GM's Management Realignment

GM's brand management realignment was reported in an issue of last week's Wall Street Journal.

According to the article, the company has organized its eight brands into four groups, for purposes of coordinating sales, marketing and advertising.

Cadillac, Hummer and Saab have been grouped into a 'premium channel' of brands for GM, with former Nissan executive Mark McNabb appointed to manage the group in North America.

Buick, Pontiac and GMC form another brand group. Saturn evidently remains as its own brand. The article didn't detail which vehicles form the fourth brand group in this reshuffling.

Mark LeNeve, GM's North American marketing chief, was quoted as saying,

"Think about (the channels) like a business,"

with channel executives gaining control of and responsibility for marketing and sales resources formerly in the hands of now-eliminated regional sales executives. These channel managers will also have "a role in product development."

I guess anything GM can do to sensibly cut needless expenses is a good thing, relatively speaking. And perhaps doing that with similar-brand marketing and sales expenses is the next best thing to culling actual models and brands in the shrinking firm.

Still, one is left wondering,

"So what?"

Isn't the real Achilles Heel at GM product development and technological innovation?

Much of GM's marketing and sales strategies in recent years has involved zero percent loans and other pricing gimmicks to offload production.

True product differentiation based on features or customer-specific marketing and segmentation doesn't seem to have been the order of the day.

If it were, would sales have sagged so much? It's one thing to not have pricing power versus competitors, but at least match their sales penetration and market share.

In GM's case, it's been years since they have held share with premium gross margins.

Will this new marketing organization make this better? Well, technically, no, since the entire marketing and sales structure expenses fall under the SG&A line, which affects net profit, but not gross margin.

I continue to believe that for GM, cost-cutting is still a short-run solution to a long-run problem that involves creativity, design innovation and getting those functions back in touch with customer needs and preferences. In that sense, this reorganization only offers the hope that the single-line reference to the new brand group channel chiefs' input into product development might make some difference in the years ahead.

Based on prior results at GM, I wouldn't hold my breath waiting for this to work.