GM & U Marketing Challenge_Full Case

GM & U MARKETING CHALLENGE

General Motors (GM) is in the process of creating a whole new company with a more streamlined set of divisions and cars, timely and forward-thinking focus on energy efficiency, and set of programs designed to re-engage car buyers. Its College Discount program, currently branded as “GM & U”, represents one such initiative to attract younger drivers to the GM portfolio of vehicles. Almost all automakers have learned that the best way to grow loyalty is to capture interest and purchase early in consumers’ car-buying lives, and provide models and brands that grow with them over time. This in fact, was part of the logic for the pioneering brand structure GM founder Alfred Sloan developed over 100 years ago to give options to all segments of car buyers from young to old, across lifestages, and price points. The leaner version of GM that exists today is still well suited to provide trade-up opportunities and meet the needs of multiple segments of buyers as well. Chevrolet (Chevy) still functions as the point of entry into the GM family of cars and offers a range of brands from the economy compact Aveo up to the storied classic Corvette. GMC offers burlier, more professional grade trucks and SUVs. Buick offers step-up sedans and a crossover with more luxurious trim levels than Chevy’s options. And finally, the Cadillac division makes a line of iconic luxury sedans, SUVs, and crossovers at the top of the prestige hierarchy. The overarching goal of the College Discount program is to support college students and recent grads in new car purchases, introduce them to the GM family of brands and models, and keep them in the GM franchise as their income grows and life circumstances evolve. The College Discount program currently has very low awareness and has not received substantial marketing support until now. With a newly increased budget of $1.5MM, a new line of cars, and a keen desire to emerge from its current situation more competitive and more efficient, GM wants to create a sustainable and actionable integrated marketing communications (IMC) campaign for the College Discount program. They view this program as an important initiative in bringing new drivers to the fold and working to maintain loyalty. As a result, GM is looking to students in the young driver target to build an IMC plan from start to finish, and intends to tap these plans as it builds out the College Discount program. The success of its IMC plan will be gauged on the following measures:

On-line media click throughs (for any potential on-line component of the IMC plan) Site traffic on www.gmcollegediscount.com Registrations and authorization number requests on www.gmcollegediscount.com Increase in showroom traffic Sales of GM vehicles

GM & U Marketing Challenge

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To help develop a comprehensive IMC plan for the GM College Discount program, it is useful to have more detailed knowledge of how the program works as well as more specifics on GM’s four divisions and its line of cars, trucks, and SUVs within each. The following sections give this information in addition to a current update on GM’s progress in its re-structuring. How the Program Works Target Audience. The market for the GM College Discount program includes:

‐ All currently enrolled students from two- or four-year degree programs, nursing degree programs, or a graduate degree program. Full- and part-time students are both eligible, and obviously the key is to just be working toward a degree.

‐ Graduates from any of the degree programs noted above holding diplomas from the past two years.

‐ Note: Vocational programs are not included unless they are part of a degree program. As a whole, the eligible target audience is nationally dispersed, ethnically diverse, and spans a broad age range. With a $1.5MM budget to spend on an IMC plan for the GM College Discount program, it is likely this wide target audience will require segmenting in some fashion. Exhibits 1-3 give a few snapshots of data on US college students. Searching www.census.gov may provide other supporting pieces of information on college graduates. Process. To obtain the price discount, students/recent grads must go to www.gmcollegediscount.com to register and obtain an authorization number. The registration process requires date of birth, zip code, and school information. Armed with the authorization number and documentation proving either current enrollment or recent graduation, consumers then go into a participating dealer, test drive, and buy. Nature of Discount. The program enables college students and grads to receive the same preferential pricing GM gives its suppliers. Supplier pricing is always less than MSRP (manufacturer’s suggested retail price), but does vary by vehicle. The range of the discount from MSRP falls roughly between $500-5,000 depending on the choice of car, SUV/crossover, or truck, but can be combined with other incentives, bringing costs down even further. The www.gmcollegediscount.com website provides a build-a-car interactive feature that calculates discount amounts for each eligible vehicle, and incorporates other current available incentives for an accurate cost estimate. Applicable Vehicles. GM makes the supplier discount available through participating GM dealers for most new vehicles from one of the four existing divisions - Chevrolet, GMC, Buick and Cadillac. The lone exception is the $105,000 Corvette ZR1. The program applies to both purchase and lease provided the driver keeps the vehicle for a minimum of six months. Finally, college students and recent alums do not have to finance through GMAC. GM, Divisions, and Models GM Corporate News and Plans. GM has received a great deal of attention in the news, so it is important to sketch out some of the relevant corporate-level news that could influence buyers. Given that college-age consumers/recent grads may have certain beliefs about GM, the factual information in the following sections may help dispel misperceptions and persuade of the potential benefits of buying from GM. GM launched a new company on July 10, with the following ownership structure: US government 60.8%, Canadian government 11.7%, UAW retiree healthcare trust 17.5%, and


