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    Case Study Chevrolet

    Uploaded by

    Nadia Zhafira

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    © All Rights Reserved
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    ANA Part 5: Cases | | | { 4 \ country. China is also a lucrative market for electric vehicles (EVs), and Chevrolet is optimistic about how the Chevy Volt will fare. Yet the company also faces many chal- Jenges in its plans to introduce EVs into China. The Chinese government has mandated that foreign EV automakers enter into joint ventures with domestic companies to pro- duce EVs in China, Such joint ventures offer many advantages but also require Chevrolet to share some of its trade secrets with its partners. For this reason, GM has decided to import the Chevy Volt, forgoing certain benefits rather than share the Volts technologies. Another challenge for Chevrolet relates to customization. Customizing vehicles to ferent markets takes time, and GM managers want to increase production and dectease the commercialization process. This has led GM to consider a new design for its vehicles that incorporates “global core architecture.” Such a move would enable GM brands to create @ more standardized design with slight adaptations for different markets. This, would likely save GM both time and money, but because cultural tastes can significantly differ, a globalized design is not without risks. It is uncertain whether Chevrolet can cre- ate a standardized vehicle that will be accepted by several different cultures. Challenges and Recovery Afier nearly a century in business, Chevrolet faced its greatest threat with GM’s bank- ruptcy in 2008, The company required a massive $50 billion government bailout, and although GM has rebounded, its reputation will take a while to recover, According to GM CEO Dan Akerson, the company “failed because we failed to innovate.” Ford, the only one of the Big Three automakers that did not accept a government bailout, took a combative approach against its competitors in its advertising. The company filmed one ad of a customer who had just bought a new Ford pickup truck as saying, “I wasn’t going to buy another car that was bailed out by our government. I was going to buy from a ‘manufacturer that’s standing on their own: win, lose, or draw.” Although the commercial was later pulled from the air (Ford stated that it had run its course), this viewpoint represented the sentiments of many Americans who felt that GM and Chrysler had over- extended themselves and then depended upon taxpayers to bail them out for their mistakes. Des] these dark times for GM, CEO Akerson stated that he viewed Chevrolet as an innovation powerhouse and believed the brand would bring GM back from the brink of collapse. The recovery, however, has been painful for GM. The company dropped half its brands from its product mix, including Pontiac, Hummer, Saturn, and Saab. Although this gives customers fewer vehicle brands from which to choose, it might benefit Chevrolet in the long run as GM can now focus more upon modify. ing its remaining brands. Such modifications will be important as environmental conditions in the market continue to change. For instance, new and impending regulations require automakers to create vehicles that are more fuel efficient. By 2025, vehicles must be able to reach 54.5 miles per gallon. Such changes will be costly and demand that GM take action now. Thus, new Chevrolet ‘chicles are likely to be lighter and possess more energy saving technologies. Such modifications are essential to ensuring that Chevrolet meets both consumer demands and the regulatory demands of the government, The Chevrolet brand is a model to which marketers aspire, Unlike so many other brands, it has lasted for a century due to its innovative product modiffcations and ability to rebound from failures. It must continue to seize market opportunities, constantly modify its products, and adapt its brand to changing customer tastes, Successfully meen, ing these criteria could enable the Chevrolet brand to succeed for another century, #s¢ % Chevrlet: 109 Years of Maat banowation AAS Brom the begin st spinning, Ford has also mad Se ‘ Mateo a naive for itself in yaeings history. startin th founder Henry Ford's 190L win against peofostonat d Al ioe ot Vehicle he manutacturesd le he manufactured himself, Ever since racinye hha Fi Vos DNA. The eampany his had tthe rset te ty 300 One, and NASCAR series, with drivers. like Force. and even Pant Newman chonsi He