Archive for December 1st, 2008

In the new political economy, smart lobbyists will be arriving in hybrids …

December 1, 2008

Excerpted from IBD, “Job One: Wean The Economy Off Of Politics”,  Krauthammer,  November 28, 2008

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We have gone from a market economy to a political economy.

In the old days, if you wanted to get rich, you did it the Warren Buffett way: You learned to read income statements and balance sheets. Today you learn to read political tea leaves.

Today’s extreme stock market volatility is largely a reaction to meta-economic events: political decisions that have vast economic effects. You don’t anticipate Intel’s third-quarter earnings; instead, you guess what side of the bed Henry Paulson will wake up on tomorrow.

We may one day go back to a market economy. Meanwhile,  the two most important implications of our newly politicized economy are the vastly increased importance of lobbying and the massive market inefficiencies that political directives will introduce.

Lobbying used to be about advantages at the margin — a regulatory break here, a subsidy there. Now lobbying is about life and death.

You used to go to New York for capital. Now Wall Street, broke, is coming to Washington. With unimaginably large sums of money being given out, Washington will be subject to the most intense, most frenzied lobbying in American history.

The other kind of economic distortion will come from the political directives issued by newly empowered politicians.

For example, bank presidents are gravely warned by one senator after another about “hoarding” their bailout money. But hoarding is another word for recapitalizing to shore up your balance sheet to ensure solvency. Isn’t pushing money out the window with too little capital precisely the lending laxity that produced this crisis in the first place?

Even more egregious will be the directives to a nationalized Detroit. Sen. Schumer, the noted automotive engineer, has declared “a business model based on gas” to be completely unacceptable. He says,  “We need a business model based on cars of the future: the plug-in hybrid electric car.”

The Chevy Volt, for example? It has huge remaining technological hurdles, gets 40 miles on a charge and will sell for about $40,000, necessitating a $7,500 outright government subsidy. Who but the rich and politically correct will choose that over a $12,000 gas-powered Hyundai?

The new Detroit churning out Schumer-mobiles will make the steel mills of the Soviet Union look the model of efficiency.

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Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=312760589983880 

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Posted in Autos - Travel, Environment - Green, Financial Crisis, Government & Politics, Oil & Energy, Taxes | 1 Comment »

Auto Marketers See at Least One Shade of Green …

December 1, 2008

Excerpted from Brandweek, “Taking the Road Less Traveled” by Steve Miller, Superbrands 2008

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In April, a revolution went down. New vehicle sales dipped 8%, cars began to outsell trucks, and sales of compacts and hybrids leaped, gratifying greenies everywhere and giving the auto industry a headache…

The momentum in the market has clearly shifted. A Kelley Blue Book survey in April found that 60% of new-vehicle buyers say gas prices have changed or influenced their purchase decision. Now, better-made small cars and gas prices have turned consumers on to cars like Toyota’s Yaris and Nissan’s Versa…

Marketing has tried to follow the bouncing ball that is consumer preferences…Meanwhile, hybrids…continue to play an emerging role in sales of small cars. Hybrids now account for 3.2% of all new car sales, up from 2.6% at the end of 2007…

But while environmentalists have embraced the vehicles, the price point difference (they are up to $5,000 more) and the fact that other gas-powered cars are now approaching hybrid-like fuel economy are challenging the technology. “The wallet always dominates in the car-buying decision…If [hybrid marketers] can conveniently make that case and make the economic equations easier, that will seal the deal”..

With all of the fuss about hybrids, alternative power trains and controversial fuels such as ethanol, most every automaker is now including something to draw attention to their own “enviromerits.”…Any campaign now has to, at least, give a nod to the green…But while green (as in environmentally conscious) is good, green (as in dough) is even better when it comes to marketing message…

Edit by SAC

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While auto marketers focus their message on the green ($) is great theme consumers are beginning to realize that purchasing a hybrid may not be the smartest financial decision.  As the hybrid market evolves its consumers are also evolving, which means marketers must do even more to understand their preferences and likely, communicate to a new shade of green. 

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Full Article:
http://www.brandweek.com/bw/superbrands/article_autos.html

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Marketing in the World of the Web

December 1, 2008

Excerpted from WSJ, “Marketing in the World of the Web”, November 29, 2008

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Bemes, clouds and MySpace: Welcome to the brave new world.

As the evidence mounts about the power of social networks to reconfigure individual behavior, the crucial question is: How to leverage this phenomenon into actual profits?

The second generation of Internet (“Web 2.0”) companies such as MySpace, Facebook, Linked/In and YouTube exploded upon the scene three years ago. Today, MySpace and Facebook together have more users than the entire U.S. population; and the online community concept is already becoming a powerful tool for everything from creating customer loyalty, to assistance in product design, to a sounding board for company strategy.

