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Wednesday, January 26, 2005


NADA - New Orleans

What Will Be Big This Year?

Starting Thursday (tomorrow) dealers and exhibitors and car companies descend on New Orleans. We (Motoralley) will be there too to meet with current and potential partners and it's always fun to wonder aloud about what will be "hot" at the show.

A couple of thoughts...from our e-commerce perch:

  1. New challengers to the current DMS providers (Dealer management systems). About 80% of the market is controlled by Reynolds & Reynolds, ADP and UCS. But there are some new companies jumping in that bring new ideas. In all disclosure, one of them is a partner of ours, NeoSynergy. We like their web approach and like even more that they like the idea of letting consumers buy a car directly from their dealer, online. We've helped them by building a consumer interface into their DMS.
  2. e-Commerce gets ever more serious. Ok...this isn't "new" news, but more and more dealers see websites, finance, used and new car leads as critical components to their business and so I think we'll start to see more and more of the dealer's budget moving from "off-line" to "on-line." More e-commerce, leads, email, etc...and a little less traditional media. The car companies are doing the same.
I'll write more about my observations at the show and if I remember, share some photographs too.

Thursday, January 20, 2005


What To Do About Mercury

First, pretend you're a consumer. That means, you don't get the company car/deeply discounted Mercury A plan/employee price. You live in Coral Gables, FL. You are not, in any way, associated with the Auto Industry. In fact, like most consumers, you ignore ads until you realize, it's time for a new car.

Would you consider a Mercury? Obviously, now you know why Ford Motor Company has often considered eliminating the Mercury brand...and why the Mercury brand has struggled in the sales race vs. both domestics and imports.

More recently, Ford Motor Company has tried to give Mercury some unique products...but alas, none of them have defined Mercury the way the Taurus helped re-define Ford's car line up.

Mercury's Identity

What/who is Mercury? What are they known for? Ideally, a brand name has meaning. That meaning comes from previous experience/history of the product. I think much of Mercury's struggles as a brand start with a missing identity...which translates into products that don't seem to create separation from the Ford brand. Too often...Mercury is seen as a Ford with a different grille.

A great example is Jeep. We know what that stands for. Rugged, off-road, Army, etc.
Porsche focuses on high performance, luxury sports cars (with an interesting diversion into SUVs). Honda is known for great engines, reliability. Same with Toyota. Both Honda and Toyota are fortunate in that they don't have a brand in their line-up that competes in the entry market. Toyota has created Scion...but Scion is very, very focused on the youth market.

Another difficult challenge for Mercury's product planners - Over a thousand Lincoln-Mercury dealers want a continuous flow of car, suv and minivan products to feed their dealer volume that complements the more luxurious (and also struggling) Lincoln brand. By defining Mercury more specifically, dealers fear they will lose volume products. So...what to do?

Some Thought Starters

Run in the opposite direction of Ford. Be the opposite of the Ford brand. Ford stands for inexpensive, reliable transportation. Create a Mercury brand that focuses on one specific attribute. For example...what if Mercury only made 4x4s? Sedans, minivans, wagons, etc. Oh sure...you could offer a down market version a la Audi...who successfully pushes its 4x4, upscale performance image but makes 4x2s available.

Focus on a specific market segment...like Scion, focus on hip, up market young and young "thinking" customers. Older people will still buy it...but you create separation from the Ford brand...and certainly the Lincoln brand and you begin to attract a new kind of customer. Race the Mercury brand to create some excitement and tradition.

Or...re-think your distribution model...what if Mercury became the vehicle that you could order and buy over the internet? And you guaranteed a level of service/satisfaction and built the brand around those guarantees. Some consumers want that added level of service/support and the Lincoln-Mercury dealer might be able to deliver it through premium pricing. Sure...that doesn't help plant volume...but it sure hasn't hurt Lexus...or Saturn (ok...Saturn hasn't made money...but look at how many vehicles they've sold...and what they had to sell over the years).

Here's wishing Daryl Hazel, VP - Lincoln-Mercury and his partner in product development, Phil Martens luck in re-defining the brand. Phil...one suggestion...remember that study I had recommended back in 1993-4, when you were segment strategy manager? Figure out the true market segmentation...what customer's really look for...and find the hole that Mercury can fill. We used a similar type of analysis to recommend that Lincoln...and Ford make luxury trucks (that was in 1992-93 when Jeff Bell was on the Luxury Operations Team - my how time flies). I don't have the answer...but I highly recommend looking in the direction. Ford's future needs a strong Lincoln and Mercury.