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former GM bond holders 10%. The speed with which the reorganization took place (a little over a month) was received by the Wall Street community as a tentative but positive sign that the new GM would be more decisive and nimble-moving than its former self. The July 10 agreement made the four-division plan (Chevrolet, GMC, Buick, Cadillac) official. Although GM is moving forward with fewer divisions, it will still honor all warranties of existing vehicles. It was felt this move would reassure current owners that there would be no foreseeable problems around part availability, service, etc. Vehicles will be manufactured in fewer US plants as the company plans to close an additional 14 plants by 2012. The objective is to operate the remaining plants at 100% capacity of operations by 2011-- significantly improving efficiency, and beating its deadline to achieve full capacity by over a year.1 In an additional move toward increased efficiency and profitability, the company will pare back the number of US dealers from 5,969 to 3,600 by December 2010.2 Despite the reduction in number of dealers, GM has retained comprehensive national coverage. However, the company admits that it may now require greater effort on the part of customers to locate a convenient dealer. In turn, this could potentially mean that GM’s web content will need to do more heavy lifting in terms of buyer education and driving simulation. The primary strategic thrust of the company includes pursuing energy-efficiency technologies and creating programs and messaging to regain and strengthen consumer trust with the company. Well prior to the restructuring, GM’s extended-range electric vehicle initiative had produced a concept car that is now in the launch pipeline for 2010 – the Chevy Volt. Applying lessons from GM’s EV1 electric car from the early-to-mid 90s, the Volt has the potential for a true mass electric option. Relatively late to the hybrid game, rather than just play catch up to Toyota and Honda, GM has also expanded its innovative fuel cell and biofuel initiatives. In terms of product pipeline priorities, GM shifted its attention away from advances in bigger and better SUVs to design, fuel economy, and the driving experience of compacts, sub-compacts, and mini cars. The change in focus seems a timely R&D mission given the significant attention the current Obama administration is giving natural resources and oil dependency. Finally, as part of its effort to refocus attention on the consumer (not just auto engineering), the company now places greater emphasis on value-added cross-divisional programs and options. Examples include On-Star (one year standard on most vehicles), XM radio (3-month free trial), roadside assistance, courtesy transportation, and matching the warranty standard originally set by Korean manufacturers of a 100,000 mile transferable power train warranty. GM has branded its 5-year bundled warranty, roadside assistance, and courtesy transportation as “The Best Coverage in America.” The company has set up a new temporary website specifically designed to provide updates related to the restructuring and subsequent company plans, achievements, and announcements. See www.gmreinvention.com for the most up-to-date information from the company. It is also advisable to read the latest media coverage on GM from the Wall Street Journal, Financial Times, or other major financial publications as progress and developments happen regularly, and

1http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=74&docid=54632 2 http://www.gmreinvention.com/index.php/site/progress_reports/0601_Viability_DealerCount/


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the temporary GM website is expected to come down once the company gains full traction in its strategic plans. GM Divisions and Models. As noted earlier, GM’s founder, Alfred Sloan, pioneered market segmentation. Now a key tool of successful marketing, uniquely meeting the needs of distinct groups of consumers with different product offerings and messaging was a novel notion in the early 20th century. Consider that rival Henry Ford famously quipped, “Any customer can have a car painted any color that he wants so long as it is black.” Customer focus was obviously not the norm for all automakers. Despite the path-breaking philosophy of Sloan, over the decades, the original brand structure became less precise as it became more difficult to tell, for example, the difference between many of Buick vs. Oldsmobile’s models. GM’s recently implemented four-division structure should provide the discipline to keep the brands differentiated both visually as well as in brand personality. Further, the strategic plan is to thin the ranks of US models to a total of 34 across the four divisions. Which ones made the cut is not yet public knowledge, but below is an outline of the rough positioning of each of the current divisions and the models within each.

