Keep On Truckin’, Baby

30 09 2010

They said it couldn’t be done. When Dodge announced the radical redesign of its RAM pickup back in the early 90s, no one thought it could mount a serious threat to Chevy and Ford.

After all, the pickup market had evolved to the point of there being only two real players anyway. Dodge had been written off for years. Always there, but no one cared. Real men debated the merits of Chevy and Ford. Sons were disowned for daring to deviate from the family brand preference. And window stickers showed cartoon characters urinating on the other guy’s logo.

The Dodge Ram now commands about 20% of the market. But don’t let that number fool you. Toyota, another “they said it couldn’t be done” maker, has bolted ahead of Dodge with its Tundra (made right here in the State of Texas).

If anything, the Ram and Tundra have shown just how vulnerable the Ford F-class and Chevy Silverado really are (family traditions notwithstanding).

Which is why Indian truck manufacturer Mahindra is hungry to enter the US market. That’s the country India, not a tribal enterprise in Arizona. And even though their distribution system is tied up in dispute at the moment, Mahindra is planning to take the US by storm very soon with its inexpensive and economical trucks.

I am sure there are die hard Chevy and Ford enthusiasts laughing hysterically at the prospect of an unknown trying to claim a toe hold in America. C’mon. America is the home of the pickup (or at least we think). The only reason the Tundra had a prayer is because it is made on American shores, right? No self-respecting man (or woman) would be seen tooling around in a Tokyo truck, would they? And will truck-loving Texans fall under the spell of a pickup made half a world away?

Well, we shall see. Mahindra has been establishing its brand presence in the US for a number of years with its tractor line. Pickups are just its latest entry.

With base prices in the range of $20K to $22K, the Mahindra should at least turn wallets. Heck, that’s cheaper than the average sedan. Monthly payments would suddenly be very affordable for most Americans.

And during a recession, who can argue that price isn’t a big factor? US car and truck sales have taken a beating the last two years, and maybe all we need is a good deal to put us in the buying mood.

But Mahindra has the same challenges any newcomer faces. Making Mahindra a household word will not be easy. And what about quality and safety? There is no track record here. It was only in the last few months that Mahindra was able to get its line up to US safety and emission specs.

The real risk for Mahindra is that they trip over themselves like Hyundai did in the late 80s, or, worse yet, self-destruct on the berm like the Yugo. Brand images are hard to shake when they get off on the wrong wheel. And never mind that there are already many happy truck buyers driving established brands. Sure, Ram and Tundra did the seemingly impossible, but can Mahindra pull another rabbit from this hat

All of this means that Mahindra better come out with all 4 cylinders firing. Because the last place the company wants to see its vehicles is at the end of a tow rope.

Dr “Pickup Line” Gerlich


Music To My Ears

29 09 2010

I am a musicophile. Always have been. Always will. More times than not, I have an earworm crawling around inside my head singing at the top of its lungs. Hey, it soothes this savage beast.

I still have my first 45 R.P.M. record, which was Paul McCartney singing Uncle Albert (1971). I went on to buy a couple hundred more 45s before graduating to full-length LPs and later CDs. There are roughly 600 of those occupying various shelves and cabinets in the home studios of KNIK, along with over 1500 CDs.

OK, maybe I am also a hoarder. Just don’t call A&E, because I don’t want to be on that show.

A couple of years ago, my students started making fun of me because I was still buying CDs. Yeah, Mr. On Top Of Things was wearing a Luddite tattoo. Music fan writ large? Yep. Techno-forward? Not so much.

Surprisingly, I had owned an iPod since 2005, yet all I ever did was rip my own CDs.

But at the urging of my students, I decided to go on a CD fast. In the 29 months that have passed, I have only purchased one CD (the re-release of The Rolling Stones’ Exile On Main Street), and purchased about 100 individual songs at iTunes. My wallet is happy. I am happy. And my music collection is no longer taking over the house.

