This week major retailers will be reporting fourth quarter earnings that will reflect their results from the holiday season. Firms releasing results are Lowes, Home Depot, Macy's, Target, Gap, Kohls, Sears, Nordstrom, and Office Depot. This is the last major industry to report earnings this quarter. We will get a sense of how well these companies did especially since this quarter represents most of their revenue and earnings for the fiscal year.
Toyota is also testifying on capital hill. A new report just came out today talking about how Toyota had boasted about saving $100 million by negotiating a limited recall of floor mats with the government on the 2007 Camry and Lexus ES350's. Toyota documents also reveal how the company saved $124 million on the delayed phase in to new safety regulations of side air bags and $11 million on a delayed rule calling for tougher door lock regulations. Was the company protecting their bottom line first and putting consumer safety second. What could come out in testimony this week could cause irreparable damage to their reputation.
Finally, Bernanke will testify in front of congress this week to give his semi-annual testimony on the economy. Investors hope that he talks about the discount rate increase and that the economy is improving.
China is also reopening their markets this week after observing the Chinese New Year. They will have about 2 weeks of news and data to catch up on which could cause some volatility in the Asian markets.
Sunday, February 21, 2010
Sunday, February 14, 2010
Crisis Management at Toyota
Marketing is an organizational function that creates, communicates, captivates, and delivers value. It is also about building long-term relationships and trust with your customers. Toyota over the years has done an excellent job of marketing. They created some of the most reliable and safe cars at a price that most people could afford. Over the years they continued to build their reputation as a leader in safety and reliability. Customers could drive their vehicles for years and years. They would get tired of driving the vehicle before it wore out. Now Toyota has undone all that hard work at earning a reputation as a leader in the automobile industry. They have drawn in to question their reputation for building a safe and reliable vehicle. They have also drawn in to question their integrity as it has been reported that they knew about the safety problems long before the public found out about the problems. So now instead of marketing their product they are involved in crisis management. How do they make it up to their millions of valued customers. I believe that they are doing everything possible to make right with the customer by recalling vehicles in question and fixing the problem. In addition, they are making payments to their dealers who have lost millions of dollars because of this. I believe Toyota will eventually return and compete at the top. A company with excellent management will learn from their mistakes and not repeat the same mistake. Hopefully, other companies will also learn from Toyota's mistake.
Sunday, February 7, 2010
Super Bowl 44
Super Bowl 44 may be remembered as an exciting game that came down to a play late in the fourth quarter before it was decided, but I am not sure the commercials will be remembered as long in my opinion. Corporations are spending $3 million for a half a minute to put their name and product in front of million of viewers. So the question that runs through my mind is what are these companies getting for the millions their spending. First, only the large multi national corporations can afford to run multiple adds during the game costing eight figures. Secondly, their spending millions on well established brand names. Why? First, let's go over the commercials that stick out in my mind.
The commercials that I remember are the Doritos commercials where the guy is sitting on the bench eating his bag of Doritos, and his dog takes off his shock collar and puts it around his owners neck, shocks him, and eats his bag of Doritos. There were a couple of other good Doritos commercials. Budweiser had several commercials and the one that caught my attention is the one where all the towns people rushed to the road where the bridge had collapsed and formed a human bridge so the Budweiser truck could crossover and deliver beer to their town. Then there was the Coke commercial where a man is sleep walking through the Africa plains. He walks past a tree with a cougar in it, bumps into an elephant among a herd, steps into a canoe that magically crosses the river getting out just before a Rhinoceros crushes the canoe, walks into a building opening a refrigerator door covered with poisonous snakes to grab a bottle of Coke, walks a little further before sitting down and opening his Coke, and smiling as he enjoys the great taste while petting a Hyena.
So why did these companies decide to spend that kind of money in a down economy to advertise well established and well known products. Beer drinkers and soda drinkers are generally loyal to their brand so I don't see consumers switching brands, but maybe Budweiser and Coke are targeting the younger crowd from 16-25 in hopes of convincing them to switch brands. The Doritos commercials are saying we are a great tasting chip so try us if you haven't tried it before.
