Marketing Efforts vs. Cost Reduction - Promo Wins For GM

Problem? "Of course, GM has long been desperate to sell cars. But last spring it was really desperate. The company had lost big money in the previous quarter, and its vehicles weren't moving off lots fast enough to make room for next year's models."(Schubert, 62)

Remedy? "We need an aggressive clean-up program" says Steve Hill, GM director of marketing.

Implementation? GM made employee pricing its nationwide clean-up program.

Results? "The most successful promotion in automotive industry history"! "Sales increased in June by 41 percent and in July by 20 percent... By mid-August, GM had reduced its inventory from 700,000--32 percent below the company's five-year historical average and the lowest level since July 1998...." Furthermore, "Hill believes that the employee discount campaign will have long-lasting branding benefits" (62).

Notes: The success of GM's employee discount promotion will definitely build some brand loyalty. Also, since they can trade-in their cars for newer models (for a price), GM stands to gain a few repeat customers. For the global marketer, the branding strategy beats any cost-cutting, sell-it-cheap strategy; afterall, once we customers get hooked, we'll buy it at any price!

On the other hand GM can cut costs but if people don,t know its products, they won't sell anything. Companies cut costs at the expense of employee benefits(healthcare), employee jobs(through outsourcing and production cutbacks), employee motivation(and consequently productivity) and employee loyalty. Instead, GM should focus its efforts on building its image as a company that promotes efficiency and reliability alongside its reputation for marketing unplain, stylish, and exciting cars. In short, cutting costs does not promote sales.

Source: Schubert, Siri. "How GM Made Us All Feel Like Family." BUSINESS 2.0 October 2005: page 62.

Marketing Efforts vs. Cost Reduction - GM BuildsBrand Equity

Through its Environmental Performance programs GM is expanding its customer base. GM "assesses and reports its global environmental performance where possible."

Environmental Policy (http://www.gm.com/company/gmability/sustainability/reports)

The GM Environmental Principles form the bedrock for all individual facility environmental policies around the world. The environmental policy acts as the driving force for implementing and improving a facility's environmental management system.

Each GM plant has a set of environmental guidelines that:

• are appropriate to the nature, scale and environmental impacts of the organization's activities, products or service
  
• include a commitment to continual improvement and prevention of pollution
  
  
• include a commitment to comply with relevant environmental legislation and regulations and with other environmental requirements
  
  
• provide the framework for setting and reviewing environmental objectives and targets
  
  
• are documented, implemented and maintained and communicated to all employees
  are available to the public.

By showing that it cares about the health and environments of the countries in which it operates, GM adds value to its cars. GM has invested in building more environmentally friendly cars(hybrids), focused on setting environmental policy, promoted human rights, enhanced employee satisfaction, and implemented diversification policies.

Source: GM. "Corporate Responsibility Report: Social Responsibility." 2005. <http://www.gm.com/company/gmability/sustainability/reports/05/700_social/index.html>

Marketing Efforts vs. Cost Reduction - GM Diversifies Products

GM diversifies its prodcut lines to broaden its market. SUVs appeal to the athletes, minivans to the soccer moms and sports cars to the young-at-heart. On another spectrum, Cadillacs appeal to the status-cautious, Chevrolet to common folk , and Hummers to the daring.