through 1923 social media, allowed Sloan to create a lucrative market in women drivers. This is a market that Henry Ford did not realize existed.

            In the modern era, social media is a critical tool because social media is about engagement between brand and customer. This engagement large, scaled engagement creates tremendous amounts of information. This information tells a contemporary marketer exactly when the operating foundation, the paradigm, of a market has shifted.  

Dean Hambleton

dnhambleton@gmail

SOCIAL MEDIA STRATEGY AND BRANDING: HOW HAVE SOCIAL MEDIA PLATFORMS CHANGED THE MARKET PARADIGMS OF TRADITIONAL INDUSTRIES

SOCIAL MEDIA STRATEGY AND BRANDING: HOW HAVE SOCIAL MEDIA PLATFORMS CHANGED THE MARKET PARADIGMS OF TRADITIONAL INDUSTRIES

            Because there is so much content and engagement created on a social media platform, modern markets now move “at the speed of thought”. New products are constantly being created or repositioned. An effective marketer must constantly reposition their product. They must understand when to do this repositioning. This is analogous to the days of the early car business.  Modern marketing was developed during the branding of the early days of the car in the 1900’s.  In the early 1923, Ford’s Model T controlled 57% of the domestic automobile market. General Motors only had 12.7%.  It was thought that GM would never pass Ford. General Motors C.E.O Albert Sloan understood the structural changes happening in the domestic car market. This knowledge of a fast moving market allowed GM to overtake Ford and be the market leader that is today.

            Social media has created great scales of information. This large amount of information and the speed at which it can be transmitted, constantly changes the paradigm on which businesses and markets operate. To create a strong brand, a marketer must understand when a significant change has taken place.

            Two things that have changed market paradigms are globalization and social media platforms. These two things have created a lot of content that has to be developed and easily transported. The wonderful thing about social media is the engagement that it creates between customers and brands. Companies now have a knowledge base to create products that customers really do need in a form that they really need it. Customers really do define their products for a producer. It is almost as if companies are just bit players in the marketing of their own products.

            Instantaneous repositioning creates whole new companies and business models that make even main line companies to evolve drastically overnight. Social media platforms have made Ford Motor Company move from being a car company to a social media brand. With a new technology called In Sync, a Ford automobile is nothing more than just one big IPhone on four wheels.

This technology was created because Ford engaged with their customers. Since 1997 Ford has been trying to find an answer to GM’s in car technology. After speaking with customers, Ford created a social media technology that now makes the car THE PLATFORM. General Motor’s technology that seemed insurmountable a few years ago, is now a non factor in the automobile business. Social media technologies has created a role reverse from the 1930’s. Social media, through the leadership of Alan Mulley, has transformed Ford into a significant market player.

These sudden, massive paradigm shifts are the reason why the percentage of companies falling out of the top three rankings in their industry has increased from 2% in 1960 to 14% in 2008.  These intense quick paradigm shifts, created by social media, have created the seismic changes that are taking place in many markets. Many present day CEOs can’t define something as basic as what industry are in and who their competitors are in their industry.

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.

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

SOCIAL MEDIA STRATEGY AND BRANDING; HOW ALAN MULALLY HAS POSTIONED FORD AROUND SOCIAL MEDIA

Alan Mulally, the CEO of Ford, has positioned Ford around Social Media.  He has repositioned Ford as a  Social Media brand and not as a car company. He has created a technology called Sync. This technology transforms the car into a rolling Smartphone.  It allows all outside technology to be integrated into the car's system.

Ford now has competitive advantage over General Motors.  On Star is based upon TECHNOLOGY INSIDE THE CAR.  Sync is based upon technology OUTSIDE the car.