Wednesday, January 19, 2005


More Shameless Self Promotion

At the Charity Preview. Scott Russell and I are definitely wearing clipons. From left to right, Colleen Bell, Julie Roehm - Dodge, Chrysler, Jeep Marketing Director, Jeff Bell - VP Chrysler/Jeep, Moi, Scott Russell, Exec. VP BBDO and International Man of Mystery.Posted by Hello

Sunday, January 16, 2005


Detroit Auto Show

Eric Ridenour, Group VP Chrysler Group accepts Car of the Year for the Chrysler 300C at the 2005 North American International Auto Show in Detroit, 2005 Posted by Hello


Detroit Auto Show Charity Preview - Smart Marketing

Detroit Auto Show Charity Preview Posted by Hello

After chatting with Chrysler Group Execs, we took advantage of the clever, "can we take your picture and capture your personal info for future marketing" ploy at the Jeep display. What's not to like about marketing like that? Memorable stuff...

How does it work? Simple...collect personal info then email market to the list and, hopefully, viral market as we/they add friends to the distribution list. Smart marketing as long as it's not overdone. This is high touch, one to one marketing at its best. Had a nice offer from Jeff Bell to get the lovely Susan a deal on her next Jeep. Now that's real relationship marketing!

Saturday, January 15, 2005


Charity Preview - Detroit Auto Show



  • I prefer the show without the loud entertainment/singing. The cars/trucks and concepts are the show
  • The evening is too short...because of slow limo traffic most people get there late...then rush out early to get to dinner and post black tie parties and dinner. Too hectic. All of this is aggravated by the long waits for coat check etc. Many people I know spent more time in line than enjoying the actual show itself.

Wednesday, January 12, 2005


Chapter 11

Interesting discussion this morning on WJR 760 am radio with Paul W. Smith...the center for Big Three and all things auto. Several auto writers (ashamed to say I can only remember Paul Eisenstein from CarConnection) were discussing the likelihood that one of the Big 3 could file Chapter 11 due to liabilities, especially around health care and retiree/pension liabilities.

The CEOs (Wagoner, Zetsche and Ford) have all joined ranks to ask for some health care relief from Dubya. The thought is that since the Germans and Japanese don't have huge health care packages around their necks, they have a cost advantage. And the "imports" that have US employees, tend to have younger employees who use less health care/pension. I agree to a point. Health care is a major, major issue...I know, we're a small business and the costs are outrageous, frankly.

If you're not sure about this, think a little about the cost structure of health care. Look around you. When was the last time you heard of an MD getting, "laid off." Or better, getting a "salary reduction." Mmmmm. Get the picture? It's one of the few businesses where the consumer has little, if any say in allowing market forces to select the best provider/treatment. Imagine that all your food was purchased through "food" insurance. Can't shop at Farmer Jack, Hollywood (names of local grocery stores) to find the best fruit, produce, prices etc. Basically, you get what you get...and you pay a deductible. Actually, some no name accountant somewhere decides, on your behalf, where you should go/shouldn't go based on a contract negotiation. No one tells you what's good, what isn't. And you don't shop based on price...you shop based on the "collective" intelligence of some insurance agent.

The system is awash in excess dollars...and I can't blame the MDs, health care professionals and the Pharmaceutical sales reps (who make hundreds of thousands of dollars for "encouraging" MDs to write prescriptions) for taking what's there for the taking. The system needs market forces and checks and balances. The system needs consumers to think before accepting treatment...to hesitate and question...do I really need this. And if I need this, who else can provide the service for less? Unfortunately, the system doesn't reward consumer "shopping." Right now, consumers don't worry about the costs of health care because, "the insurance will pay." Hey...we pay the insurance companies! Then...they pay the Dr! Everytime you get healthcare, the system (that being all of us) have to cover the bill.

Getting back to the Big Three and health care costs, it's only going to get worse. The collision is coming. More retirees are entering the system...the boomers are aging and those of us born after 1960 will see a different health care system than our parents. I think the burden can be minimized if consumers start getting access to the real costs and are forced to see what the Dr. is charging for his/her services vs. the competition.

Yeah, I know...I'm crazy. But that's how market forces control price gouging. Bureaucrats are notoriously bad at directing markets (e.g. Soviet Union, Cuba, etc.) Here's hoping that we can find a way to bring market forces to bear in health care...so the Big Three can be competitive on pension and health care costs.

Tuesday, January 11, 2005


Toyota To Overtake GM?

Who Will Be Number 1?

