Tiger Scandal good for business

Americans love to build up a superstar, then they love it when the superstar falls. The only thing Americans love more than that is to forgive the fallen star and return he or she to glory. This happens all the time. Tiger Woods will come through this scandal stronger than ever with even more endorsement power. His apparel sales are up this period vs the same period last year.
So keep your chin up Tiger a year from now everything will be O.K. All you have to do is say, you are sorry and the American public will eat it up with a spoon. Look at Kobe Bryant and the scandal in the hotel with a girl. How about Mark McGuire, Sami Sosa and the lot who all used steroids. Look at Michael Jackson, he has sold millions of records since his death. Wasn't he a child molester? We love to love, hate, then forgive. Its what we do.

What's goodwill worth for Volvo

Its hard to put a dollar amount value on the goodwill of a company. However, I am sure that China's Zheling Greely Holding Group Co. paid a pretty penny for just the brand equity when they purchased Volvo from Ford Motor Co at $1.8 billion. With China's growing market becoming larger than the U.S. its no wonder Zheling Greely wanted to get into the auto manufacturer segment. Ford is using some of the purchase proceeds to pay down a portion of their $23.5 billion debt. Ford is trying to shed non core brands and get down to their core products. They felt Volvo was a distraction to the rest of their manufacturing.

McDonalds and Market Penetration

McDonald's has a new strategy to penetrate the market this summer. The object of market penetration is to sell more of the current product to the current market segment. This can be a low risk marketing strategy because often the company knows the product and the segment very well. What McDonald's is planning to do this summer is offer soft drinks, no matter what size, for a $1. The company would like their locations to become a destination of preference for beverage buyers for a 150 day period this summer. The reason the restaurants can offer the soft drinks for $1 is that these drinks usually account for about a 90% profit margin. Hopefully, by discounting the soft drinks they will increase consumers, which will therefore buy other products and increase the total sales mix. Some franchise owners are worried this promotion will hurt the bottom line because the high margin on soft drinks often offsets the low margins on other products. The McDonald's strategy is to steal customers not only from other restaurants but from other places consumers buy soft drinks, like 7 eleven. Then when the customer is in the McDonald's they will be introduce to other new beverages; such as, smoothies, frappes and ice coffee. The company has a strategy to add $125,000 additional new sales per store in new beverage sales alone. One problem with discounting soda is that the consumers will sometimes bypass the other new beverages for the soda on special. This kind of cannibalization is to be expected but as long as the sales increase overall the strategy will be considered a success.

When is an Ad not an Ad.

Buick took out a full page ad in The Wall Street Journal today. It states that sometimes the best advertising isn't an ad and has the cover of Motor Trend. On this Motor Trend cover it features the new Buick Regal Turbo. It also says " Forget the past 30 years Buick is back!" This is definitley and ad. What Buick is trying to do is satisfy the consumers external search when searching information on a new car. Buick is showing showing consumers that their products are
excellent products on the Motor Trend's criteria. Motor Trend's main criteria many times is performance and most people don't think of Buick when they are looking for a performance car.
However, on the Motor Trend cover it labels the Regal as an Acura killer, the LaCrosse as a Lexus beater, and the Regal GS as an Infiniti fighter. The company has positioned itself against some of the best performance sedans in the industry. Buick is trying to change the belief of the consumer so that can the consumer's behavioral intent and purchase their products as performance vehicles not just sound transportation that your father would buy. After all, if you are a motor head and remember the 1970's the Buick GSX was the fastest quarter mile muscle car in the industry. Also, in 1984 the Buick GNX V6 turbo was faster in the quarter mile than the Corvette. So actually, those of us in the no have always none that Buick can produce a performance automobile. Now maybe the masses will understand.

Free Publicity

Is it true that any publicity is good publicity. I would say not. I was just watching Saturday Night Live and the did a parity of a couple driving a Toyota Prius with a gas pedal stuck in the accelerated position. The couple screams and tries to get the car under control then you hear the sound of the car crashing. At the end of the parity commericial the Ford logo comes up and it say Ford we make Hybrids too. Man I wondered if Ford paid them for this. It was funny and memorable which is very bad advertising for Toyota, but great advertising for Ford. It seems there is an article a day in The Wall Street Journal concerning Toyota. It make you wonder where reporting stops and politcs begin. I know Toyota has had their recent problems, but it seems that several politicians have done their best to keep them in the spot light in order to benefit Ford and GM. Regardless, I am sure that many consumers will be talking about the parity of Toyota on SNL on Monday at work. And that spells added trouble for Toyota.

Cadillac Niche Market

GM is wants to become a niche player in the European luxury car market with the Cadillac brand. A year ago GM pulled the Cadillac out of the European luxury car market because they realized that they were not getting the growth they needed to stay. Now they have a new approach. The Cadillac will be targeted at a small segment of buyers and try to sell only 3000 cars a year. How can they do this and be profitable? Well, the selling approach will be done through a streamlined marketing organization of 20 people and bare bones distribution network.
Low over head means lower costs which means GM can be profitable with fewer sales. In the past GM tried to come into the market with a line extension on the back of the Cadillac brand. The models were specific to the European market designed on existing platforms with features thought to be desired in this market. However, the sales never kept pace with projections. The large design and poor fuel economy of other models did not meet consumer expectations either.
This time Cadillac will focus on key markets like Germany, Switzerland, and Italy. They plan to penetrate these markets with limited models and sleeker designs with better fuel economy. The focus will be a consumer who wants something other than a BMW or a Mercedes. Consumers who want to be the first with new products and technology. With their sights set lower will GM hit their projected sales. What message are they trying to send to the consumers? Are they limiting supply to create more demand? Only time will tell if this marketing strategy will be successful.

Ford Positioning

It looks like Ford's positioning on the perceptual map is on the rise for quality perceived. The company's sales are up 48% in February. I think Ford is using points of parity instead of points of difference to position itself agains the likes of Toyota and Honda. If you look at recent ads the company talks about the quality and mileage being just as good as these foreign auto manufacturers. So they are trying to put into the mind of the target market that we are just as good as imports but you should buy our cars because they are American. All of this comes with the trouble that Toyota is having not only with the actual problems with the gas pedal, but with the perceived problem and growing concern of the public perception of poor quality. Its very hard to be the market leader. The market leader must maintain quality while trying to gain new customers. The cost of gaining new customers can be very high; therefore, sometime manufacturing cost are cut or short cuts taken. This could have been what happen to Toyota while sourcing this gas pedal. Maybe the company who make the pedal was the lowest bidder, but not the highest quality part. In the meantime Ford will need to maintain their quality because I would quess Toyota will be coming on strong to regain their lost market share.