Archive for December 23rd, 2008

Is lithium the oil of the future? … If so, one foreign dependency gets replaced by another.

December 23, 2008

Electric hybrid cars are the secret sauce that will save the planet and free the U.S. from its dependency on foreign oil, right?

Well, the environmental benefits are apparent, but we’ve got a problem.  Batteries are the major cost component of hybrid electric cars (running from $3,000 to $5,000 each).  Right now, industrial strength rechargeable batteries are made mostly in Japan and China — not in the U.S.  A consortium of U.S. companies is soliciting government money to develop and build batteries here.  That’s good.  But, there’s another problem: Lithium — the major element that goes into the current battery of choice — is only minimally available in the U.S.  Uh oh.

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Excerpted from “The Trouble with Lithium”, Meridian International Research, Dec. 2006

The world is embracing the Lithium Ion battery as its answer to mobile electrical energy storage needs (translation:  for use in cars).

All other technologies are being more or less swept aside by the attraction of the potentially high energy density of Lithium based batteries.

The most well known alternative to LiIon is the NiMH battery. It is rugged, proven, has high cycle life and has many years development behind it. However, it is heavier than LiIon, very Nickel intensive. (and poses an environmental disposal challenge).

Analysis of Lithium’s geological resource base shows that there is insufficient Lithium available in the Earth’s crust to sustain Electric Vehicle manufacture in the volumes required, based solely on LiIon batteries.

Depletion rates would exceed current oil depletion rates and switch dependency from one diminishing resource to another.

Analysis shows that a world dependent on Lithium for its vehicles could soon face even tighter resource constraints than we face today with oil.

Concentration of supply would create new geopolitical tensions, not reduce them.

Exclusive dependency on Lithium Ion batteries, where the Lithium will overwhelmingly come from South America, would be like being dependent on South America for 100% of our oil supply.

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Full technical article:
http://www.evworld.com/library/lithium_shortage.pdf

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Posted in Autos - Travel, Oil & Energy | 2 Comments »

GM’s Marketing Missteps

December 23, 2008

Excerpted from Harvard Business Online, “How General Motors Violated Your Trust”, by John Quelch, December 11, 2008

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The top eight reasons why GM has failed as a marketer:

1. Focus on products, not customers. For years, Detroit wrongly viewed product types as market segments. Cars were classified as subcompacts, compacts, intermediates etc. But no consumer ever left home passionate to buy an “intermediate car.” Segments are groups of customers, not products.

2. Too many products, too many brands. The Toyota and BMW product lines are very simple, easy for a salesperson to explain and easy for the consumer to understand. There is a logic to the product lineup. Desperate to retain share in the US, GM continues to add to its already confusing array of 60 models under 8 different brand names. The positioning of each brand has long been unclear, a problem magnified by look-alike models built on common production platforms with frequent model changeovers adding complexity costs to production. Buying a car is an infrequent purchase; the consumer needs a clear roadmap of what is on offer.

3. Too many dealers. GM did not reduce its dealerships as it lost share. As a result, dealers began competing on price against each other rather than external competitors. Slipping sales caused dealers to consolidate two or more GM brands on a single lot, further undermining any pretense at distinctive positioning for each marque. And the need to keep sales up at each dealership limited GM’s enthusiasm for embracing new ways of taking new car orders from consumers over the internet.

4. Losing market control. You know you are the market leader when the other players in the value chain – producers, dealers, consumers – all look to your product line as the bellwether alongside which they organize theirs. Today, GM is correctly trying to regain control of the middle with the new Chevrolet Malibu. But will it be able to displace the Toyota Camry and Honda Accord?

5. Bigger is better. Higher wage and benefit costs make it harder for GM to make money on small cars. But the real reason for the migration of the product mix to SUVs and trucks is that the “petrolheads” who run Detroit are all big, tall men. They would rather go down in Detroit history as the guys who brought you the Escalade, not the Prius. They are Jack Palance, not Billy Crystal. Over half the cars bought in the USA are purchased by women; would you know that from the lineup of senior executives at GM?

6. No global brand. Here Ford has a clear advantage over GM. Ford is a global brand. The company name is the brand name. Sure, they have Lincoln and Mercury but the vast bulk of Ford’s marketing dollars worldwide back the mother brand. GM, by contrast, is a house of brands, none of which is global. Marketing resources at GM are inevitably dissipated.

7. Not invented here. Smaller than GM, Ford has been prompted by necessity to better integrate its worldwide operations. In a well-run multinational, this involves US headquarters learning from its subsidiaries, not just telling them what to do or letting them run independently. For decades, Detroit has spurned US launches of high quality vehicles conceived and made in its own European factories.

8. Finance focus. GM has not been run by marketers. It has been run by accountants. The cost focus has crowded out needed emphasis on consumer insight and marketing. Instead of obsessing over the $1,500 per car labor and benefits cost differential separating the big three and the foreign transplant brands, GM should have exploited its market access to develop brilliant new designs that the American consumer would gladly have paid more for. Instead, the Toyota Prius has trumped Detroit and GM’s belated answer is the $40,000 electric Volt.

Edit by DAF

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Full article:
http://discussionleader.hbsp.com/quelch/2008/12/how_general_motors_violated_yo.html

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Posted in Autos - Travel, Mktg - Brands, Mktg - Strategy | 1 Comment »

Facebook: Thank your friends for that pop-up …

December 23, 2008

Excerpted from WSJ “Facebook Tries to Woo Marketers” by Jessica Vascellaro, November 11, 2008

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Despite its surging Internet audience, Facebook has yet to prove it can wring steady revenue out of advertisers. Now it’s trying a new tactic to woo Madison Avenue.

The company is rolling out a new ad format called “engagement ads” that further blurs the line between marketing and social networking.

The new ads appear on the main screen when a person first logs in to Facebook. They prompt a user to do something within the ad, such as comment on a movie trailer or RSVP for the season finale of a TV show.

If the user completes the action, such as adding Bravo TV’s “Project Runway” show to a personal list of events, Facebook tries to get Bravo’s ad in front of more eyeballs by sharing a notice about what the user has done with their friends.

Facebook has a lot to prove with the new ad format, which it began quietly testing in August and started making available to all advertisers this month. The company says 70 of the U.S.’s 100 largest advertisers have advertised on its site since 2007. But its share of total number of U.S. online display ad views was just 1.1%…MySpace.com, is the market leader with 15.9% of display-ad spending…

Facebook’s new push also comes as economic turbulence hits the online ad market…growth is expected to decelerate from 17% in 2008 to 14.5% next year…

Advertising on social-networking sites appears particularly vulnerable, analysts say, because advertisers are still searching for the right ways to measure the effectiveness of ads on those sites…

The new ads won’t appeal to all Facebook users. Heather Watson, 32, recently saw the engagement ad for “Project Runway.” Ms. Watson says such ads “detract from the [Facebook] experience,” and she clicked the “not attending” option to wipe the Bravo ad from her view…

Facebook has tried many ad efforts in the past, starting with basic “fliers,” the low-budget graphical ads users could buy to promote things like events….But many marketers stayed away, concerned advertising alongside user-generated content might tarnish their brands and that the site appealed only to college students.

As Facebook has widened its audience, it has run into another problem: users weren’t clicking on ads when they browsed each other’s profiles…the rate at which users click on Facebook’s display ads is less than 1% 

Edit by SAC 

Full article:
http://online.wsj.com/article/SB122637098500816351.html

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