There is still one commonality of all that music. I own it. Whether it is on vinyl, on a CD, or stored digitally on my phone and computer, it is mine. All mine. Not yours.

But the music industry is evolving faster than a 78 R.P.M. record. Ownership is out; listenership is in. As in subscription listening. Who needs to have property rights to their music when you can pay a small fee to listen to whatever you please?

Which is why I am growing increasingly enamored of services offered by Rhapsody, Rdio and Mog. For about $10 a month, I can listen to an unlimited amount of music on my computer. On my phone. Wherever I am.

And to think I was in the process of becoming a big Pandora fan. Sure, semi-custom free stations are pretty cool (and allow you the pleasure of discovering new artists you’ve never heard before). But what about all those other times when you want to be the DJ? Yes, dear, now there’s an app for that.

And why continue to pay iTunes $1.29 every time I am compelled to buy a song?

If you are thinking like me, subscription listening could be an iTunes killer. While Apple is busy gloating over the fact that iTunes’ sales are about to pass those of tangible CDs, they had better be looking over their shoulder at listening sites. Rhapsody, et al are going to do to music what Netflix has done to movies. The customer is in charge, and they get the what/when/where for one low price.

We’re so sorry, Steven Jobs. We’ so sorry if we caused you any pain. But the kettle’s on the boil and we’re so easily called away.

Anyone want to buy a bunch of old CDs and records?

Dr “In The Groove” Gerlich

Segway Segue

28 09 2010

Sometimes it doesn’t pay to use your own product.

It’s bad enough when, after a decade of trying valiantly to gain public acceptance, hardly anyone wants one. It’s even worse when the company’s owner dies using one.

And that’s what happened over the weekend when James Heselden, owner of Segway, plunged to his death while trying out the new rough terrain model of the two-wheeled transit device. Heselden had just bought controlling interest of the US company last December. Sometimes irony can leave a bitter taste.

While Heselden’s death is certainly tragic, it is almost equally disastrous that the Segway never lived up to expectations. Founder Dean Kamen introduced the device over a decade ago amid much hype and hoopla. Kamen, a veteran inventor with numerous successes across many fields, will go down in history as the developer of something that was to be a revolution…but instead the people revolted.

And said no.

Which raises the question of why such a novel transportation device could thus far be adopted primarily by police and security units, as well as urban tour companies. Sure, we may occasionally see one being used by physically challenged adults (they are, in fact, a godsend for some), but outside of airports and major urban centers, they are pretty darn scarce.

Maybe it was the price (between $5300 and $7200). Maybe it was all the reports of user injuries. And maybe it was the perceived impracticality of it (outside of selected urban applications).

I suppose if everyone lived in compact villages much like in Truman Show, the Segway would be the hands-down winner for transport. If we all lived within a mile of work, play and shopping, it might work (but even then its cargo capabilities are limited). But we don’t, and so the product has languished.

It is also limited by speed and range. A gas or electric scooter can go much farther and faster, as can a standard bicycle. Both of these can be had for much less than a Segway. So why spend two or months’ salary for what amounts to a novelty?

Good question.

Now that the owner has died while using his own product…well, the PR can’t get much worse. Every major media outlet in the western world is carrying this news. It is worse than any Consumer Reports pronouncement of poor product safety. The Segway is not just an accident waiting to happen. No, it is now a death machine.

And I do not say this to make light of Mr. Heselden’s bad fortune. Maybe the product really is unsafe. He just suffered the indignity of proving it.

As for Kamen, I am sure he meant well with his original Segway. And I am sure he really felt like it was going to truly revolutionize human mobility. But like a expensive, sophisticated mousetrap, sometimes the basic model works just as well, if not better.

Given this sad turn of events, it may be time to bury the Segway along with its owner.

Dr “Road Ends Here” Gerlich

Foam, Sweet Foam

27 09 2010

I have been a breweriana collector for 37 years. Yeah, I may have technically been underaged at the moment (I was 14 when I started), but I did it anyway. Beer can collecting was a huge hobby back in the 70s, and I was one among many who picked up cans along the street and cajoled parents into buying specimens for my collection.