CHEVROLET continues to hold a special place in the heart of American culture as one of the quintessential Americana brands of any kind. For nearly 100 years, it has stood for American pride, and is associated with hard work attitudes and middle America values. With good reason, Chevy frequently shows up in the lyrics of country music celebrating the American heartland. The brand is an upbeat, drivable version of baseball, hotdogs, and apple pie. The Chevrolet division also houses the majority of GM’s current fuel development innovations and the subcompact and mini cars under development. (See www.chevrolet.com for more information on the upcoming Volt, Spark, and Cruze.) It is clear that GM treats Chevy as its flagship division as well. A brief overview of current models under the Chevy label include (see www.chevrolet.com for more detail):

Aveo Small car segment Malibu Mid car segment (also available as a hybrid) Cobalt Compact car segment Impala Large car segment Traverse Mid SUV crossover segment Equinox Compact SUV crossover segment HHR Compact MPV segment (multi-purpose vehicle) Tahoe Large SUV segment (also available as a hybrid) Suburban Large SUV segment Colorado Mid pickup segment Silverado Large pickup segment (also available as a hybrid) Avalanche Mid pickup segment Camaro 4-seat sport segment Corvette Luxury sport segment Express Large van segment

In 2007 and 2008 Chevrolet models have won awards that recognize its quality and design improvements. Accolades have primarily focused on the best-buy value of the


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Chevrolet line overall. Both Consumer Reports and Consumer Digest have singled out Chevy sedans, SUVs, pick-ups, and crossovers as high-value best buys in their respective categories. The Silverado was particularly called out for value-driven awards for heavy-duty pickups. Further, true car aficionado magazines (Car & Driver, MotorWeek, Edmunds, AutoWeek, Road & Track, and others) continue their love affair with the Corvette giving trophies for best sports car, car of the year, ride of your life, best dream car, best performance car… You get the idea.

GMC is currently the only division today using a consistent tagline to encapsulate its brand positioning – “We are professional grade”. The division makes a line of craftsman quality trucks, SUVs and crossovers. GMC is the most masculine of the division brands. Its trucks in particular offer trim levels and heavy-duty options that appeal to professionals that demand a hard-working truck to help with heavy-haul and storage needs without sacrificing creature comforts. If Chevy pickups are for “civilians,” GMC serves the real deal pros. As with the Chevy lines, GMC has consistently earned Consumer Digest praise as best value for its SUVs and light-duty pickups. The Sierra is the signature model in the GMC line. Its current line includes (see www.gmc.com for more detail):

Canyon Mid pickup segment Sierra Large pickup segment (also available as a hybrid) Acadia Mid SUV crossover segment Yukon Large SUV segment (also available as a hybrid) Savana Large van segment(also has a cargo van version)

BUICK is the trimmest division of the four with only three models. The original positioning was loosely upscale and traditional with largely sedan offerings, particularly compared to Chevy. In recent years though, the division has struggled to maintain a clear brand identity. However, it did benefit from its former sponsorship of golf great Tiger Woods. Further, the Buick Open is a marquis PGA event, so overall awareness of Buick remains quite high. The brand has made some overtures into family-oriented luxury with its newest sedans and crossover, and it currently sits between Chevy and Cadillac in terms of prestige, price point, and luxury appointments. Its current line includes (see www.buick.com for more detail):

Lucerne Large car segment Lacrosse Large car segment Enclave Mid SUV crossover segment

CADILLAC – Like Chevrolet, Cadillac has maintained a distinct positioning throughout the history of the brand. Cadillac has always been the American symbol of having made it. It retains some of the same American heritage equities as Chevrolet, but Cadillac has always sat at the pinnacle of the classic American dream, so has more enviable prestige and aspirations associated with it. In a way, GM hopes the company’s current rebirth story will mirror that of Cadillac’s. The brand suffered a significant decline in the 80s and 90s, only to completely reinvent


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itself in the early 2000s. Cadillac scrapped nearly all of its line of stodgy, fuel-inefficient luxury sedans and crafted a contemporary design philosophy and new brand vision. Almost immediately after launch, its Escalade SUV was embraced by urban culture and popularized by professional athletes and rap and hip hop artists. The symbol of having attained the American dream had become relevant and desirable again. Building on this success, the major redesign of rest of the Cadillac line has helped continue to notch down the average age of the Cadillac driver. It has also added elegant sex appeal to the brand by signing Kate Walsh (actress from Grey’s Anatomy and Private Practice fame) as a spokesperson. Its current line includes (see www.cadillac.com for more detail):