presetice inv the Indy. 500, Formule Tom Kendall, faques Villeneuve, John ' ‘ te race Hurd vehicles, Creating, solid connections fo Mneticn’s past isan important part af bond's branding strates Ford and Gener Mote While Chevrolet's 4 wale take very di Hine “Chevy Rims Deep” is an attempt ‘it approaches toward marketing. ‘nian the brand ay & ctitical part of America’s heritage, Ford's tagline “Ford, Drise ne.” and ite previous taglines of "Bold Moves” and “Have You Driven a Ford Lately?” evake a more exclusive than Chevrolet, Ford and GM also dlitfer in how they bran their sehicles, Ford takes a fantly branding approach to its vehicles, placing the Ford marae alg with thy brand of the vehiele on the car, General Motors, hossever, has embraced insble Pram architecture, beginning in 2009. Prior to this time, GM was placing 1 Mark of Excel 2009, GM lence” logo on its vehicles to connect them with the parent compar expressed ils intention of allowing its vehicles to stand on its crs. Nove ¢ cles will not have any visible affiliation with GM, nor will GMs + branding strategy has both advantages and disadvantay sumers when the same company offers 2 slate of different vehicles. 1 the coast favorable impression of the company or even an individual mort likely to carry that perception over to another company model, On ily branding risks contaminating the entire family if one produ to be inferior. In the case of GM, the company’s bankruptcy « had the ability to contaminate its four brands of vehicles, in spi merits, By adopting invisible brand architecture, GM is reduc contamination. es. Family branding fi " International Marketing Chevrolet sells over 4 million vehicles in more than 140 ev roughly 70 percent ofall GM sales in foreign markets, While Chevso ate a consistent brand image across the world, ils products instance, South Africa Chevrolet’s product line includes the Chevro! Lumina, Optra, Cruze, Orlando, and Sonic. In Brazil, Chevro the Camaro as well as the Chevrolet Captiva, Prisma, S10, M ‘The different models appeal to the differing tastes of Chevrolet's various & ‘Although for years Chevrolet has portrayed itsell ay an American brand, to reality the brand has become truly globalized. In fact, marketers at Chevrolet 2 now trying 10 embed the Chevrolet brand into other cultures just ay they set off tom Soe part of American culture. hv an attempt to erate greater brand awareness, GM has vavcded to rebrand Daewoo—a South Korean brand that GM acquired inthe cary 2000s evrolet, Despite the fet that sales of Daewuo vehicles have increased in ecent years, GM recognizes that unany South Korvants Lick aysareness of the Chevrolet brand, It hopes that recasting Daewoo as Chevrolet will increase awareness and allow Chevrolet to compete against its competitors Chevrolet’s sales are still highest in the United States, fallowedl by Brazil: How Chien ts not far behind, China is now the thin! largest market for Chevrolet and is the largest market in the world for vehicles. Chevrolet sells a variety of vehicles i ann Fae ing the Volt, Camaro, Captiva, Aveo, Sail and Spark. GM his entered tate serena joint ventures with Chinese companies in order to sell eer aeons chevrolet vehicles within the Y Desby, which it would continue to support for e All-American Soap Box jeff Gordon and Jimmie the All: as Jk 1e next decade, Chev drivers such chicles driven by drivers s the next decade, Chevrolet vehicles dri neta Teneo wou! go oo become a summon SH a TS alines sch as ae ort Bey” and. “Baseball, hot dogs, apple pie and Bost Sllen meses Bost NY ike a Rock” began in 1991 to describe ane ee tap tuck The tagline imbued the brand with a sense of| strength and soa apie ‘ulopted in 1994 and its most recent “Chevy Runs Deep. The Chews bran resonates wih consumers, so ach so thatthe companys mare eters mist exert caution when implementing changes. For instance, in 2010 GM desided the company would stop using the popular American nickname Chevy only use Chevrolet in corporate communications and advertising, Although 4 cao consumers were encouraged to still use the popular nickname, employees were not to use Chevy internally. The reasoning behind this was that international buyers of Chevro- let tended to get “Chevy” and “Chevrolet” confused, believing that they were different cars. However, consumer backlash and managerial changes convinced GM to drop this an, Changing the tagline to “Chevy Runs Deep” has not been free from criticism either. Chevrolet fans did not feel that the slogan was as strong as previous ones, and