Saturn Case Study

Case Analysis #1

SATURN

Decision Focus

Saturn has tried to uphold its image as "a different kind of company" since its establishment in 1985. To do this, it has concentrated on creating and maintaining a strong relationship with its customers. The company was launched with a $5 billion investment with high hopes that a GM could reach a new market area with a new line of compact vehicles. The goal was to sell 80 percent of Saturn vehicles to people who otherwise would not have bought a GM product.

Saturn made their debut in the market for compact cars in 1990. By 1993 they were experiencing success in the already crowded market, selling nearly 230,000 vehicles. The next three years the numbers looked even more promising, averaging over 280,000 vehicles per year. Unfortunately, from 1997 to 1999, Saturn experienced a trend reversal and sales dropped to average around 235,000/yr. To combat this, Saturn concentrated on pushing their newer L-Series, which helped bring an increase over the following 3 years (widely helped by the expanding product lines).

Much of the struggle Saturn struggled (late 90s) was attributed to the lack of diversity in their product lines. The L-Series helped greatly during its first two years in 1999 and 2000, accounting for as much as one-third of total sales. In 2002, the VUE and the Ion began making an impression, and Saturn once again topped the 280,000 mark. Now Saturn is faced with keeping sales figures up, even though averages industry wide are dropping. It's no secret that manufacturers are having some trouble consistently selling cars, and that makes it harder for Saturn to gain market percentage and sell more vehicles. Saturn must find how to sell more cars in order to gain and keep momentum in the vehicle market, which is expected to see dwindling sales in the upcoming year (Appendix Article 2).

SWOT Analysis

Strengths

* Unique identity as "A different kind of company, a different kind of car."

* Reputation for satisfying customers

* Built from the ground up

* Part of General Motors, although fulfills a satellite persona

* Completely uses its own production lines

* Benefits from caring employee reputation

Weaknesses

* Small selection of vehicles

* Operates in a crowded market of compact vehicles

* Reputation as a "chick's car"

* Small customer base

* Lack of variety when it comes to quality of product

Opportunities

* Currently changing market trends

* Still has image as a "newer" brand

* Not tied down to any image as a "cheap" or "expensive" brand

* General Motors has recently dissolved Oldsmobile, an upscale product line

Threats

* Currently in a dwindling market as vehicle sales are expected to drop

* Pressure from competitive import companies

* Track record brings a reputation as a company that misses trends

Alternative Choices

1. Crossbreed vehicles with other GM products and/or other lines in order to gain customers based on variety/price.

2. Increase money into advertising and distribution channels of vehicles with hopes that heightened awareness and availability will spark a rise in sales.

3. Concentrate on expanding Saturn to new design concepts and fresh vehicles, somewhat altering their image, but also coinciding with Saturn's individual identity as "a different kind of car".

Evaluation of Alternatives

1. Crossbreed vehicles with other GM products and/or other lines in order to gain customers based on variety/price.

Saturn is, of course, one of the well-known distribution arms of General Motors Corporation. This gives Saturn one of the world's largest financial and intellectual pools to dip in, both when it comes to creating ideas and also when backing them. This gives them the opportunity to expand their vehicle selection not only by new design and production, but also by combining successful existing parts and designs from other GM vehicles with the Saturn spin. Also, Saturn already has been involving Honda engines in their designs, so this suggests that decision makers are not totally opposed to integrating other ideas to sell vehicles. General Motors has several lines they use to sell cars, trucks, and vans. The Chevrolet label carries vehicles such as Malibu and Impala Sedans, the Chevy Venture minivan and the S-10 pickup, and the more famous names like the Silverado pick-up, and of course the Camaro. Pontiac and GMC Dealerships are littered with models such as the Grand Am and Grand Prix, the Montana minivan, the Yukon and the increasingly popular Envoy. Buick offers a more luxurious option for drivers with options such as the Park Avenue and the Rendezvous, but GM offers the coup-de-grand selection of elegance and quality with the Cadillac Series. This gives a large sibling variety to Saturn's role model selection, and if GM needed to answer a question Saturn asked they would have a lot of examples to answer with.

Hypothetically, it would make sense that any steps Saturn could take to cut costs and provide the market with a less-expensive vehicle should be taken. It is not uncommon for automakers to share frames among vehicles, such as the Ford Taurus and the Mercury Sable. Also, many vehicles share similar parts such as window motors and switches to cut down production, installation, and even training costs for mechanics and assembly workers. This helps lower the sticker price of the vehicles and makes them more affordable, hopefully attracting additional customers. General Motors needs to make sure they don't get too stubborn as they did before, going almost nine years without giving Saturn a new product (Appendix Article 1).

However,