RE-ENGINEERING

GM’s brave new world ushers in a structure where there is a single line of responsibility for each model. General Motors is completing the biggest marketing restructure in its history, as it copies the blueprint laid by its US operations in th

Later this week, General Motors will announce the appointment of six brand managers across Europe. It will be one of the fin ishing touches to the biggest restructure in the history of the company’s marketing and advertising operations.

The six will become the “brand czars”, the guardians of the future of the world’s largest motor manufacturer in one of its most important markets – Europe.

Officially it is being described as a move to implement the same structure that the car maker introduced in the US in 1995. And to a degree that is true. Packaged goods manufacturers like Procter & Gamble and GM’s largest rival Ford, through its Vision 2000 programme, have established or are establishing similar structures.

But at root is a more basic need than creating a me-too structure. The European car market is the most competitive in the world and General Motors is trying to achieve a more efficient and seamless way of bringing its cars to market and fighting off its closest rivals the Peugeot-Citroë Group and Ford. Significantly, the new brand management system will be marshalled from GM’s European production headquarters at Rsselsheim.

In the three months to the end of last September, Ford lost 302m while GM returned a profit of 50m in Europe. For Ford, it has meant an acceleration in the overhaul of its European operations. GM wants to avoid being forced to rush such changes by introducing them at its own speed.

The restructure unites the production and promotional aspects of the manufacturer, both in terms of closer working but also geographically.

In the new structure, individual teams will work on the Astra, Corsa, Frontera, Omega, Tigra, Calibra and Vectra car lines, with all marketing and advertising executives reporting to the brand managers. The Sintra MPV range – to be launched in the UK next month – will fall into one of these categories, rather than having a standalone team. The European Business Team, which has previously co-ordinated all European activity from production plants to advertising, until now was based in Zurich.

The brand managers are likely to come from a mixture of the European Marketing Unit – also previously based in Zurich – which according to sources will be dissolved, and “outsiders”. People with brand management experience from other fmcg categories – GM’s head of marketing in the US, Ron Zarella, recruited people from sectors as diverse as salty snacks and toiletries as brand managers when the US went through the same upheaval in 1995. But Zarella, who is not himself from an automotive background, was searching for 35 brand managers to work across GM’s Buick, Chevrolet, Oldsmobile and Pontiac lines. GM’s European boss Dick Donnelly is only searching for six.

In the US, each of the brand managers is responsible for the advertising, marketing, promotion and pricing decisions on individual car lines. They also have input into the styling and “character” of the car.

Teams of specialists are created to advise on all aspects of a vehicle, from its launch through its lifetime. The aim is to avoid the common criticism levelled at car companies: that once the launch is over a car is simply abandoned to sink or swim. The logic of the restructure is to adopt some of the processes learnt from the production line, and improve the efficiency of the process.

With the average lead time on car lines falling, and the launch cost rising, the need is now greater than ever. So in future, manufacturers will produce more models from fewer car platforms, giving the outside perception of greater choice, while reducing costs through economies of scale across Europe.

The European brand managers will have control over all advertising and marketing decisions, including agency appointments. They will work side by side with the Vehicle Line Executives (VLEs) who oversee the development of each line and ensure that deadlines are met. In the US, the VLE system has come in for some criticism because it is argued they do not report to a top board or management committee, and therefore, arguably, lack accountability.

“These (the European) brand managers will have an international function – they will co-operate with the vehicle line executives and also liaise with others in individual markets,” says a GM source. “The brand managers will be responsible for building the brand of all the products, across all markets, in a consistent manner. In many markets GM does not have the resources to promote individual car lines.”

But the restructure is not expected to lead to a review of General Motors’ European agencies: Lowe Howard-Spink in the UK, Lowe & Partners in Germany and McCann Worldwide in the rest of Europe. All the agencies have been spending time in Zurich advising on the new structure and how it will be implemented.

In tandem with the VLEs, the new structure will effectively replace the Zurich-based European Business Team. It is highly significant that the brand managers will be based at GM’s European headquarters at Rsselsheim in Germany – alongside the production plant and not Switzerland, home of GM’s European administrative headquarters.

But a pan-European structure is slightly complicated by the retention of the Vauxhall name in the UK. Across Europe, GM is branded as Opel, but tradition and the strong brand name of Vauxhall has meant that previous attempts to change the name have always been thwarted. The new structure will not change that state of affairs.

Ironically, it is in the UK that the impact of the restructure can be seen most clearly. The appointment of Declan O’Mahony as Vauxhall’s marketing “supremo”, and the consequent scrapping of the marketing communications and marketing services director roles (held by Wolfgang Schubert and Andy Gilson respectively) and their departments, simplifies the system.

O’Mahony will deal directly with each of the six European brand managers once he takes up his role as marketing director on March 1. Although he has worked on the marketing side before, his most recent role – as comptroller – at Vauxhall, a financial role, gives a possible indication of the company’s new priorities.

O’Mahony’s appointment is the first of a number of changes expected in the coming weeks. “Everybody’s job will change,” says one source, “practically nobody will do what they do at the moment. It is all part of its shift from being a car-led to a consumer-led company.”

Schubert is believed to be moving to either Germany or Switzerland with General Motors, after less than two years in charge, while Gilson is believed to be staying within GM’s UK operation. Some sources suggest he will be given added responsibilities.

Vauxhall now has a structure that mimics that which is being created in Europe with all its marketing staff working in four brand teams. The brand managers are Gareth Jones (Corsa, Tigra); Stuart Harris (Vectra, Calibra); Paul Confrey (Astra) and Peter Hope and Darren Payne who handle the Omega range and Vauxhall’s vans division.

Further details on the new European structure are scant. It is unclear how it will differ from that in the US, but because of the large number of markets involved, sources believe there will have to a more flexible approach.

Ironically, the new model for working coincides with both new arrivals from the US and a debate within GM, which has now apparently been put on to the back burner, about how GM should approach the sales and marketing of its US models in European markets.

Last month, it ignored three international networks to hire an independent German agency to promote its US brands, Cadillac and Chevrolet, across Europe. The decision to hire Buhler, Flettner & Partner is seen as the car company choosing to go for a short-term sales drive, rather than a longer-term branding campaign. At present, GM sells fewer than 9,000 Cadillacs and Chevrolets in Europe.

“The original brief was to exploit the potential of the US cars across Europe,” says one source. “But GM had a dilemma over whether to go for a strategy that just sold the cars it received in Europe or create a brand and say why these cars are relevant to European markets.

“So for GM to go for a local integrated agency suggests that it wants a campaign to support the network of dealers across all markets rather than the branding campaign others were suggesting.”

The first task for the agency will be the European launch later this year of a new Corvette, but there is also speculation that it will introduce its Saturn range into Europe this year.

GM’s brave new world ushers in a structure where there is single line responsibility for each of its models. Last year GM sold more than 1.6 million of its Opel, Vauxhall and Saab badged vehicles in Europe. This represented a sales increase of just 1.9 per cent on 1995, while all its closest rivals reported increases of between 9.3 per cent and 4.2 per cent.

The figures underline the reason GM is so determined to introduce its new structure, and why it hopes it works. If it doesn’t, GM will lose its position in the European market – and in the share-driven world of cars, that is unacceptable to its Detroit bosses.

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Tom Fishburne is founder of Marketoon Studios. Follow his work at marketoonist.com or on Twitter @tomfishburne See more of the Marketoonist here

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