General Motors, Blacksmiths, and the Relevance of Brand Marketing. Classic Jack from 1993

The following commentary is reprinted from my 1993 book Adbashing Surviving the Attacks on Advertising The insights and recommendations are in many ways even more relevant todayToo often in the past corporate strategies have been determined without the input of marketing trends and marketplace realitiesThere39s the story of the blacksmith who prided himself on molding the finest horseshoes and having the fastest service Upon the introduction of the automobile he set his strategy to produce more horseshoes and speed up his service even more to assure that he could capture the lion39s share of the smithing business He hired more blacksmiths and increased his space One day a young auto mechanic walked in and asked for some free space to fix autos In return he would give 50 of his business to the blacksmith But the blacksmith said no because the loss of space would be counter to his strategy of improving his turnaround time on shoeing horsesThis apocryphal story is indicative of the many counterproductive actions taken by business caused by blind adherence to strategies that are not based upon marketplace realities and are not responsive to tactical marketplace opportunities In the 1980s General Motors39 strategy was to become more costcompetitive and profitable by merging the manufacturing and design of its divisions During this period it became obvious that the greatest tactical opportunity was to clearly differentiate their product lines and serve various market fragments Yet the engineering division manufactured products that were clones of each other Japanese competitors were marketing clearly differentiated and well targeted products Marketing executives from American auto manufacturers became the oldfashioned elixir salesmen trying to sell their cureall products in a modern drug store A major issue for big business in the 1990s is how effectively it can adjust and restructure organizationally to take advantage of new business realities Most major companies have had significant staff cuts in recent years Marketing and research departments have been especially hard hit Brand and product management have focused heavily on their shortterm business needs spending the majority of their time and efforts on distribution and promotional effortsSeveral studies have tracked the disintegration of brand loyalty during the 1980s Brand equity which took years to build has eroded as corporations have concentrated their marketing efforts on shortterm promotional activities and simultaneously cut back on the percentage of their marketing budgets devoted to establishing brand equity Companies generated brand loyalty for their products at a time of minimal competition and when mass media were available at comparatively low costs They aggressively promoted their brand image and identity through mass media advertisingAs consumers became less homogeneous in their tastes and the numbers or products increased competition became fiercer Manufacturers shifted strategies away from mass media and toward targeted marketing and promotional couponing efforts attempting to incent customers to purchase their products Ultimately the marketing process has imploded on itself companies have emphasized price cutting promotions and trade allowances The more price cutting and couponing they do the more consumers expect them and base their buying decisions solely on price The more trade allowances offered by marketers the more demands retailers make in return As marketers have placed more emphasis on shortterm promotion the equity value of their brands have collapsed Now companies are faced with the challenge of rebuilding brand loyalty and rebuilding profits at a time of intense competition and fragmented media To respond to this challenge business requires a new set of paradigms Whereas corporate marketing executives have been operating under financially restrictive parameters future corporate directions must entitle them to act aggressively and creatively Jack Myers is available to speak and consult on emerging media and advertising industry trends patterns and economics Contact Jack at jmjackmyerscom

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General Motors, Blacksmiths, and the Relevance of Brand Marketing. Classic Jack from 1993

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General Motors, Blacksmiths, and the Relevance of Brand Marketing. Classic Jack from 1993

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