Can cars be sold like Crest? Ask former P&G and GM chairman John Smale

John Smale did a lot more than shake up the hierarchy at General Motors Corp. in 1992 when he grabbed the reins as chairman and put John F. (Jake) Smith Jr. in as president (since elevated to chairman, replacing Mr. Smale).

A long-time GM board member, who retired as chairman of Procter & Gamble Co. in 1990, Mr. Smale also is credited as the architect behind GM's now blossoming brand-imaging strategy (see feature, p.36).

Among his other accolades at brandheavy P&G, Mr. Smale maneuvered Crest toothpaste to the No. 1 selling brand.

Coming from an outfit steeped in pushing high-volume consumer items such as soap (Ivory) and laundry detergent (Tide), Mr. Smale figured staid old GM -- with a roster of strong, familiar, but fading marques -- could regain lost vitality by adopting some of the same brand-management principles used successfully by other manufacturers of consumer products.

"Smale certainly accelerated the GM program, and I'm sure that turned on some lights at Ford and Chrysler," says David E. Cole, director of the Office for the Study of Automotive Transportation at The University of Michigan.

Analysts and other industry watchers generally believe that Mr. Smale strongly influenced the hiring of Ronald L. Zarrella, president of optical products producer Bausch & Lomb, to be Jack Smith's brand management guru. Mr. Zarrella, a GM group vice president, is typical of the personnel outsourcing going on. Buick and Cadillac went to ad agencies to fill ad manager posts. "Every one of the GM divisions has at least one brand manager brought in from the outside," Mr. Cole says. "It's an open-minded philosophy because these new managers are not narrowly focused (like the automotive veterans)."

Brand management is having a strong impact on advertising agencies at GM and Ford Motor Co., and to a lesser extent at Chrysler Corp. But the agencies aren't talking on the subjects of brand managing or brand imaging. Normally mild-mannered Richard O'Connor, who retires at year-end as chairman of Campbell-Ewald (Chevrolet's agency) tells WAW via a spokesperson that "We will not discuss the subject." Ford Div.'s advertising arm, J. Walter Thompson in Dearborn, also clams up. Why are they so up tight?

Mr. Cole thinks the agencies are playing shy for two reasons. "One, it's proprietary. They have had the data for years but never used it. Secondly, it is so new to so many people that they are on the sharp slope of the learning curve." A GM public relations official confides that Mr. Zarrella has clamped down on outside comments.

"Under image management, the agency and the manufacturer will have to create a niche that the product occupies," says Thomas Healey of J.D. Power. "That's number one. Second, they will have to police that niche and make sure that everything advances the product in that niche."

Mr. Healey defines a brand as a contract between the manufacturer and the buyer, with the supplier in between. "When you see a brand symbol, there are certain things that are guaranteed," he explains. "When you buy a suit from Hart, Schaffner & Marx, you not only know its price range but its quality. If a pair of shoes don't wear properly, you are aware that the brand contract has been violated."

Mr. Cole looks at brand management as a way of listening to the customer and getting his/her wants and voice into the development process. "In the past, the industry has been talking to the buyer instead of listening," he notes. "Manufacturers got carried away in bench-marking against the competetion.

In the latest University of Michigan Delphi study, entry-level buyers rated price at 91 on a scale of 100, while technology earned a zero. The average midsize customer listed price at 60 and technology at about 5. Luxury drivers favored performance and technology.

What happened was the industry looked at entry and midsized buyers as part of the luxury market. Mr.Cole adds: "They drove the prices up dramatically and left the customers behind." He cites Ford Taurus as an example.

The original Taurus of a decade ago did use a form of brand management.

"But, Ford in 1996 left the process it used for Taurus and Sable and lost the essence of what made them successful. That's why they have brand managers today and why they are getting back to what worked before," Mr. Cole says.

J.D. Power's Mr. Healey reminds that Mr. Smale's influence is strong "because packaged goods people live off brand images.

P&G is the Harvard of brand managers."

What are the qualifications for a brand manager? For one, an MBA in marketing is essential. Even l more critical is an ability to listen to the customers.

The brand managers obviously have plenty of clout on current and future products. At GM, says Mr. Cole, "He or she is a big dog, the chief marketing executive."

One plainly obvious reason for the surge in brand imaging is the tremendous increase in model choices among Big Three and foreignbased producers. At the start of the '60s there were only 19 nameplates in the U.S. market. Ford and Chevrolet alone accounted for 16 nameplates in the 1996 model year -- without counting their imports.

Thunderbird is a case of brand confusion, says one analyst, noting that the T-Bird came out in the late '50s as a neat, small luxury sports car, a two-seater: "It developed into a four-passenger sedan and suddenly became a personalized luxury car. Surely, it would be confusing if you bought that 'Bird in the '50s and were away for a time and just returned. The early customer would be crushed to see his favorite as a personalized cousin of Cougar."