Gm Saturn Case Study
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GM Saturn Case Study
Ron Rubinstein
Strategic Marketing Management course
NYU SCPS – Fall 2005
Key Issues
How (whether) to revive a faltering brand after impressive initial success in early 90s.
How to regain competitive advantage after loss of momentum, and failure of initial business strategies to sustain long-term sales growth.
How to penetrate wider demographics (younger, male)
How (whether) to penetrate foreign market
Key findings: Environmental/General
Saturn developed by GM as a separate brand and independent subsidiary in the late 80s, to deal with shrinking domestic market share for passenger cars:
from 44% to 33% between 85 and 90
42% of buyers didnt even consider buying GM
Main competition were compact Japanese cars, due to perceived higher quality and value.
Factory was established in Spring Hill, TN, to isolate from Detroit mentality
Key strategy to ensure quality: maintain good labor/management relations through
cooperation with UAW in all aspects of business.
Key findings: Product Strategy
Initial concept: Compact, high-quality cars:
SC1, SC2 coupes
SL1, SL2 sedans
Technology innovation, e.g. plastic bodies
Target Market:
Demographics: baby boomers, college educated, 25-49
Sell 80% to “Converts” (wouldnt otherwise buy GM)
Larger vehicles were added later:
SW1, SW2 station wagons (1993)
L-Series mid-size sedan and station-wagon (1999)
VUE SUV (2001)
Key findings: Promotion Strategy
Unique, “folksy”, “straight-talk”, $100M+ consumer ad campaign, building a focused brand image, using themes such as:
Saturn employees enthusiasm, and dedication to building cars “in a brand new way” with US can-do spirit.
Saturn buyers lifestyles, playing up baby boomer themes of utility, value and safety.
Brand focus strengthened by using model numbers (not names), and calling dealerships “Saturn of [location]”
No haggle, stress free, high-integrity selling at dealerships
Key findings: Pricing & Placement Strategy
Dealership strategy: Large territories (to prevent internal competition), e.g. one dealership per metro.
Traditional import-car markets (East, West coast), not to cannibalize stronger GM heartland markets. Dealers chosen with import-brand expertise.
Pricing:
One price – no rebates or promotions. Facilitates option of calculating total package pricing and finance costs from the ease of ones home on website.
Affordable pricing with high value
Key findings: Successes and Failures
Initial success very high:
170Kunits sold in 92: 170% more than 91, and representing 2.1% share of domestic market.
Cult-like following that drove sales growth until 96.
Failures:
Employment model did not scale well to increased production. Increase attempts harmed quality and employee relations.
Failure to reach 300Kunit/yr sales goal. Sales declined from peak in 95 of 285Kunits.
Electrical vehicle launch (in line with innovative image) was a flop
Very late launch of SUV line in