Raising the level of your leadership




Cadillac Or Chevrolet?


If I ask you—“Should a Cadillac dealer try to sell Chevrolets?”—your answer would be emphatically “NO.”

But they tried it once. Wanting to compete in the small car market, Cadillac introduced in 1981 a Chevrolet disguised as a Cadillac called a Cimarron. But even with a Cadillac emblem and a leather interior, it was still essentially a Chevrolet with a Cadillac price. It was a disaster for Cadillac from both an image and profit standpoint and was discontinued with the 1988 model. (By the way, wanting a Cadillac, but unable to afford a real one, I bought a Cimarron in 1987. It was embarrassing when I realized it was really just a Chevrolet in fancy clothes.)

I made the same mistake in business back in the ’90s. We were a Cadillac company—building large (up to 100’ length) expensive ($0.5M and up) aircraft assemblies for Lockheed, Airbus, Gulfstream, etc. Having some open capacity on some equipment, we decided to get in the Chevrolet business by going after some low-value machining business to utilize some of our open capacity and make a little “incremental’ profit. It was a disaster and a hard lesson.

We learned that if you have a Cadillac customer base, and a Cadillac cost structure, don’t try to compete with Chevrolet dealers.

There are many downsides:

  • Distraction from the real Cadillac business
  • Brand dilution and confusion
  • Angry and dissatisfied customers
  • False economies of marginal pricing
  • Used capacity that limits future opportunities for real business

So, when tempted, remember:

  1. If all that matters is price—it’s a commodity. It is hard to differentiate your business in a commodity market.
  2. Customers will not pay Cadillac prices for a Chevrolet. And you can’t fool them with a Cimarron.
  3. This almost never works as a “growth” strategy.
  4. If you worked hard to create a brand, protect it!
  5. The shallow end of the pool is always more crowded for a reason. (Think about it.)

By the way, the Cimarron was a pretty good Chevrolet; not a very good Cadillac.

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© Copyright 2020 by Dick Wells, The Hard Lessons Company

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