The View from Bear Creek

The Dirty Job of Selling Fords

The Discovery channel has a show called Dirty Jobs.  Host Mike Rowe, each week, performs some nasty, smelly job that you probably would not want to touch ... garbage collector, bridge painter, exterminator, crab sheller ... it goes on and on.  Much of the appeal is Rowe himself: a cheerful Regular Guy with a self-deprecating sense of humor.  He'll step in, week after week and show after show, and actually do the job, rather than just filming someone else getting themselves filthy.

It might occur to you that Rowe would be in demand as a corporate spokesperson for, say, Stanley tools.  Well, Ford got him first.  He did some ads for Ford pickups, which I've not seen because, I guess, I don't watch too many shows that skew to the pickup demographic.

I did see this one, and felt I should comment.  They've wasted Rowe.  "And that difference is in every vehicle in our lineup, which includes the most fuel-efficient midsize sedans in America?"  That is not how Mike Rowe talks!  That sort of copy is acceptable when you have the anonymous voice-over reading the line, but when you have a well-defined personality on the screen, you use that personality.

How?  Plunk a tape recorder down in front of Rowe, have him read over your draft, and let him comment on it.  Hand the guy a beer, crack one open yourself, and talk cars.  Then go back to your tape and rewrite your words using his words.  "Hey, you're looking for a midsize car?  Ours have the best gas mileage in America". 

Don't hire a real individual and pay him to be bland.

Service Still Succeeds in Retailing

I'd posted about Circuit City, back when they were trying to survive by doing more of what ruined them in the first place ... and here, in today's Wall Street Journal, we see what happened to smaller competitors who did the exact opposite of the late, unlamented Circuit City.

The article (page B1 in the ink-on-your-fingertips edition) talks about hhgregg and other electronic retailers who are exploiting the vacuum left by CC's departure.  They're expanding ... during a downturn ... and bringing something interesting to the party: experienced, knowledgeable salespeople.  Some customers actually find this reassuring, especially when they're about to drop $1200 on that 47-inch LCD TV.

We know that service works on expensive merchandise, but Publix and Wegman's are able to get it to work in groceries.  And Wawa gets it to work in convenience stores!  Apart from state prisons, convenience stores are the last place you expect actual service.

Professional service: people will usually pay a little extra for it, and history tells us your competitors will be scared to copy it.

Yet another bad example

From a Citigroup press release, dated 1 May 2009 (this stuff is like shooting fish in a barrel):

New York – Citi (NYSE: C) today announced that it has reached a definitive agreement to sell its Japanese domestic securities business, conducted principally through Nikko Cordial Securities Inc., to Sumitomo Mitsui Banking Corporation ... In connection with the transaction, Citi and Sumitomo Mitsui Financial Group (hereafter SMFG) have agreed to enter into an alliance agreement to provide SMFG with access to Citi's global networks in corporate and investment banking, including M&A and sales and trading services, while continuing the longstanding partnership between Citi and Nikko Cordial Securities in originating and distributing capital markets products to investors in Japan and globally.

Look carefully: they agreed to enter into an agreement. 

We might also wonder, in the first line, about the "definitive agreement" ... I look at a dictionary (remember those?) and this agreement does not appear to be any more definitive than any other contract to sell some part of your business to someone else who does not yet realize that it's hopeless.  The release concludes:

Nikko Citi Holdings' CEO Doug Peterson said, "Citi has a proud history of delivering our global capabilities to clients in Japan, and we will continue to have a large local presence here, with market-leading investment banking and corporate banking platforms, the largest retail banking presence among foreign-owned banks and one of Japan's top premium credit card businesses."

Citi's Institutional Clients Group advised Citi on this transaction.

The purpose of a press release is to entice some reporter into doing an article.  Therefore, you try to include things that people might find interesting.  Is there anyone, outside of the Institutional Clients Group, who gives a flip that they advised?

As for Mr. Peterson's quote, I think we all realize by now that "market-leading" means "not actually going out of business this month".  And, without spending more time on this than it deserves, I've got to guess that "banking platform" is short for "bank".

Does anyone even proofread any of this?

GM and Brand Management

Once upon a time, GM had five main brands - Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac.  Alfred Sloan looked at Ford, the leading automaker at the time, and saw that Ford's marketing was one-size-fits-all.  Sloan decided that he would segment the market and target each of his brands to one segment: Chevrolet for the common man, Pontiac for the college grad, up to Cadillac for the senior partner.  By the 1930s, he had not only passed Ford, but had created the biggest industrial company in the world.  And this strategy worked until the 1960s.

