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