CTS Mid luxury car segment (and now also wagon) DTS Large luxury car segment STS Mid luxury car segment SRX Mid luxury SUV crossover segment Escalade Large luxury SUV segment (also available in hybrid)

While Chevrolet and GMC have won attention for best-value, most of Cadillac’s recent industry awards have centered around its design and quality. It has won “Eyes on Design” awards as well as technical innovation recognition by Popular Mechanics. Further, for 2009, the CTS has a five-star initial quality rating from JD Power, and the Cadillac line overall climbed to a 3rd place standing behind only Lexus and Porsche in initial quality ratings.3

The company knows it must find ways to prove its relevance again and counteract perceptions of uninspired design, inefficient fuel economy, and weaker repair and quality reliability compared to other manufacturers. It has made serious inroads against combating these consumer beliefs, and intends to use the College Discount program as a means to convince younger consumers to consider GM brands as they become an active part of the American car-buying public.

3 http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?ID=2009108


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Your Task Overall, the goal is to build an IMC plan for the GM College Discount program. To accomplish this, follow the steps below. For each step, we list the total point values (out of a total 100) that will be used in scoring submissions. As a suggestion only, we provide the number of slides you can expect each step to take. Our experience is that the strongest plans can be rolled out and supported in 30-35 slides. Submissions cannot exceed 35 slides.

Decide who you intend to target. All current two- and four-year college students as well as graduate students and grads from the previous two years are eligible, but you need to decide how you can reach the entire group or chosen segment effectively with a $1.5MM budget to produce results on the defined success criteria (click-throughs, gmcollegediscount.com site traffic, authorization requests, dealer visits, and sales). If you chose to narrow the target, use case data and any other logic and secondary research to provide a rationale for how you intend to define the target audience for your IMC program and why you believe this is the best option. (10 points, approx. 1-2 slides)

Conduct primary research (interviews, focus groups, observation, etc.) with members of your defined target audience to gather key insights on their perceptions of GM and competitor brands, car-buying process, media habits, and any other topics required to aid in justifying decisions. You should be creative in how you get in the head of the target. Note: Exhibit 4 provides a list of sites the target commonly uses in researching car information and decision making. (15 points, approx. 2-3 slides for research methods overview and the critical results)

Write a creative brief to serve as a guide for the message development of the IMC plan. Use whatever format feels appropriate. (10 points, 1 slide)

Using the insights about the market (i.e., GM’s unique capabilities and strengths, chosen consumer segments, and competitive dynamics) and anchored by the creative brief, create a comprehensive IMC plan for the GM College Discount program. (50 points, 20-25 slides)

‐ Describe all plan elements, justify each element and explain how each will achieve the objectives set forth in the creative brief. In describing each element of the plan, you are expected to provide a sample or concept of the creative execution for each type of media included in the plan. Images of GM vehicles and logos are available after login on the EdVenture Partners case site, www.edventurepartners.com/GMcase, for use as needed.

‐ The plan should incorporate all media deemed relevant and efficient in reaching

the chosen segment(s). You should consider the following types of media even if not all are used for strategic or budget reasons:

Traditional (print, broadcast) Digital Social networking Public relations Events and promotions Direct mail


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‐ Although you should use the above list of media types as a starting point, you are encouraged to be as creative as possible in considering any and all other ideas on how to reach the selected segment(s).

Allocate percentages to chosen media against a $1.5MM budget. You are expected to do

enough research to do this allocation exercise, but costs of specific vehicles (e.g., full-page ad in GQ, banner placement on Facebook, etc.) are not required. Justify budget decisions based on target audience insights and expected reach. (10 points, 1-2 slides)

Format of submission matters. Grammar and spelling, cohesiveness, creativity and design, and professionalism of the submission will be evaluated. (5 points)


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Exhibit 1 (http://www.census.gov/population/www/socdemo/school/cps2005.html)


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Exhibit 2 (http://www.census.gov/prod/2004pubs/04statab/educ.pdf)


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Exhibit 3 (http://www.census.gov/prod/2004pubs/04statab/educ.pdf)


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Exhibit 4: Websites Used for Car Research

(results are from GM-sponsored qualitative research)

Consumerreports.com Kelleybluebook.com Edmunds.com Cars.com Carfacts.com Vehix.com Craigslist Individual manufacturer websites Google searches

GM & U Marketing Challenge_Full Case

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