At yesterday's Autoshow events one of the topics of conversation was,

Will Toyota Overtake GM as the World's largest Auto Seller?
According to several sources, including GM executive Bob Lutz...this is a distinct possibility. A lot has been said about who will be number one and although there's some worry among local residents about not being home to the world's largest automaker, the trend has an air of inevitability about it. Toyota has been inching up on GM year after year, both in the US as well as international markets. GM still has a commanding lead in the US with market share in the high 20's.

How has this happened? A lot has been said about this as well. The answer lies, I think, in several areas:

You'll notice I didn't mention marketing or styling. I believe Bob Lutz once said something to the effect, "Let's hope that the Nissan designers don't go to work for Toyota." I hope I got that at least somewhat correct. Toyota has never been known for its styling. And, I would argue, they have also not focused on "break-through" advertising over the years. In other words, no Joe Isuzu or Janis Joplin/Led Zeppelin in their ads. Nonetheless, they have slowly but surely taken marketshare, year after year.

Toyota is not perfect. They have made their share of mistakes. But what you have to admire is when they make a mistake...they fix it. An example is in minivans. Chrysler invented them, rolled them out and owned the market. The Toyota introduction (the Previa) was wrong in many ways from a design standpoint. But as I mentioned yesterday, they put their toe in the water and fixed in the next generation. The current Toyota Sienna is as good as anything on the market. We know they are likely to delivery a high quality product so once the design and package (engine, transmission, interior and exterior proportions/design) are right, they start to take market share.

Monday, January 10, 2005


2005 North American International Auto Show - Detroit, MI

Most Significant Industry News?

There's a lot of talk about what is/isn't signficant at the 2005 Detroit Auto Show (ok...it's called the North American International Auto Show...but that's just too darn long). The Dodge Magnum won International Car of the Year, the Ford Escape Hybrid won Truck of the Year. Lots of concept cars being introduced starting yesterday and through this week. But here's my vote for the most signficant thing of the Show this year:

The Honda Pickup Truck

Why...you ask, is a truck that isn't even for sale yet (and hasn't been shown yet!), significant. A few days ago I wrote that the F-series pickup truck has been the best selling vehicle line in America forever (Thanks, in some way, to my contributions as VP, Account Supervisor at J. Walter Thompson to, "The Best Never Rest" Ad campaign of 1990-91 - a story best left for another time). A few years back, Toyota entered the fray and last year, Nissan took the plunge. Now...here comes Honda. Ok...pundits and domestic defenders will froth that they don't have an appreciable share of the truck business yet. But we used to say that about SUVs and passenger and luxury cars as well. Then came the 4Runner, Pilot, Acura, Lexus, Infiniti and so on.

Typical Japanese approach to any problem is to put toe in water and enter slowly. Use continuous improvement over years. I recall one of my Ford product planning friends, Paul Linden (where are you Paul?) telling me about his years planning Lexus when he was at Toyota. With admiration, he spoke about their methodical 15 year plan for Lexus. Trust me on this, 15 year plans do not exist in the domestic car industry. I'm not saying they should...I'm simply saying that long term focus is what drives companies like Honda and Toyota. That means...right about now, in 2004...the first 15 years would be up. Not a bad result with Lexus, considering the plan was to be at the top of the luxury pile after 15 years. I still recall the articles in the bible, Automotive News. Luxury car makers were saying things like, "our customers will not buy a Japanese luxury car..."

So it will go in pickup trucks, I bet. Ford, Chevrolet and Dodge still dominate. I'm hoping that they will maintain their leadership for the sake of our real estate values here in Detroit and because I have friends whose livelihood depends on the profitability of those truck lines. But watch out...the little motorcycle engine company is beginning to put its toe in the water, to join its competitors, Nissan and Toyota. And it would be tough to bet against those three, given their track record in cars, SUVs and luxury products.

"Success is 99% failure," observed Soichiro Honda, founder of the Honda Motor Company.

Saturday, January 08, 2005


The Ad Folly Continued Part 3, Tres, Trois, Drei

Having been critical of the current Ad mantra, I do need to defend the auto ad practitioners at agencies and car companies and dealership. It's always easy to sit back, from the comfort of my warm, cozy blog, as the snow piles up on my suburban driveway. I'd like to take a moment to try and explain how we got here.

Imagine being put in the position of VP Marketing/Advertising at a car company and your job is to promote a car. To get to that point in your career, it's likely you've had to fight your way up the corporate ladder. At most companies, what you've learned is that no one gets punished for doing the obvious...but if you try something, "unusual" and fail...you're career ABS fails in a highspeed turn. This promotes risk aversion. The, "you never get fired for hiring IBM" mantra of days past. Much easier to go the "tried and true" direction. And if it goes wrong well...we did what we were supposed to.