I believe the multi nationals with well established brand names want to make sure that they keep their brands in front of the public eye to say we believe in our product, we appreciate our loyal customers, and this is the the product that will deliver value.
The commercials that I remember are the Doritos commercials where the guy is sitting on the bench eating his bag of Doritos, and his dog takes off his shock collar and puts it around his owners neck, shocks him, and eats his bag of Doritos. There were a couple of other good Doritos commercials. Budweiser had several commercials and the one that caught my attention is the one where all the towns people rushed to the road where the bridge had collapsed and formed a human bridge so the Budweiser truck could crossover and deliver beer to their town. Then there was the Coke commercial where a man is sleep walking through the Africa plains. He walks past a tree with a cougar in it, bumps into an elephant among a herd, steps into a canoe that magically crosses the river getting out just before a Rhinoceros crushes the canoe, walks into a building opening a refrigerator door covered with poisonous snakes to grab a bottle of Coke, walks a little further before sitting down and opening his Coke, and smiling as he enjoys the great taste while petting a Hyena.
So why did these companies decide to spend that kind of money in a down economy to advertise well established and well known products. Beer drinkers and soda drinkers are generally loyal to their brand so I don't see consumers switching brands, but maybe Budweiser and Coke are targeting the younger crowd from 16-25 in hopes of convincing them to switch brands. The Doritos commercials are saying we are a great tasting chip so try us if you haven't tried it before.
I believe the multi nationals with well established brand names want to make sure that they keep their brands in front of the public eye to say we believe in our product, we appreciate our loyal customers, and this is the the product that will deliver value.
Wednesday, February 3, 2010
Purchasing a new vehicle
One month ago my wife and I started talking about trading in our 2004 Honda Pilot. We needed the size of the Pilot to transport our three children and their friends. I had seen the Chevy Traverse advertisements comparing their superior gas mileage, interior space, and cargo capacity against the Honda Pilot. Those are facts you can't dispute, but there are other factors when buying a vehicle of that size and price ($38,000) such as looks, safety, and reliability. I am sure I have left out a few.
So we drove down to the Chevy and Honda dealerships, which were side by side, on a cold bone chilling Saturday to see what they had on the lots. We drove by the Chevy dealership and my wife's first comment was "I don't" like the look of the Traverse". So needless to say we didn't consider the vehicle anymore. Then we drove over to the Honda dealer looking for the Pilot and they had one on the lot. We went inside and began talking to the salesperson. He asked if he could help us, and we told him we were interested in the 2010 Honda Pilot. He asked what we were driving, and we told him a 2004 Honda Pilot. The salesman started explaining all the improvements and features that had been added since then. My wife and I were both impressed with the vehicle as well as my 12 year old son. Although, I really think he was more impressed with the free fountain soda machine.
This sequence of events represents the function of marketing which is a series of processes which creates, communicates, captures,and delivers value to the customer. Honda has created a product that has value. Value reflects the relationship of benefits to costs. Honda when deciding on price had to be sure that the consumer (me) was willing to pay a price that satisfies them and the consumer. I perceived that the benefit I received from owning the pilot (safety, style, space, dependability, etc) was worth the cost of the vehicle I was going to pay. The Honda dealership in turn is selling it at a price that generates a profit for them. We left the dealership with their latest offer which I felt was a fair deal, but I knew I could do better in a larger city.
Therefore, based on the price in Springfield I called the largest dealer in St. Louis and told them what I wanted to pay. The salesman took my price, hung up the phone, and talked to his sale manager. Within a few minutes, I got a call from the sales manager telling me that they would be very close to that price. Then, my wife and I drove approximately two hours to the dealership and were able to close the deal at a price very close to the price we discussed over the phone.