Then the lines between the brands got a bit blurry.  By now, of course, all of GM's competition was doing market segmentation, and as each division tried to position itself against its competitors -- well, it wasn't so easy to tell the difference between a Buick and an Olds anymore (although Olds pushed the "Rocket 8" engine in their ads).  John DeLorean stuffed an outsized engine into a Pontiac Tempest and created the first muscle car: the GTO.  It sold well, but it changed Pontiac's brand, and it competed with Chevrolet's Corvette.  Sloan would never have permitted it in 1950.

The one thing that killed the brand distinctions more than anything else came in 1977.  It may come as a surprise, but the best-selling car in the US was the Olds Cutlass.  The 350-cubic-inch engine for the Olds was similar to the Chevy 350, but not identical.  The Olds engine plant could not keep up with demand, so GM quietly slipped some Chevy engines into the Cutlasses.  Inevitably, someone tried to work on his own car, found that the Olds replacement parts did not fit -- and, oh, the screaming!  Buyers pointed out that, if they'd wanted a Chevy, they'd have gone to a Chevy dealer -- and paid less.  Some state Attorney Generals started talking about enforcing the truth-in-labeling laws.  And then GM, in one of the worst decisions in the history of brand management, attempted a legal defense: they announced that there was really no difference between the engines of the various divisions, and if any consumers had been gullible enough to believe the advertising, they had only themselves to blame.  By about 1980, the marketplace had accepted that the GM brands differed only in the trim and the shape of the logo (apart from Cadillac and the Corvette).

I really think part of GM's problem now is: their brands mean nothing.  "Brand" means "consumer's expectations", and what do you expect from a GM brand these days?  Segmenting the market with no brand identity is like slicing a pizza with the edge of a sponge.  They could have been in much better shape.

Perception, Reality, and Pickup Trucks

Today's Wall Street Journal (page B1, available online only to subscribers) reports that Washington, who now passes judgment on GM's actions, is suggesting that the GMC brand be sold or shut down.  GM says that their strategy, which is to combine Buick, Pontiac, and GMC into one sales network, is unchanged.  The issue is: GMC, which used to make trucks and buses, now has pickup trucks and SUVs as its bread and butter, but these are relabeled Chevrolets.  So: does it make sense to keep selling what is basically the same thing under two different labels?

They give one example: the Chevy Silverado (2008 sales: 465,000) and GMC Sierra (169,000) are basically the same vehicle.  The GMC version, marketed to commercial users, tends to have a higher resale value than the Chevy, which is marketed mostly to individuals.  And Sierra sales dropped only 19% in '08, while Silverado sales were down 25%.

I'll talk more about how GM fumbled its brand management in a week or two, but just for now:  if customers think GMC and Chevrolet are really distinct products -- if they have different expectations for those two nameplates -- then they are different brands.  As long as the vehicles are pretty much identical, it'll be hard for GM to maintain that distinction, but perception beats reality, and it does make sense to keep the two labels.

Famous Last Words

Item in today's Wall Street Journal, page B1 (sorry, the online version of the article omits the part I want to discuss): Sony, famous for delivering consumer electronics that is top-of-the-line and priced accordingly, is starting to ship some simpler, less expensive items.  Case in point: the new Webbie HD camcorder, positioned to compete with the Flip.  Flip has been made by Pure Digital, which is selling itself to Cisco.  Pure Digital CEO Jonathan Kaplan is quoted as saying he's not concerned: "You can't out-price and out-market a great product".

Oh yes you can.  Flip may yet win this battle, but the history of business is littered with "great product" that could not compete with someone who out-marketed them.

Netbooks and Consumer Tech Marketing

This is the second post about netbooks, following the comments on their implications for Microsoft.  I will begin by explaining why I don't want a Mercedes.

The engineers at Mercedes started installing an oil level sensor.  So, they figured, we really don't need the old dipstick anymore, and many new Mercs do not have a dipstick ... not even as a backup to the sensor.  I have seen electronic sensors malfunction, but I have never seen a dipstick malfunction.  I guess someone broke or lost one someplace, but this is basically a pretty reliable technology.  If you buy one of these cars, and the sensor gives out on you, you'll have to replace it or risk the engine.  It won't be cheap.  What we have here is an engineer, proud of his gadget, and no one asking if the gadget really makes sense.