Some examples:

Yes...the corporate safety net looms large. Kind of like strapping yourself to an anvil and swimming...because that's what the previous guy/gal did.

How to fight this? Couple of thoughts:

More on the calculus of word of mouth marketing in the car business next time. Now, I have to go and listen to some more Spanish guitar and flamenco records I found in the garage.

Thursday, January 06, 2005


The Folly of Automotive Advertising Part 2

I wrote at length the other day about why it is so difficult for a car company to get an edge in the business without a great product. To summarize...cars are a long consideration item because they are expensive, stay in the household for a long time and require ongoing service.

It stands to reason that a 30 second commercial will have much less impact on your next buying decision than your previous 3-5 years of ownership correct? In fact, research we conducted over the years showed that the majority of shopping consumers were much more likely to be influenced by a "trusted" friend or informant (a loudmouth, know it all like me, for example) with "inside" information on who has the best products.

Further, if you have had 8 problems with a vehicle, are you really going to buy the same brand again? This then...is the critical calculus in marketshare.

When we were designing the CRM (Customer relationship marketing...shorthand for direct mail, telemarketing, and other forms of direct response) programs for Chrysler there was a small band of philistines that believed that our salvation lay in "gifts" and giveaways. One day, one of the enlightened commented,

"Oh...I get it...so, let's say I have an xyz 4x4. Last week, my engine drops out of the car on the way home in a driving rainstorm. Basically, our CRM system would automate a direct mail with a coupon for a free NASCAR hat. If the bumper falls off, we send you a free jacket!"


After a hearty laugh...there was a long silence. And we realized...yes, that's what it really was all about. Because there was no "budget" to "solve" the problem. Just a budget for stuff. I mean...we'd have to actually TALK to the customer...and SOLVE the problem. Talking to customers, one on one, for those of us in the CRM business, is REALLY expensive budgetwise. You don't measure one on one, productive conversations as a CPM (cost per thousand) but rather in a cost per contact.

But...there will always be hundreds of millions of dollars to advertise the new, shiny version. And...hopefully, the reasoning goes...you'll have developed amnesia about the little engine block incident. Strangely, we'll spend millions more trying to figure out why the campaign isn't working as well as we thought.

Next Time...we'll talk about a formula for solving this problem. Unfortunately, this formula has not developed a strong following in the ad community because it doesn't allow us to fly to Palm Springs for 3 weeks to shoot and edit a sexy tv commercial.

Wednesday, January 05, 2005


20 Most Researched Vehicles on the Internet...where are the Domestics?

I wrote yesterday about the decline of the Big Three. Sure, there are plenty of bright spots...for example, Ford announced that the F-Series was the best selling vehicle in America for the 23rd year running. But the overall trend at the brand level is more negative. Take a look at the findings at Kelly Blue Book:


1. Honda Accord 11. Honda CR-V
2. Honda Civic 12. Ford Mustang
3. Toyota Camry 13. Ford Explorer
4. Toyota Corolla 14. Ford Escape
5. Nissan Altima 15. Infiniti G3520
6. Toyota Highlander 16. BMW 3-Series
7. Toyota Sienna 17. Mercedes C-Class
8. Honda Pilot 18. Volkswagen Passat
9. Honda Odyssey 19. Volkswagen Jetta
10. Toyota 4Runner 20. Chrysler 300
Pretty frightening stuff. If you're wondering, how come the first "domestic" is only # 12 on the list (Mustang, followed by Explorer and Escape) but domestics still have the most marketshare?

Simple...a good chunk of the traditional Big Three sales are bought by large fleets (e.g. rental car companies). And fleet buyers don't do vehicle research on sites like KBB. Further, fleet sales are not necessarily the most profitable way to do business. Fleet buyers get big discounts.

When you look at pure consumer interest, the picture changes dramatically. These #s also explain why domestic products tend to have more incentives to achieve their sales targets.

On the good news front, it's nice to see Chrysler making the top 20 list with its stylish 300. When I was still Chief Marketing Officer at Car.com our editors voted it the Best New Design.

Tuesday, January 04, 2005


Finbar O'Neill resigns at Mitsubishi to join Reynolds & Reynolds

This is a very interesting move...things were not going well at Mitsubishi. Car sales are down significantly and dealers are very unhappy.