Most people think that marketing stops at the point of the transaction, but the other part of the definition of marketing I left out is maintaining customer relationships that will return long-term benefits to the organization and stakeholders (consumers, investors, employees). After all the paper work was completed our salesman met us to explain all the features of the vehicle, which I appreciated. That was a marketing process of continuing to develop that relationship with the consumer. Also, he explained that we would be receiving a survey to ask how he and the dealership had done selling us the vehicle. He explained that anything less than a score of 5 (excellent) was a failure. These ratings are important because future consumers can read these ratings and remarks which will have a significant impact on their buying decision.
We drove the vehicle home that night very satisfied with the vehicle and the deal we got. In another week I had a package sitting on my front doorstep from the dealership. It was a tin of some of the best chocolate chip cookies I had ever tasted. I wondered how he knew I loved CCC. I thought to myself what an impressive dealership Bommarito had. I then remembered the words from the sales manager when he called me on the phone to tell me my price was close to what the final price would be. He said "I know that if you come down and buy a vehicle from us you will be a customer for life". I had never been treated like that before at a dealership. The cherry on top of this is that for two years I will receive free maintenance which includes oil changes, tire rotations, and car washes. Just in case you call them ask for Josh.
Hope you have enjoyed my first blog.
So we drove down to the Chevy and Honda dealerships, which were side by side, on a cold bone chilling Saturday to see what they had on the lots. We drove by the Chevy dealership and my wife's first comment was "I don't" like the look of the Traverse". So needless to say we didn't consider the vehicle anymore. Then we drove over to the Honda dealer looking for the Pilot and they had one on the lot. We went inside and began talking to the salesperson. He asked if he could help us, and we told him we were interested in the 2010 Honda Pilot. He asked what we were driving, and we told him a 2004 Honda Pilot. The salesman started explaining all the improvements and features that had been added since then. My wife and I were both impressed with the vehicle as well as my 12 year old son. Although, I really think he was more impressed with the free fountain soda machine.
This sequence of events represents the function of marketing which is a series of processes which creates, communicates, captures,and delivers value to the customer. Honda has created a product that has value. Value reflects the relationship of benefits to costs. Honda when deciding on price had to be sure that the consumer (me) was willing to pay a price that satisfies them and the consumer. I perceived that the benefit I received from owning the pilot (safety, style, space, dependability, etc) was worth the cost of the vehicle I was going to pay. The Honda dealership in turn is selling it at a price that generates a profit for them. We left the dealership with their latest offer which I felt was a fair deal, but I knew I could do better in a larger city.
Therefore, based on the price in Springfield I called the largest dealer in St. Louis and told them what I wanted to pay. The salesman took my price, hung up the phone, and talked to his sale manager. Within a few minutes, I got a call from the sales manager telling me that they would be very close to that price. Then, my wife and I drove approximately two hours to the dealership and were able to close the deal at a price very close to the price we discussed over the phone.
Most people think that marketing stops at the point of the transaction, but the other part of the definition of marketing I left out is maintaining customer relationships that will return long-term benefits to the organization and stakeholders (consumers, investors, employees). After all the paper work was completed our salesman met us to explain all the features of the vehicle, which I appreciated. That was a marketing process of continuing to develop that relationship with the consumer. Also, he explained that we would be receiving a survey to ask how he and the dealership had done selling us the vehicle. He explained that anything less than a score of 5 (excellent) was a failure. These ratings are important because future consumers can read these ratings and remarks which will have a significant impact on their buying decision.
We drove the vehicle home that night very satisfied with the vehicle and the deal we got. In another week I had a package sitting on my front doorstep from the dealership. It was a tin of some of the best chocolate chip cookies I had ever tasted. I wondered how he knew I loved CCC. I thought to myself what an impressive dealership Bommarito had. I then remembered the words from the sales manager when he called me on the phone to tell me my price was close to what the final price would be. He said "I know that if you come down and buy a vehicle from us you will be a customer for life". I had never been treated like that before at a dealership. The cherry on top of this is that for two years I will receive free maintenance which includes oil changes, tire rotations, and car washes. Just in case you call them ask for Josh.
Hope you have enjoyed my first blog.
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