Product details

General Motors (GM) has been offering increasing discounts in order to gain a better market share in the US automobile market since it started its zero-percent finance scheme in 2001. Ford and Chrysler have followed GMs lead and the level of incentives has been rising steadily in the face of competition. However, the big three have been unable to match the market share gains of foreign automobile manufacturers. The case discusses GMs pricing strategy, which is driven by its need to keep producing and selling cars in order to be able to meet its pension obligations and fixed costs. The commoditisation of the automobile, and the inability of GM to create an aspirational, high quality and value for money image for its cars, is contrasted with the fast moving, customer and quality oriented perception that foreign manufacturers have created in the minds of the consumers. As a result, GMs cars are selling on the basis of the latest ''price'', and not on the basis of the ''product''. Incentives have helped GM gain a market share, but are detracting from the brand''s image and this may have an impact on its future performance.