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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