Consumer tech marketing has traditionally been: we have more features!  We have a bigger drop-down menu, or more megapixels, or something.  Now many products don't ship with a manual ... it's on CD-ROM, because it would be hundreds of pages long, and printing and shipping something that big is too expensive.  No customer uses more than a tiny fraction of the "features", and heaven help the user who clicks on the wrong button by accident, thereby invoking the "convert your desktop and all your documents to Devanagari" operation.

Now they're selling netbooks ... nice, simple netbooks ... to people who can afford a "better" computer.  Part of the appeal is simplicity.  It does what you expect it to do without using outrageous amounts of memory or processor.  The Mercedes engineers won't understand it, but there's a market for things that work properly, inexpensively, and without being fussed over.

Netbooks and Microsoft

I'm going to do at least two posts on netbooks.  This one deals only with Microsoft.

A netbook, as explained in this Wired article, is a simple, small laptop computer.  They were originally designed to be distributed at very low cost in developing nations.  So, there's not much in the way of processing power or RAM.  The early versions had no hard disc, using flash memory instead, and ran Linux rather than the more expensive Windows.  Microsoft probably didn't like it, but hey, as soon as someone can afford a better machine, they'll get a better machine, and that one will be running Windows.  The netbook is really only useful to browse the web and handle e-mail: serious software, like Photoshop, won't run on one.

Then, to everyone's surprise, people who could afford a "better" machine bought netbooks.  Worldwide, they'll account for some 10% of laptop sales this year.  Not worldshaking -- yet -- but important.

What does it mean for Microsoft?  (and, by implication, what does it mean for your mutual funds that own Microsoft?)  First, there is now a market segment that is accustomed to getting a computer that does not come pre-loaded with Windows.  Yes, I know about Apple, but that's a niche brand whose fans apparently like being a niche brand.  Anyhow, Apple has never shown any interest in selling copies of its software to other hardware manufacturers.

Vista is a famous memory vampire, and will never run on a netbook.  Many netbooks sold in the US do come pre-loaded with XP, but it's really too much OS for the hardware, and Redmond can't charge much for it.  The upcoming Windows 7 includes a cut-down version, which will run on a netbook, but there's still the problem: if the manufacturer can pre-load Linux for next to free, Gates and Ballmer can't charge much more than next to free.

Next, the netbook model is: don't run an app on your computer.  Use a browser on your computer to run an app that's actually hosted on a server someplace.  So netbook owners can't use Photoshop to edit their pictures ... but, since most people only want to eliminate the red-eye and add a caption, they really don't need Photoshop.  There's appsavailable on the web to do those tasks.  And, significant to our discussion, there's apps available on the web to do word processing and spreadsheets.  If netbook owners are satisfied with those, well, it doesn't help the sales of Microsoft Office.

To summarize: the netbook looks like a market changer, and it'll be a market that does not favor the Microsoft business model.

Audit This.

The phone rang a few minutes ago.  It was a computer-generated voice from H & R Block, thanking me for choosing them to do my taxes this year ... and asking me to stay on the line for a short survey.  I have other things to do, and it's easy to hang up on a computer.  I hung up.

If you're going to do market research ... if you're going to solicit feedback from your customers ... do it right.  Survey response rates are bad enough as it is, but doing the survey like this is going to drive them down further.  After that, do you trust your numbers?  Are you sure that you haven't under-represented some segment of your target market?  Sure, you saved money, but what did you give up?

Do it right or don't do it.

"Internet Retailer" Buzzwords

There's an article in Internet Retailer regarding the poor job companies admit to doing when it comes to measuring and improving on customer satisfaction.  Predictably, it's not in English.  For example:

"CMOs must assume ownership for the customer experience and establish enterprisewide measures and disciplines to ensure continuous improvement. We are missing a major opportunity to turn customer pain into competitive gain at every touch-point through better use of web and contact center technologies and processes."

That first sentence, I think, means: "CMOs are responsible for the way customers are treated.  CMOs have to ensure that customer satisfaction is constantly measured, and that everyone in the firm works to improve that score".  "... turn customer pain into competitive gain ..." sounds like Johnny Cochran got an MBA.  I have a massage therapist who works on my back from time to time; she may know what a touch-point is.  I don't.

This is vague to the point of being meaningless.