Anthony Frausto-Robledo, EIC (info@architosh.com)

5 Jan 2005 (originally written 10 June 2004)

 

Apple and Saab: The Story of These Two Brands Reveals Lessons for Both Companies, Their Shareholders and Their Customers

I have a confession. Not really a conventional confession in the sense of having committed some sin, but rather in admitting that I did something I thought I'd never do: I bought a Saab. Let's get something straight. I didn't think I'd never own a Saab because I knew something about the company and its cars that turned me off; no, instead, I thought I'd never own a Saab because I bought into the negative mythology about them without really researching the brand.

Here in America owning and driving a Saab is more unusual than using an Apple Macintosh computer. A lot more unusual! The company only sold 48,000 cars in America last year, and it was one of the best years ever. People describe people who drives Saabs as—well, unusual! Automobile journalists describe Saab's loyal base of customers as a "cult following". I was never really aware of all of this until recently. All I knew was that there was this generalized negative myth about Saabs.

Now as a Mac user does this sound familiar?

Confronting the Myth

When GM bought half of Saab's car division in 1990 the company just came off its best year ever in unit sales in 1987 (137k units). While they were aware of Saab's quirky nature and history (and all that goes into the Saab Story mythology) Saab was looking very up to GM's eyes and the company had plans to build it into a new Swedish BMW. Back in the late 80's the luxury car market was booming and the large car makers were buying up the fancy foreign brands. So this was GM's plan: produce a luxury Saab to compete with BMW's 7 series.

It never happened. GM abandoned the goal.

Since the 1990 purchase Saab's marketshare and units fell under GM's half ownership. The parent Saab company was unhappy with the marriage and results and decided to sell the remaining half to GM, for a fraction of what GM paid for the first half, a paltry $125 million.

Lesson One: A Design Brand Realized

Confronting the myth is really about design. Saab has always been a design-oriented brand. While GM may think it can fix Saab's financial state, it must first fix the company's identity in the overall market. The two goals can run side-by-side as we have seen with Apple in the late 90's.

When Steve Jobs came back to Apple in 1997 the company was in far worst a state then Saab was in 1990. Apple was hemorrhaging money and had no clear direction with its products and marketing. In one dramatic swoop, Jobs slashed everything that wasn't essential and started the iMac project. Simultaneously, he also launched the massively successful Think different ad campaign -- which won over the hearts and minds of many in the industry.

After more than a decade GM is finally realizing what Saab is: a design-oriented brand. And one with a cult following as powerful as Apple's. But the two companies have much to teach each other through observation alone.

The world is watching as the Big Three produce cars of national heritage in countries far from their origin. While the ultimate goal is to produce cars more cheaply, the branding mission is save the brand from the scrutiny of that action. More than that, in the case of Saab, is to rebuild the brand so that it can appeal to both a new customer base and retain its legendary cult following. Awe, that's a tough trick...something Apple has been trying to do since Jobs came back and saved the company.

If Apple can re-polish its brand image with the iPod in such a way that it speaks to both its cultish installed base and at the same time opens up to new customers then Apple can produce both top and bottom line growth. The strategy is simple: Shed the old brand identifiers (Macintosh) and create new ones built up around compelling products that do what the original brand products did.

In the case of Saab and GM's challenge, they are going to continue to produce their legendary sport sedans (9-3 and 9-5) but shed the negative mythology by attacking the products' overall quality. The real trick for them is not losing the quirky nature of the original so as to spook off its cultish installed base. In terms of top and bottom line growth the company is focused on coming up with entirely new products (like Apple did with the iPod) that have little relation or history to the brand's mythology.

For Saab they may see in Apple's iPod move an entirely new product platform that at heart is taking the focus away from products that are stagnant in the market place and replacing that with a new focus on what is both hot and new. In this case PC's in general and the Macintosh in particular have little top line growth compared to entirely new segments in the market like digital music players.

For Apple they can observe in Saab their strategy of applying the Saab story to entirely new product categories that have no history to the original brand and its origin. The hot markets in the US car market are still SUV's (especially upscale and performance oriented models) and performance oriented all-wheel drive wagons and hatchbacks. Saab is addressing both of these new markets but whether or not they can product the iPod equivalent has yet to be seen.

Next Page: Lesson Two: A Design Brand Saved

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