General Motors has created a new hybrid, and it’s not a new car model. It’s a business model. With the US government as a 60% shareholder and the UAW owning most of the rest, and with political appointees who lack automotive or even business experience in the driver’s seat, it’s a business model that puts political considerations above trivia like consumer wants and needs and marketplace realities. The new Chevy Volt television campaign, which broke during the World Series, is a case in point.
If you wish it, it must be so
For the moment, forget a few inconvenient truths. Forget that Government Motors’ own executive director for hybrid electric vehicles and batteries admitted at the Volt’s press launch that, what with recharging time and all, driving an electric vehicle (EV) from Detroit to Florida would take 28 days – a full week longer than if you made the trip by bike. Forget, also, the wonderful effect that all those coal-fired electric plants working overtime to keep millions of EVs charged up would have on the environment.
Even if those truths weren’t true, there’s no way EVs could singlehandedly turn around a company that can’t even draw $30 for a share worth $50 (liquidation value) in their IPO. But Government Motors is pressing on regardless.
The classic strategic dilemma
Every marketing and advertising strategist is faced with a dilemma: whether to shoot for category expansion or share conquest. In English, that means should you invest in growing the pie or in cutting yourself a bigger slice? Both alternatives have risks and rewards.
Category expansion = bigger pie
When you’re the category leader, the only way to grow sales is to grow the category. A classic example of this is Jell-O, whose main marketing objective over the decades has been to get customers to take that box of gelatin dessert off the pantry shelf and make something to eat with it, so they can go out and buy more. Or Band-Aid, which increases sales by getting more people to use adhesive bandages in general. In the 1980s, when one cup a week was heavy yogurt consumption, and when I worked on Dannon yogurt, the marketing objective was to change market share from 95% to 60% (of a much bigger category), which was why the famous “Russians” television spot sold yogurt generically.
Share conquest = bigger slice
But if you’re not the leader, you run the risk that every ad dollar you spend will build as much business for competitors’ brands as for your own. So what you generally do is attack your main competitor head-on, as in the “I’m a Mac” campaign that did so much to boost Apple’s share.
Of course, the category has to be big enough so that a share is worth it. The EV category isn’t and won’t be for some time to come – maybe ever.
“Technology geeks and environmentalists are expected to go wild over the first mass-market electric and plug-in hybrid vehicles when they hit auto showrooms in the coming months,” says the Los Angeles Times, “but most consumers will balk.” And in case Government Motors hasn’t noticed, technology geeks and eco-freaks don’t comprise a mass market.
According to the respected J. D. Power & Associates, pure EV and hybrid sales should total 1 million worldwide this year, or about 2% of total car demand. By 2020 – ten years from now – that figure should grow to 5.2 million, or 7.3% of worldwide sales.
Chevy Volt strategy = bigger crumbs
Undeterred by that reality, the marketing aces at Government Motors set out to compete for a share of a minuscule market segment against the Nissan Leaf — sort of.
Their 30-second commercial typifies the all-windup-no-pitch formula, with the first two-thirds – 20 seconds – devoted to voiceover about how Americans just like to get up and go on the spur of the moment. “So doesn’t it just make sense,” the next seven seconds ask, “that we build an electric car that goes far — really far?” That’s it. How far is “far – really far”? Is it farther than Leaf? Is it farther than Prius? Is it farther than a 53.5 mpg Audi injected turbo diesel? The world may never know.
It’s certainly not the strongest sales argument for plunking down BMW or Mercedes money on a Chevrolet Volt. Unless you’re one of those Americans who likes to just get up and go at slower average speeds than a bicycle.