others were unsure about what it meant. This confusion caused GM to begin overhauling its marketing to clear up the confusion, According to Chevrolet’s marketing director, the tagline is meant to have an emotional impact while tying Chevrolet to its American heritage. While Chevrolet modifies its taglines to fit certain countries, many of its taglines are used for multiple countries to create strong brand cohesiveness. Globally, the company positions its vehicles along four values: durability, value, practicality, and friendliness In South Africa, Chevrolet commercials have emphasized familial values as well ae excitement, Taglines include “Captiva. Made for Memories.” and “Where Will Chevrolet Take You?” Although Chevrolet has adopted more of a global brand strategy, it still cus- tomizes its branding to appeal to certain markets, (On the promotior “America General Motors’ Rivalry with Ford General Motors is one of the “Big Three” carmakers in the United States, along with Ford and Chrysler. Although Ford and Chrysler are formidable competitors to Cherrelet, ‘most View Ford as being the more serious rival. Ford and Chevy vehicles ate both con. fered to be practical and affordable cars, and although Chevy is generally viewed being sportier than Ford, Ford's sports vehicles like the Mustang are divest competitors to Chevy's sports cars. While Chrysler came onto the scene later curing the 1920s, Ford ape Chevrolet are closer in age and have been competing since the inception of Chevrolet. ‘his highly competitive rivalry has challenged many of Chevrolet's branding state- gies, For instance, Ford is also deeply entrenched in American culture. Many view the Model TT as the first American car, although it would be more accunste to say it was the first one produced for the masses. The unproven statement by founder Henry Ford regarding the Model T, “You can paint it any color, so long as it's black,” is remembered re & century later. Ford also claims that its Ford Aerospace engineers and techie helped place a man on the moon by helping to design and provide services for NASA’ Mission Control Center. Supporters of Ford are more likely to view Ford ae a greater jPart of America’s heritage than Chevrolet, : . Case 9: Chevra 100 Years of Product Innovation 411 Chevrolet Volt Chevrolet’s product mix would not be complete without venturing into the electric vehi- cle industry. Its Chevrolet Volt, unleashed in 2010, runs on a battery but also uses gaso- line once the electrical charge is depleted. The Volt’s battery allows the vehicle to travel 35 miles on electricity; it can then travel 37 more miles using gas. Initial views of the Volt seemed positive. In 2011, it was named as the winner of the World’s Green Car award. However, the Volt may take longer than anticipated to go from the introductory to the growth stage of the product life cycle. GM's plans to sell 10,000 Volts in 2011 were too optimistic: only approximately 8,000 Chevrolet Volts were sold. Many Chevrolet dealers were hesitant to sell the Volt due to a perceived lack of local demand, Such obstacles are not uncommon with new products, as both dealers and consumers need to learn more about the product before making a commitment to purchase it. The high price tag of $1,000 also increases the risk of purchase. While the current interest in electric vehicles is high, demand may take longer to catch up due to the high level of perceived purchase tisk. The Volt faced a more serious challenge when its lithium-ion battery proved to be problematic in crashes. The battery caught on fire after Uhree government crash tests, but the fires themselves would not occur until days or weeks after the crashes. Further investigations revealed that the coolant Tine got damaged during the crash tests. Coolant leaked onto the battery wires, eventually causing a fire, After these safety issues came to light, GM took quick action to address the problem. It created a plan to increase the reinforcement surrounding the battery pack and issued a voluntary recall on the more than 7,000 Volts already sold as well as the more than 4,000 in its showrooms. It also provided loaner cars for consumers to use until their Volts were modified and offered to buy Valts back from customers who no longer wanted them. Although this quick action might have saved the Volt from an early demise, the initial safety challenges could still have a significant effect on demand. ‘The safety issues have also provided threats and opportunities for the Chevy Volt’s prime competitor, the Nissan