NEWS ANALYSIS;SMALE DRIVING GM'S BRAND MARKETING

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John Smale's fingerprints are all over General Motors Corp.'s move into brand management.

Mr. Smale, who retired as Procter & Gamble Co.'s chairman-CEO in 1990, became GM's chairman under crisis conditions in 1992. It was Mr. Smale who insisted last year that management look outside for an executive to head up North American marketing. The search eventually landed Bausch & Lomb Corp. President Ronald Zarrella, who is now putting into place a brand management system similar to the one P&G uses.

A string of marketing blunders had helped set the stage for Mr. Smale to come in and retool GM's approach to marketing.

As recently as 1980, GM's U.S. car and truck market share was 44.5%. In 1994, that share was 33.2%-a dropoff of 11.3 points in an industry where each share point represents about $3 billion in sales.

GM's malaise began under the chairmanship of Roger Smith, a financial wizard who lacked a feel for either innovative products or customer trends.

Mr. Smith engineered a disastrous mid-1980s reorganization that removed engineering and manufacturing responsibility from individual divisions. One result: A blurring of brand identities.

A 1986 model year commercial for Ford Motor Co.'s Lincoln-Mercury division slyly ridiculed GM's look-alike models. In the spot, by Young & Rubicam, Detroit, a parking valet who is asked to retrieve a Cadillac confuses it with both an Oldsmobile and a Buick model.

Other marketing miscalculations added to GM's woes. Just as maturing baby boomers were beginning to move into four-door sedans, GM came out in 1987 with redesigned midsize cars that were first available only as two-door coupes.

GM produced the first sport-utility vehicle, but was slow to recognize its potential as a new breed of family transportation. Jeep Cherokee and then Ford Explorer stole sales because GM lagged in offering a four-door version of the Chevrolet Blazer.

During Mr. Smith's tenure, GM also began to rely heavily on consumer lures such as rebates and low-interest financing. The discounting cheapened the image of the company's products.

Roger Smith was succeeded in August 1990 by Robert Stempel, who couldn't turn GM around in the midst of an economic downturn.

When GM lost $4.5 billion in 1991, Mr. Smale and other directors revolted. The 1992 boardroom uprising left Mr. Smale as the new GM chairman, while John F. "Jack" Smith Jr., who had headed up GM's European operations, became president-CEO.

As non-executive chairman, Mr. Smale has avoided the public limelight. But drawing on his P&G experience-going all the way back to being a brand manager for Crest toothpaste in the 1950s-Mr. Smale has worked behind the scenes to modernize GM's approach to marketing.

One of his goals has been to develop "one voice" advertising, in which regional dealer ad group efforts reinforce national ad messages. GM's Saturn has met the "one voice" goal by using Hal Riney & Partners, San Francisco, to create both national and regional advertising.

In a 1993 speech to Saturn dealers, Mr. Smale cited Saturn as an example of how to develop a clear image with consumers, and he outlined his belief in the importance of brand building.

"Whether you have a new model or not, and regardless of how heavily your competitors are into short-term promotional advertising, I urge you to stick with what you're doing. That's the way you maintain and strengthen that brand equity, and it will definitely pay off in the years ahead," Mr. Smale told the dealers.

In Mr. Smale's unconventional view, individual model lines need to be treated as brands.

Mr. Smale worked with Pontiac division executives like General Manager John Middlebrook to adapt that idea in the 1994 model year. In a forerunner of the new GM brand management system, individual brand management directors were put in charge of marketing for models like Bonneville and Grand Am, which would be treated as brands under the umbrella Pontiac brand.

In an interview last year, Mr. Middlebrook discussed Mr. Smale's influence.

"[Mr. Smale] always says, `This may not apply in your business, but this is something I've learned over the years in mine.' He asks, `What is your process for budgeting to a brand?' and things like that to get you thinking how it applies to our business."

Before leaving Bausch & Lomb, Mr. Zarrella met with Mr. Smale to ensure the latter's backing.

"I am completely comfortable that, from the top, the path [for change] has been pretty well opened," Mr. Zarrella said.

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