Finbar O'Neill had the difficult task of reviving Mitsubishi after a disastrous 2002-2003. Appears that Mitsubishi tried too hard to meet their aggressive sales goals in 2002-2003 by underwriting high risk consumers. He's going from a very difficult situation at Mitsubishi into another difficult situation at Reynolds and Reynolds. Reynolds has essentially shrunken since 1999-2000. Although they are considered a "leader" in the Dealer Management System market, revenue has stagnated and it's not clear that Reynolds has figured out how to profit from the rapid transformation of the retail business. The good news is that Reynolds & Reynolds now gets a seasoned automotive veteran to help "right" the ship. The previous administration, although technology savvy, seemed to struggle with the direction of the company in the face of rapid changes in the retail environment.

Then, there's the onslaught from new and lean DMS companies like Neosynergy

If he can get the right combination of car business and technology people, I'm betting he'll be able to grow the company again.


New Car & SUV Prices - Shop & Compare at MotorAlley.com

New Car & SUV Prices - Shop & Compare at MotorAlley.com

In case you didn't know...here's the website we're building...appreciate feedback/comments. It's a work in progress!



The Folly Of Automotive Marketing/Advertising

I wrote yesterday about the decline of what we used to call the "Big Three (3)." I often read in news articles that the Big 3 need to "improve their marketing."

Actually, it's the exact opposite. There is nothing really wrong with Big 3 advertising and promotions. In fact, I'd argue it is probably the best there is. Domestic producst have very high awareness, typically. They have more dealers and have been around longer so they are part of your community.

Further, domestics simply spend more on advertising. Why? Because they can and because for years, the product was inferior (it's probably on par with the leading imports now) so advertising, price reductions and cash back is all they had to promote products that had quality issues.

In the car business...it's about the product. (I'm going to duck now, because there are a lot of people out there who believe that it's about the marketing/advertising). And if your product isn't very good, you have your hands full...sure...you can work magic around the margins...but negative consumer feedback will kill the best ad campaign in a matter of weeks and months.

The car companies and their dealers (primarily the Big 3) spend about $40-$50 billion (yes, that's with a B) on marketing and advertising. 2/3 of that is spent on cash back, low rate financing and dealer /salesperson incentives. 1/3 of that is spent on TV, newspaper, radio, magazine ads to either tell you why it's a great car or why now is a great time to buy.

Some key reasons why product is king in automotive.

  1. Cars are not kleenex, chiclets, canned chipped beef or even air freshener. A brighter, more noticeable box or endcap at the grocery store checkout line will not impact the decision making process significantly because the decision making process is, on average, 6 months long (based on consumer research I conducted/witnessed over the years as an advertising researcher and product dev. consultant)
  2. Your neighbors and friends don't tell you how happy/unhappy they are with their breath mints at cocktail parties. They will, however, talk until they are hoarse about how much they love or hate their XYZ 4x4 because of the quality problems and the poor service and that the defroster doesn't work and they will NEVER buy one again.
  3. You don't take dog food or tuna fish in for service 2-3 times a year. How you get treated, what you get charged and how the car is returned has a big impact on your view of that dealer and the manufacturer the dealer represents. I know people who currently won't buy another xyz because of the poor service received. Don't you?
More later on automotive advertising and marketing...

Monday, January 03, 2005


Decline of the Big Three

For those of you who live in Detroit, this is an ongoing topic. I had plenty of time to think about this over the holiday weekend and the following things struck me:

  1. They're not really the Big 3 anymore...Chrysler is now DaimlerChrysler, although they still have a large presence as a "domestic" manufacturer
  2. Marketshare for what used to be the Big 3 continues to drop...year after year. I recall Bob Stempel being "fired" when GM's share was still in the low to mid 30% share. Last I checked, they were around 26 or 27%...and the trend is down.
  3. Cutting edge engine technologies don't seem to be coming from the "Big 3." The "cool" new hybrids are coming from Japan...Honda and Toyota. Those of us close to the industry know that the core/essence of a vehicle platform is the engine. It is also an expression of engineering excellence and technology.
  4. The Big 3 still seem to be able to develop interesting new designs (e.g. the new 300 and Magnum) but the question remains -- can these new vehicles sustain a la Camry or Accord? We can hope...
  5. Increasingly, the Big 3 have become very successful "truck" and "SUV" manufacturers. This isn't all bad...they are, after all, profitable. But the overseas competition is moving into that profitable niche as well. At last count, Toyota had 5 SUVs...that's more than Dodge or Jeep!

Does any of this matter? At the current rate, it will cause some dislocations (selfishly...I think it's hurting the value of our home in Michigan...less jobs = less demand for homes/declining local economy).

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