Employee discounts sound clever, but aren't a good marketing strategy
Tags: GM, Automotive, Marketing
The Associated Press has a story as do many others on the success of GM's employee discount marketing strategy for its cars. The attraction to buyers: they feel like they are getting a deal. The attraction for auto makers? It gives them a simple story for unloading 2005 inventory. But while many articles have noted that this marketing strategy is being viewed favorably because it eliminates some of the incentives that have been killing automaker profits, they are missing an essential point: The employee discount marketing IS an incentive, just one with a different name. And this incentive won't cure the fundamental underlying problem that automakers are producing a lot of vehicles nowadays that aren't very attractive in this era of $2.50 a gallon gasoline.
Remember, good marketers only sell on price when they have nothing else to sell. Employee discount programs are just a fancy name for cutting price and profit to move inventory. GM will need a better strategy if it expects to pull itself out of its marketing slump.
The Associated Press has a story as do many others on the success of GM's employee discount marketing strategy for its cars. The attraction to buyers: they feel like they are getting a deal. The attraction for auto makers? It gives them a simple story for unloading 2005 inventory. But while many articles have noted that this marketing strategy is being viewed favorably because it eliminates some of the incentives that have been killing automaker profits, they are missing an essential point: The employee discount marketing IS an incentive, just one with a different name. And this incentive won't cure the fundamental underlying problem that automakers are producing a lot of vehicles nowadays that aren't very attractive in this era of $2.50 a gallon gasoline.
Remember, good marketers only sell on price when they have nothing else to sell. Employee discount programs are just a fancy name for cutting price and profit to move inventory. GM will need a better strategy if it expects to pull itself out of its marketing slump.
posted by Carl Howe at
9:23 AM
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