Case Assignment Analysis
Saturn: "A Different Kind of Company. A Different Kind of Car."
(This is a case from a previous edition of the Marketing text - not currently in your text book. This is only a sample analysis to demonstrate analysis format only)
Case Summary:
Saturn is a division the General Motors Corporation, born in 1990 after seven years of research and design. General Motors hoped to gain a viable share of the passenger car market with the introduction of the Saturn family of cars. Their marketing concept was easy: provide customers who would not otherwise have shopped for a General Motors car an alternative to the other brands by building quality cars, ensuring customer satisfaction, competing only with rival brands, and no haggling over price. This case shows that Saturn created a successful marketing concept and although not profitable for General Motors, that concept continues today. Saturn was successful in bringing customers to General Motors who would not have otherwise purchased a car from the automaker and with General Motors bringing Saturn back under the corporate wing, will provide the company with the necessary resources to compete with their rivals in the future.
Key Marketing Issues:
(These are the issues in this particular case - each case will have a different set of Key Issues)
Lack of profitability - Despite Saturn's initial successes, the company was a failed project. By the 2000's, Saturn was a multi-billion dollar loss for General Motors.
Large retailer geographical areas - Saturn retailers were given large geographical areas, ensuring they only competed with rival brands rather than other Saturn retailers. Although a good concept, the retailers didn't need to use high-pressure sales tactics, but bad because they had no reason to compete. They were the only deal in town if a person wanted a Saturn.
Unknown name brand - Saturn was a new company with an unknown name. They were created as an independent wholly-owned subsidiary of the General Motors Corporation unlike the other divisions (i.e., Chevrolet).
Labor agreement - Unlike the traditional labor union contract with the major automakers, Saturn forged a deal with the United Auto Workers Union where labor and management worked together as a team; they incorporated into their agreement a no-layoff policy. This created inefficiencies within the project.
Product modification - Changes in one or more characteristics of a product. Saturn did not keep pace with the rest of the auto industry in making product modifications.
Styling - The physical appearance of a product. Saturn failed to change the physical appearance of their initial models for several years.
Personal Case Analysis:
I think Saturn's strategy was a creative and unique strategy; however independence from Corporate General Motors hurt the company. Saturn's strategy of building quality, affordable cars continues to be a strong point for the company today as does their approach to customer service which is considered the best in the industry. Unfortunately, Saturn's labor agreement didn't allow for efficiencies and the team approach to sales and decision making doesn't always create an environment for profit. I believe that General Motors' decision to bring Saturn back under the corporate wing will turn losing company into a profitable one as long as it continues to utilize its strong image and great customer service.
Case Questions:
1- Have Saturn's strategic marketing planning efforts been successful? Why or why not?
Initially, I believe the Saturn strategic marketing efforts were successful. The cars sold well, they won numerous awards and they reached their intended target market, although shy of their goal of 80%. Their customer service and pricing policy ensured customers were satisfied without high pressure sales tactics; the customer knew exactly what he was going to pay. Unfortunately, Saturn did not make a profit. I believe this was mainly due to their independence from Corporate General Motors, their labor agreement, their team approach to management and their large distribution geographical areas. If Saturn had not been an independent entity and all of the resources of Corporate General Motors been available, Saturn would not have lagged behind the rest of the auto industry. Although I don't necessarily agree with labor union agreements, their no lay off policy created an inefficient organization that was unable to fix itself when necessary. Their approach to decision making, while innovative, looked at the people rather than the bottom line. And finally, I think their large geographical retail areas, although a good idea for the individual retailer did nothing to increase sales.
2- What should Saturn do as competitors attempt to copy its unique brand image and pricing and dealer policies?
The positives Saturn brings to the auto industry are its unique image of being a quality, safe, reliable and affordable car. The prices are set and there is no haggling, which decreases competition in general. Frankly, I think Saturn needs to change it's pricing and dealer polices to come more on line with it's competitors or it will never be able to compete with it's rivals. There's simply no incentive for the retailers.
3- Briefly describe the target market and marketing mix used by Saturn.
Target Market: Initially, Saturn chose to target college educated men and women between the ages of 25 - 49, who preferred Japanese made cars for their quality and affordability. That mix has changed with the newer products on the market.
Product: General Motors made the decision early on to make Saturn a wholly owned subsidiary rather than a division under the corporate wing. They wanted to ensure Saturn was not affiliated with the traditional auto-building mentality of the Detroit auto builders, so they built a manufacturing plant in Tennessee. They used the most up-to-date technology and forged an unparalleled and unique relationship with the United Auto Workers Union. Finally, they involved the employees, management, and the advertising firm utilizing a team approach.
Distribution: Saturn decided to give their retailers large geographical areas to ensure they did not compete with other Saturn retailers. The intent was for the retailers to focus on their rival car competitors.
Pricing: Saturn wanted to provide it's customers a friendly, unstressful car buying experience, so they created a fixed-price policy. Essentially, the retailers were not given rebates or promotions and there would be no dealing or haggling with the customer. The price tag price of the car is what the customer paid plus transportation.
Promotion: Saturn utilized a people-oriented, straight talk concept about the car company, not the car itself. The sales rooms were low stress, where the salespeople worked in teams and not against each other. There was no pressure to promote or sell anything to the customer unless the customer asked the question.
Recommendations:
Saturn was the brain child of the General Motors Corporation, who desperately needed a small car to compete with the import market. Saturn was to be "A Different Kind of Company. A Different Kind of Car". Although successful with their marketing mix, the company never made a profit. Their lack of profitability was due to many reasons: their unknown name, General Motors did not want their automakers name associated with the company; their retailer large geographical areas, which did not induce competition between the retailers; their unique labor agreement which did not allow for layoffs; and their failure to update their cars through product modification and styling. All in all, Saturn was a marketing success, but a profit loss.
For the future, I recommend that the Saturn line be retained by GM. To increase brand awareness, GM must aggressively advertise Saturn to include a new ad campaign with increased television spots and an improved website. Profitability can be improved by negotiating a better labor contract when the current one expires. Saturn should consider increasing the number of dealerships for customer convenience. Finally Saturn must conduct marketing research to better determine the needs of its customers so that new models and options can be added to the line that will increase sales.
Works Cited
(Each analysis must include a minimum of three outside references, not counting the text or references from the case subject directly. The references can be from any bona fide online business/marketing source (NOT Wikipedia). Look for an article in an academic journal preferably through the Webster online library. https://library.webster.edu/)
Garsten, Ed. "Do or die for Saturn". The Detroit News. 1 Jul 2005. 23 Mar 2007.
https://www.detnews.com/2005/autosinsider/0501/08/A01-53370.htm
Houghton Mifflin. "Saturn: ‘A Different Kind of Company, a Different Kind of Car'".
Marketing, Con. Ed: Cases. 2000. 21 Mar 2007
https://marketing.hmcanada.com/cases.html
"Innovative Saturn-UAW Contract Dismantled". SaturnFans.com. 26 Jun 2004.
20 Mar 2007
https://www.saturnfans.com/Company/2004/contractdismantled.shtml
Sherman, Joe. Summary. In the Rings of Saturn. US: Oxford University Press.
1994. 21 Mar 2007 https://books.google.com/books
(Remember that any paper with less the 500 words of content - not counting the words from the questions and references - will receive a zero)