12/17/2008
The Big Three's Biggest Problem Is Neither Management nor the UAW
The Big Three’s Marketing Catastrophe
With American automakers in crisis, an enormous amount of time has spent debating the cure. More short term cash? A stronger economy? Smarter management? A less burdensome labor contract?
All these things – cash, better conditions, better management, and a new salary and benefit framework – would be positive developments, but none of them solves the real problem facing the Big Three. The real problem is this – Americans do not want to buy Big Three automobiles.
Whether this aversion is justified or not is beside the point. The fact is it exists, particularly among younger car buyers. The prevailing perception is that American cars are of inferior quality, too expensive, and sold by dealers who are difficult to work with.
The perception has built up over considerable time, since the 1970′s. As a result, the future for the Big Three in the U.S. market is grim. If young people are not interested in driving American cars now, they’re unlikely to change as they age. And their children will desire American cars in even smaller number. No industry can afford to lose an entire generation, let alone two.
Given the generally negative consumer perception, I fear that a government bailout and/or a seemingly over generous UAW contract will backfire on the Big Three, no matter how well structured. Bailouts are widely unpopular in principle and give car buyers another reason to buy a Honda. Similarly, car buyers may not like having their tax dollars protect what they see as excessively high UAW compensation, particularly when car buyers themselves are struggling through a deep recession.
Once you have lost a critical mass of public support, it’s hard to win no matter what actions you take. Incremental actions, stopgaps, patchwork solutions are the worst courses of action, because they reinforce the notion that there is no recovery plan, no vision, no real change forthcoming, no future. The best path, indeed the only path, is to either take no action or take sweeping action.
What can the Big Three do to regain the trust and support of the American car buying public? That must be the central question.
Social Media to the Rescue?
One way – one extremely important way – to regain consumer trust is to have open and public discussions with consumers. On this front, there is reason for hope, because American automakers are already doing it.
GM Fast Lane is a groundbreaking blog – you can hardly pick up a book on social media without finding reference to it. Ford has a serious presence on Twitter. GM is Twittering, too. (They ought to be all over Facebook as well.) Social media is already helping Detroit strengthen relationships with their loyal customers and reach out to new ones. It’s working, and Detroit is ahead of the competition. Why not pour it on? Take full advantage. Speak honestly. Admit mistakes. Beg forgiveness. Ask for ideas. Explain. Listen. Respond.
Slick ads that ignore dysfunction in Detroit will not sway consumers. Two-way, honest discussion just might. At this point, it’s no exaggeration to say that there is nothing to lose. But there are one or two generations of present and future car buyers to gain.
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12 Responses to The Big Three's Biggest Problem Is Neither Management nor the UAW
Brad,
I think your idea about listening to what the lowly consumer actually wants is probably too straightforward for those with Harvard or equivalent MBAs and other qualifications which lead these companies.
In order for them to listen, you will need to propose ideas which entail a greater level of sophistication and less common sense.
Andrews last blog post..British sex industry – why a proposed new law should be rejected
Andrew, If you are right about that, then Detroit is doomed. Based on their track record, maybe it’s a long shot. But I do think if they’d humble themselves enough to ask, car buyers would be understanding and far more helpful than any marketing survey.
Brad Shorrs last blog post..The Big Three’s Biggest Problem Is Neither Management nor the UAW
Brad, living here in Michigan in the thick of it is at times overwhelming. However, you are right this is not a new issue and there are many reasons that American manufacturers (not just automakers) lost the trust / interest of the American public, some justifiable others persistent myths. You are right, bailout money is not THE answer. It is a complex issue that should have been addressed years ago, sadly the impact today is watching a city crumble around me as jobs disappear with no replacement industries or jobs.
Karen Swims last blog post..Drunk with Power
Karen, It is not too late for a reverse. I still think the situation is salvageable … do you? Or is it too late?
Brad Shorrs last blog post..The Big Three’s Biggest Problem Is Neither Management nor the UAW
Even with all the hearings etc…I would pay good money to hear Seth Godin debate the Big 3 Automakers. His simple one page memo nailed it: http://sethgodin.typepad.com/seths_blog/2008/11/what-to-do-abou.html
IF he wouldn’t do it, I’d drive Ross Perot there myself, and pick up Lee Iocaca on the way. I am betting after their presentation….assuming there would be a big dose of reality and “let’s all buy American,” i am betting car sales would skyrocket.
Come to think of it, one of ‘em should hire Ross or Lee to do a one minute spot during the Super Bowl. No script either, anything they said would re build trust.
gl hoffmans last blog post..Bernard Madoff et al Are Starting to P%$# Me Off
Hi GL, Seth v. Detroit would be productive, and good theater, too. As for a Super Bowl ad, do you think public reaction to an ad of any kind would backfire ala the private jets? A frivolous expenditure? Speaking of which, I would not want the government looking over my shoulder on every expenditure as an investor in my firm. Yikes. Another drawback of bailouts.
Brad Shorrs last blog post..The Big Three’s Biggest Problem Is Neither Management nor the UAW
Brad – enjoyed this one. My aunt was the first woman to go to work in our local GM plant. Thanks to her stories, I grew up hearing about what it’s like to make cars.
Agree with you about shifting from advertising into more of a strategic social media campaign, especially one that integrates online PR elements.
Looking forward to seeing what the auto industry serves up at the 2009 Chicago Auto Show. It’s always interesting to me to see how the brands interact with the people on the floor. For example, BMW has an owners lounge. You need to show a key to get in.
The conversations and interest levels vary by the brand. Seems like this would be a good opportunity to get to know owners and to find out who the evangelists are – in person and in a virtual show online.
@wiredprworks on twitter.com
Barbara Rozgonyis last blog post..Social Media Optimization | Search Engine Strategies Coverage
Hi Barbara, Good point – the Auto Show is the perfect venue for Detroit to expand influence via social media. Interestingly, I got a Twitter response to this post from GM. They’re definitely listening.
Brad Shorrs last blog post..The Big Three’s Biggest Problem Is Neither Management nor the UAW
Brad,
the idea of using social media to support auto industry is an interesting one. Here in Germany we have a significant going down of the auto industry as well, with consequences to other branches as well. Germans are not buying other cars, they have stopped buying cars at all, because they a) haven’t got the money, b) keep their old cars a little bit longer, c)switch over to public transport. Families with two cars find out that they can do with one.
Ulla Hennigs last blog post..Simply the Best
Hi Ulla, We’re not to that point quite yet here, but you know, sooner or later, people everywhere are going to have to buy cars. When they do, I believe social media will influence what they buy.
Brad Shorrs last blog post..UK Readers, Please Help Me Understand
i think that the finacial problem plus the big 3 is one problem no money no cars no cars no work but the problem is the billion dollars or should i say the trillion dollar war. the war is putting the economy in north america way down in problems
i think that the finacial problem plus the big 3 is one problem no money no cars no cars no work but the problem is the billion dollars or should i say the trillion dollar war. the war is putting the economy in north america way down in problems we can not hauve million of people out of a job because no money will go to the goverment