GM’s Saturn Problem

14 years and 15 billion dollars later, Saturn hasn’t made one cent. Saturn was originally created as a “different kind of company” so non-GM customers would purchase GM cars in disguise. Plastic dent free bodies, and very high customer satisfaction rankings kept it going, but there were no profits for GM, the parent company.

Competition from Japan and Korea weren’t figured into the equation. All auto operations are running in the red. So what is GM going to do to get out of this financial quagmire? Unload Saturn? Of course not – they are going to sink 3 billion more dollars into Saturn – and make it just another GM car, sort of.

The name won’t change, so hopefully the customer loyalty won’t change (because 70% of Saturn buyers won’t even consider purchasing another GM car), but the designs and parts will be wholly GM. It will be another example of one car created with slightly different variations under different names – but all basically the same car by one manufacturer.

Why not just get rid of Saturn?
There’s still power in the name of Saturn with customers, and it’s stronger than Buick and Pontiac. Not to mention, GM would have to buy out all of the Saturn dealers, which would cost hundreds of millions of dollars. And by keeping these Saturn customers, they stop them from going to overseas competitors.

Originally, the successful “Different Kind of Company” advertising campaign contributed to the splash of Saturn, along with the hype of finding an American location for the plant. The entire point was to draw people who would never buy GM.

Problem: most Saturn buyers never traded up – they either got another Saturn or shopped elsewhere. It never changed their opinion of GM. Changes at the head of GM, mixed with jealousy from other divisions who coveted the monies spent on Saturn, caused an eventual starvation of resources for Saturn.

Then a poor decision to market Saturns to the Japanese didn’t do as well as they had expected (what a surprise…) In the meanwhile, December 2000 saw the demise of Oldsmobile. Why not Saturn? Oldsmobile covered an overlapping of customers. Saturn customers were their own demographic, and unreachable without the Saturn name.

The eventual solution was to make Saturns just like every other GM car – just still keep the name. “We’re investing in Saturn’s future because the inherent health of the brand is quite good,” says Lutz: “It just needs a bigger, more exciting portfolio.” In other words, they’re adding more models, and chalking this up to a $15 billion dollar learning experience.

BRAINSTORM:
If ever there was a poster child for the power of branding, I believe Saturn would be it. Not because of its success, but because of the inability to kill it despite its failure! Can you see how incredibly high customer satisfaction with Saturn countered with an inherent dislike of the veiled GM manufacturer behind it is an oxymoron of huge proportions? GM created a make of car for people who don’t like GM in an attempt to lure them into upgrading to higher priced GM models. One problem – Saturn lovers still hate GM, and want another Saturn, or another make of car. Go figure.

So, this is one case where ‘a rose, by any other name’, is NOT a rose. Saturn, although owned by GM, is NOT a GM car, according to its loyal owners. The name Saturn was branded so well that people stuck with the car and ignored the truth about its manufacturer. The only problem with separating Saturn and pretending it wasn’t a GM car was that they did it so well that people still didn’t want anything to do with GM. What a problem…

So let’s review the good part of the branding. They took a cold and bureaucratic car making industry and portioned out a part of it for a “different kind of company” that actually makes cars for individual people, not for “consumers” at large. At least that is what they portrayed. I remember seeing commercials where people ordered a Saturn from the factory, and the factory worker has the customer’s picture pinned up inside the car. Funny what you remember after all these years – but it definitely made an impression on me. Why? Because it was so anti-institutional, and so personal. I probably would have purchased a Saturn had I the opportunity to do so. (Later we will review an article about customization of products, and how well the concept is doing today, despite additional costs and waiting time for the customers.)

So it IS possible to brand a pretty large piece of moving plastic (remember, the non-denting plastic outside?) and make it seem personal. Also remember the very positive and successful advertising campaign, including the publicized search for an American location for the plant. Everything associated with Saturn was American, and family and apple pie. And it worked. There just wasn’t enough profit margin built into the model to make any money, since it was meant to be a loss-leader that would get people to trade up to “real” GM cars.

So the question is, what is your brand saying? Is it personal or is it coldly corporate? Is it very pro-present-culture (like Americana), something that people can create an affinity to and loyalty for? Or is it very bland and impersonal, where people can utilize your services or product, but it doesn’t really mean anything to them?



GM’s reason behind Saturn was to latch onto another segment of the consumer population by luring them in with something that they would hopefully really click with. But the end result was supposed to be the customers trading up to higher profit margin cars eventually. This never happened. Have you created a “loss-leader” product that does not truly represent the core values of your main company and product, expecting to win over some customers that normally wouldn’t consider you? If so, do you realize that, like GM, you may never be able to transition your new customers to your main products, because the core values are so vastly different?


Since the goal of the car maker (and basically every business) is to make a profit, and have sufficient profit margins, instead of killing off the product and the company, they are finding ways to increase the profit margin on the existing company. How? By basically changing the models and the ways they manufacture the cars, but keeping the Saturn name on it. This will allow them to increase their profit margin. If you have a popular product that is not doing well profit-wise, is there a way you could reduce costs via manufacturing without damaging your integrity or your core values?


Another very important point is that Saturn survived because its marketing campaign successfully snared a different demographic that had eluded GM until this point. Oldsmobile, whose customers overlapped some of their other divisions, was therefore expendable. How can you make your brand so directly niche marketed that the name of your product or company alone will be worth something as a key to a certain demographic group?