GM puts final nail in coffin of brand-management effort

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General Motors Corp., aiming to protect profits as it raises the incentive stakes, is restructuring marketing staff at its vehicle divisions in a move that eradicates the last remnants of its failed brand-management system. The shift, effective last week, reduces white-collar head count, leaving fewer executives receiving annual bonuses, a spokeswoman confirmed. GM did not disclose a number of staff reductions at the vehicle divisions, which employ some 400 marketing and sales staffers, according to an estimate from a former insider and a GM agency executive.

streamlining

GM is replacing the marketing teams, now aligned by model lines to a single team per division, each under a marketing director, the spokeswoman said. Each vehicle division will now have a single marketing director responsible for advertising, marketing and promotions for all models.

That puts more control in the hands of the marketing directors since advertising directors will start reporting to them instead of the general managers of the divisions, the spokeswoman said. The divisional ad directors had more power than the marketing directors under the old system, John Middlebrook, VP-vehicle brand marketing and corporate advertising, told Advertising Age in an earlier interview.

Among the changes, according to an internal memo obtained by Ad Age: Mark-Hans Richer moves to marketing director of Pontiac from the brand's director of advertising; Jay Spenchian shifts from marketing director on three Cadillac models to the division's marketing director and Margaret Brooks, marketing director on the Chevrolet Tracker, takes on the post of marketing director, Buick.

GM spent $2.16 billion in measured media last year, according to TNS Media Intelligence/CMR. Globally, the automaker reported in financial filings that its 2003 advertising expense was $4.7 billion.

The auto giant has cut its head count, including design engineers, in the past year, as a part of a longer effort "because the industry's whole [vehicle] pricing structure has collapsed," said an auto analyst who asked not to be named. GM's projected global profit margins of 2.6% this year represents only half its 1999 margins of 4.9% with virtually the same production volumes, he added.

The reorganization comes in the wake of GM's decreased profits in North America. GM reported its North American operations earned $1.2 billion in 2003 vs. $4.3 billion in 2002. In the U.S., it said its market share slipped to 28% in 2003 from 28.3% the prior year.

GM has increased its U.S. incentives in the past year from $3,814 per vehicle in March 2003 to $4,292 last month, according to CNW Marketing Research and last week announced a new incentive of $1,000 cash-back plus 0% financing for 60 months on most of its trucks.

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