There isn’t a smart company today that isn’t implementing some kind of online community, wiki or blog strategy. But companies with millions of members of online communities are now asking: How do we sell them products and services?

Very few of the traditional techniques of classical marketing (call them Marketing 1.0), or even of eCommerce (Marketing 2.0) will work in the world of social networks. A very different set of tools, concepts and practices is needed. Call it Marketing 3.0. Here are five:

– From loyalty to attention. Before you can win consumer loyalty, you have to capture and reward consumer attention. Smart marketers will of necessity become obsessed with customer attention in the way they once obsessed over customer loyalty. The shrewd brands will create elaborate attention-rewards programs, and incentives to break through the noise and make that critical initial connection.

– From crowds to clouds. Once you get that attention — once you generate heavy traffic to your site, gather a large league of “friends” on MySpace, or spawn a dedicated following on Twitter — how do you monetize the crowd? Smart brands are turning their crowds into “clouds”: organic, self-forming and often self-governing communities of interest. In the old model, customer-service departments aimed to placate or jettison disgruntled customers. In the cloud model, the idea is to cultivate and reward them. That’s not an easy transition.

– From places to spaces. Consumers are increasingly organizing themselves into new communities — not just the big generic social communities, but myriad idiosyncratic slices of narrow, passionate interest (i.e., BlackPlanet, Inpowr and MomsCafe).   These new  “meganiches,” may seem small, even strange at first. But when they’re efficiently targeted, they can be highly responsive, lucrative and loyal. With this shift toward self-organization by consumers, national advertising campaigns as we know them will increasingly become a waste of time and money for many companies. The trick for brands is to cohabit social spaces with these consumers.

– From memes to bemes. In the Age of Broadcast, good advertising could occasionally manufacture memes of tremendous social impact. Think of “Where’s the Beef?” or “I can’t believe I ate the whole thing.” If you can’t recall an irresistible or effective turn of phrase of late, it’s because it is exceedingly difficult to spread a meme in today’s fragmented media environment. Marketing 3.0 is now the science of devising and managing directed business memes: call them bemes. Bemes are sent by members of social communities to each other and typically contain a reward or exclusive offer, which, when redeemed, also results in a reward coupon for the sender. This encourages members of social communities to propagate a “viral” ad.

Brute force marketing won’t work inside social networks. The best online marketing now takes place among people who know and trust each other. Want to be a sensation? Create a beme that consumers willingly accept and share with others.

– From silos to simultaneity. Too many retailers today persist in believing that online shopping is merely a virtual extension of real world shopping. That is a big mistake. he physical world has become the showroom for the virtual realm. Retailers now must reimagine a world where consumers experience products in stores but ultimately buy them on the Web: Stores are for experiences, the network is for inventories.

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All of this suggests that Marketing 3.0 is not only different from its predecessors, but actively undermines them. If your marketing program fails to adapt to this new world, it won’t just become irrelevant — it will actually work against you.

Full articel:
http://online.wsj.com/article/SB122792310060465901.html

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Digital Marketing Momentum Loses Steam

December 1, 2008

Excerpted from Wall Street Journal “Marketers Cut Back on Digital Media” by Emily Steel, October 16, 2008

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Financial woes likely will derail the growth of a slew of advertising technologies that until recently were being hailed as the next big thing.

In recent years, marketers have set aside a portion of their ad budgets to experiment with digital technologies such as Web video, mobile phones, gaming and virtual worlds.

But with broader economic turmoil reaching Madison Avenue, these “experimental” budgets are among the first to hit the cutting-room floor.

Chrysler LLC has already slashed its experimental ad buys. With each ad dollar facing additional scrutiny, especially in the hard-hit auto industry, these ad buys will now make up about 5% of the auto maker’s marketing budget, down from as much as 10% in previous years…

Areas like mobile, virtual worlds and widgets are expected to be hit particularly hard, as it remains unclear what kind of impact ads in these media have. These campaigns often reach a small number of people, and standard measurement systems have yet to be developed. “When we get into the need to drive results, you can’t spend money on the experiments and hope to keep your job and get your sales goals.”

Spending figures for emerging advertising remain small compared with spending in the overall online ad market,…  in 2007,  U.S. advertisers spent $878 million dollars on mobile marketing, which includes ads delivered through text messages or displayed on a mobile Web site.

 U.S. ad spending on widgets and applications — small computer programs that can contain videos, interactive games and music that Web surfers can post to blogs, social-networking or personal Web sites — was $15 million.

PepsiCo says emerging media remains an important way to engage today’s consumers. “The market is not going to drive us to miss one of the largest opportunities that we’ve had in a long time.” 

Edit by SAC 

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Full article:
http://online.wsj.com/article/SB122403310652235021.html

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