Monday, May 4, 2009

Will GM’s portfolio pruning assure its survival?

5/4/09

As part of its restructuring, GM has announced that it is eliminating 4 of its brands – Saab, Saturn, Hummer and Pontiac. This will allow them to focus on their 4 remaining brands – Chevy, Buick, Cadillac and GMC.

In reading about this, I was reminded of the discussions that I participated in when Uncle Ben’s launched Uncle Ben’s Country Inn Rice Dishes ®. Those in favor of not including Uncle Ben’s in the product name felt that it was stogy and would prevent the brand from reaching its full potential.

But, the VP of Marketing, who had the final word, pointed out that since she would not be able to support the brand with its own advertising campaign for more than a few years, it would need to live under the Uncle Ben’s umbrella so it could be supported with synergistic ads after the launch period.

Supporting 8 brands was clearly cost prohibitive, and supporting 4 will be easier, but has GM gone far enough? As market analyst Todd Turner pointed out in the attached article, the GMC division only appears to be profitable because there are no development costs associated with it.

Perhaps it would make sense to eliminate this division as well, or bring all the remaining brands under a common umbrella. Since GM spent over 2 billion dollars for marketing in 2008, the potential for savings could be huge. What would you do?

Greenberg, K. (2009, April 27). GM To Focus On Four ‘Keeper’ Brands. marketingdaily.com Retrieved, May 4, 2009 from
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=104881

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