People want to buy products that say smart things about them - but how can American car manufacturers address that need when the price of a company's stock, like General Motors, sells for less than $10 a share? That's not smart - and I don't care how many sharp looking "strivers" and "achievers" you throw into those Cadillac ads and positioning statements under the heading "brand character." Do you want proof that a company's management jumps to conclusions before they jump to the facts? Do you want proof that a company's management does no homework before engaging their mouth? Just look at Chrysler's $2.99 Gas Guarantee promotion. Not only does Chrysler find it difficult to sell cars. Now they're selling gas instead. And once you've sold price your brand equity sinks so low you have to climb up a ladder to get to the bottom. But wait. That's where Chrysler already is. Where is the dramatic turnaround shift? Talking about Chrsler's wonderkind CMO let's quote Casey Stengel who once asked, "Is this all there is, or is this all you got?" Why doesn't each product line have a unique selling proposition instead of generic segmentation? Is it not true that doing the same things the same way and expecting different results is the definition of insanity? Do basics, adventurers and other socio-economic classes of consumers actually see themselves in Wranglers and Cherokees when the stock of American car companies like GM sell for less than $10 a share? The purchase just says, "You're dumb." Years ago my research for GM found people want "to buy products that say smart things about me." Sure, the economy and the housing/mortgage/credit crunch are excuses in combination with the high price of gas - but it's only an excuse - and excuses have to be corrected. I am certain that everything management knows about how to market its vehicles and leverage its brands comes from fine market research processes that gather and measure data. But the trouble with quantifying yesterday is that it does not tell you anything a company needs to know today - at present. As Captain Kirk did in the Kobiashi Maru simulation at Starfleet Academy - Chrysler needs to create new knowledge that does not yet exist to be measured to alter consumer habits and practices and to change the rules of the simulation to win. Except slow moving inventories are not a simulation. Look at this lot. Everyday, we drive past auto malls jam packed with slow moving inventories. Banners proclaim fantastic deals, yet day after day we see the same lots. Why doesn't a dealer get smart and one night after closing remove 80% of his inventory from sight. The next day most of us would think, "Wow! Something's going on. Either there is a blow out clearance sale or the dealer's going bankrupt." The sharks would swim in looking for the deals smelling blood in the water. What a perfect environment and buyer mindset to close the sale. That's what sales people call Jonesing people.
Showing posts with label gas prices. Show all posts
Showing posts with label gas prices. Show all posts
Thursday, July 10, 2008
Chrysler's $2.99 Gas Guarantee
People want to buy products that say smart things about them - but how can American car manufacturers address that need when the price of a company's stock, like General Motors, sells for less than $10 a share? That's not smart - and I don't care how many sharp looking "strivers" and "achievers" you throw into those Cadillac ads and positioning statements under the heading "brand character." Do you want proof that a company's management jumps to conclusions before they jump to the facts? Do you want proof that a company's management does no homework before engaging their mouth? Just look at Chrysler's $2.99 Gas Guarantee promotion. Not only does Chrysler find it difficult to sell cars. Now they're selling gas instead. And once you've sold price your brand equity sinks so low you have to climb up a ladder to get to the bottom. But wait. That's where Chrysler already is. Where is the dramatic turnaround shift? Talking about Chrsler's wonderkind CMO let's quote Casey Stengel who once asked, "Is this all there is, or is this all you got?" Why doesn't each product line have a unique selling proposition instead of generic segmentation? Is it not true that doing the same things the same way and expecting different results is the definition of insanity? Do basics, adventurers and other socio-economic classes of consumers actually see themselves in Wranglers and Cherokees when the stock of American car companies like GM sell for less than $10 a share? The purchase just says, "You're dumb." Years ago my research for GM found people want "to buy products that say smart things about me." Sure, the economy and the housing/mortgage/credit crunch are excuses in combination with the high price of gas - but it's only an excuse - and excuses have to be corrected. I am certain that everything management knows about how to market its vehicles and leverage its brands comes from fine market research processes that gather and measure data. But the trouble with quantifying yesterday is that it does not tell you anything a company needs to know today - at present. As Captain Kirk did in the Kobiashi Maru simulation at Starfleet Academy - Chrysler needs to create new knowledge that does not yet exist to be measured to alter consumer habits and practices and to change the rules of the simulation to win. Except slow moving inventories are not a simulation. Look at this lot. Everyday, we drive past auto malls jam packed with slow moving inventories. Banners proclaim fantastic deals, yet day after day we see the same lots. Why doesn't a dealer get smart and one night after closing remove 80% of his inventory from sight. The next day most of us would think, "Wow! Something's going on. Either there is a blow out clearance sale or the dealer's going bankrupt." The sharks would swim in looking for the deals smelling blood in the water. What a perfect environment and buyer mindset to close the sale. That's what sales people call Jonesing people.
Tuesday, July 08, 2008
When a good business goes bad
What are the outwardly visible warning signs that a good business is going bad? How can you tell when a rapid growth company is turning the corner to becoming a mature earnings company and you can kiss all those lucrative stock splits goodbye?Hired by Leo Burnett, the EVP Client Service asked me what I thought of rumors that Philip Morris might buy Kraft. I said I thought Philip Morris was preparing to reduce their dependency on tobacco profits from 96% to something in the range of 46%. No one believed me, so no one went after Kraft's new business except me, landing the Kraft BBQ sauce business for myself and not Leo Burnett. And there followed a string of Kraft account work resulting in Kraft's most successful growth period with brands turning in results well beyond anticipated category norms. I made a bundle and so did Kraft.
During that time Starbucks also took off. It was time to buy stock. I'd buy at $22, watch it rise to $44, split, then repeat the process again and again. So how did I know when to get out? When Starbucks launched milder dimensions coffees in a bid to become more things to more people. That was the beginning of the demise of Starbuck's brand equity. It was also the last time the stock grew and split. Starbucks had actually succeeded by being fewer things to fewer people. You had to love that dark roast taste or you didn't. Today my broker told me Starbucks dropped to $14. That's off $4 from four days ago.
What brings my attention to these matters? The price of gas. At nearly $5 a gallon I've come to realize that there's actually no gas shortage. How do I know this? Because when we are really out of gas, the oil companies will begin to diversify into non oil and gas businesses. Then it will be time to worry. Sounds like Philip Morris all over again.
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