Leaf, Although both the Leaf and the Volt are electric vehi- cles, they are positioned differently. The Nissan is a truly electric car, whereas the Volt will ran on gasoline if needed. GM's VP of marketing saw this as a major advantage, using it to position the Volt as “a car first and electric second” and claimed that the Volt can give drivers the peace of mind that they will not become stranded if they use up the clectricity reserves. However, the recent battery fires have reduced faith in the Volt and cast doubt on the electric vehicle industry as a whole, Nissan was quick to respond to these safety concerns by detailing the triple layer safety structure of its batter- ies. In 2011, the Nissan Leaf appeared to be taking the lead in the number of vehicles sold, but the Volt was catching up. With analysts predicting that only one will win in grabbing the majority of the U.S. market share, the stakes are high. Chevrolet's Branding Strategy Although the Chevrolet brand has evolved over the years, it maintains many of the same themes'that it started out with a century ago: a quality vehicle with deep roots in America’s past. When Durant first envisioned Chevrolet, his desire was to create a low- priced vehicle that could compete head on with Ford. Therefore, one of its first slogans, “Quality at low cost” comes as no surprise. As Chevrolet vehicles became more popular with Americans, minus a dip during the Great Depression, the company wanted to firmly entrench the brand as a key part of American culture. It found part of this solu- tion by associating itself with American sporting events. In 1935, Chevrolet started | 410 Part 5: Cases magazine Motor Trend's Truck of the Year award for its ability to tow 21,700 pounds, its reduced vibrations, and its smoother ride. The ability to haul or tow large loads seemed to gain importance during the recession. For those who love big trucks but hate the large amounts of emissions they generate, the Silverado HD comes equipped with a new sys- tem that reduces nitrogen-oxide emissions. . "Chelsea between Amer lve for big tuk (the two best-selling vehicles in 2011 were trucks) and being environmentally friendly. s a result, it began manufacturing a hybrid Silverado. ‘The hybrid Silverado has many of the same characteristics of a traditional Silverado, including high torque and horse- + yet it can get 20 mpg in the city and 23 mpg on the highway (versus 15 mpg in pow the city and 20 mpg on the highway for the light duty Silverado). By making the Silverado greener, Chevrolet is not only preparing itself for tougher emissions regulations, but also appealing to the market's demand for less-polluting trucks, Chevrolet SUVs/Crossover Vehicles SUVs, or sports-utility vehicles, became a hit during the 1990s as they provided owners with a sense of prestige and power. To meet this demand, GM created several SUV lines such as the Hummer. However, because SUVs require so much fuel, rising gas prices and greater concem for the environment contributed to their decline, As a result, GM dis- continued its Hummer Tine along with several of its Chevrolet SUVs, including the ‘Trailblazer. Although SUVs seemed to be on the decline, they appear to be gaining in popularity once more. In 2008, when fuel prices were high, many consumers began switching to hybrid vehicles and smaller cars with greater fuel efficiency. However, when gas prices | dropped to under $4 a gallon, SUVs made a comeback—with some slight modifications, Auto companies such as GM began manufacturing SUVs with better fuel efficiency, The safety of SUVs has also improved. Thanks to the addition of stability control within SUV models, studies indicate that drivers of SUVs are less likely to die in a crash than those driving smaller cars; the death rate for SUV drivers dropped 66 percent afier newer models were introduced. This is good news for Chevrolet’s SUVs, which include the Suburban and the Tahoe. First emerging in 1936, the Suburban is the oldest surviving vehicle model in the United States. Today the Suburban appears to be in the growth stage as a favorite among families and was nominated by Kelley Blue Book as one of the Top i 10 Family Cars for 2011. One likely reason is due to its safety features, which include six airbags and traction control. In contrast, the Tahoe is targeted more ’ foward those who need lots of space and who travel in more rugged terrain. The Tahoe has been one of the most popular SUV models since the 1990s. To attract !

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