Once the darling of the American auto industry, GM has announced that Pontiac will suffer the same fate as Oldsmobile and be phased out by the end of 2010. It marks the end of a dismal period for Pontiac, a fall no-one could have forecasted during the glory days of the Trans Am Firebird.
But the question remains, how did such an iconic brand fall into a tailspin and never recover? The simple answer -- it stopped meaning anything.
The reason for this ambiguity can be attributed to former GM President Alfred Sloan and his “ladder of success”. From lowest to highest, GM brands Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac each fulfilled a niche market for “every purse and purpose”. Sloan was lauded as a visionary at the time, being one of the first CEOs to publicly discuss customer targeting using brand portfolio architecture.
However, Sloan’s ladder works well in theory, but articulating how each brand is different from each other is something else altogether. Put simply, why have two or three brands when one will do?
In multi-brand corporations like GM, brand cannibalization is a constant threat. When brands start representing the same thing, eventually one eats the other. The decision on which brand to pull the plug on is usually self-evident, as it was with Pontiac.
But why Pontiac and not Cadillac or Chevy? When it comes to cannibalization, it is usually the middle-ground that is most vulnerable. It is easy to convey prestige or affordability, but it’s difficult being somewhere in between. This is a challenge that clothing retailer the GAP is experiencing as it struggles while its sister brands Banana Republic and Old Navy flourish.
The death of Pontiac is a sad end for an American icon, but the lesson we can learn is timeless. Ambiguity of meaning is a surefire way to irrelevance. As Jack Trout famously said, brands must “Differentiate or die.”