Today I have over 25,000 items in my collection (including both beer and soda cans). Through the years I have become acquainted with more brand names than a regular consumer could ever begin to remember. And in many regards, my collecting passions actually meshed nicely with my chosen field of marketing. After all, brand names are to marketing what beer is to good times.

Or something like that.

I have seen brands come and go. Mostly go. There has been considerably consolidation in the US brewing industry the last few decades, with two players (ABInBev and SABMiller) commanding a whopping 80% of the marketspace. Sure, microbrews have shown steady growth the last decade, and have been a breath of fresh air in an otherwise flat market, but they remain the bastion of beer snobs.

Whose group of which I am a charter member.

But I have stood in amazement at how some of the old brands have staged a bit of a resurgence of late. Thanks to cigarette-smoking, asymmetrically-coiffed, tattoo-covered messengers on fixed gear bikes in Portland deemed Pabst Blue Ribbon a cool thing to swig, the beer that once haled from Milwaukee has become a cult favorite.

And that no doubt helped create the recent purchase of Pabst by a New York family. Pabst owns a whopping 42 nostalgia brands from the past, and only about half are currently being used…and the majority with little or no marketing. Interestingly, Pabst does not even own a brewery. They are strictly a marketing company. The majority of their beers are contracted-brewed by Miller Coors.

What made Pabst so appealing to those Portland bike messengers was the fact that it was counter-culture. Just like them. Of course, there is danger in any counter-culture artifact trending, because it…um…becomes dominant culture. This means that as Pabst continues to surge, those same hipsters may need to find something else to drink.

The new owners see great value in all of these old brands (brands that still adorn my shelves). You see, all of us aging baby boomers remember Stroh’s. Falstaff. Red White and Blue. My Dad drank those very brands, and personally emptied those (and many more) cans in my collection. To see those brands reappear does a middle-aged man’s heart good.

And whereas the previous owners intentionally cut the marketing budget (unwittingly giving rise to its counter-culture pop status), the new owners will no doubt try to pump a little buzz back into the brew. They plan to get most of those brands back in supermarket shelves and streaming through sports bar taps.

The fact that they are also at least one price point below the major brands works to their advantage. In terms of flavor, they are aimed at the mainstream American taste in beer, which is a fairly light pilsener. They do not compete at all with craft brews, and apparently have been so effective at whittling away sales of Budweiser’s flagship brew that ABInBev is planning to give away beer this Wednesday across the country at a National Happy Hour event.

While the beer snob in me still prefers the malty aftertaste of a Fat Tire, I don’t have a problem sipping a PBR or a Lone Star (another Pabst property) every now and then. The fixed gear cyclist in me kind of understands the mindset of those Portland guys.

I just don’t have enough hair left to style asymmetrically.

Dr “Don’t Worry, Be Hoppy” Gerlich

User Friendly

26 09 2010

A revolution took place in the last 15 years, a revolution that has chopped media outlets and corporations off at the knees. And it is only in the last couple of years that these companies have figured out how to turn lemons into lemonade.

That revolution (surprise, surprise) was the internet and the power it put into the hands of the general population. No longer would we be subjected to carefully crafted information and images provided by media moguls. If anything, this era should be called We The Media.

Because it means that our voices are on equal footing with those professionals who are paid to write, speak and shoot.

This leveling of the playing surface has spelled trouble for print and broadcast outlets, as well as the corporate world in general, because often we (as in you and me) are able to post newsworthy information faster than they. When at least one-half of the population not only has a computer with broadband access, but also a smartphone with still picture and video capabilities, that means everyone is a reporter. “This just in…Dr Gerlich is enjoying a Fat Tire with his colleagues over at Buffalo’s Southwest. The foam is over the top.”

So what’s a company to do?

Simple. Ask them. Welcome them. OK, beg them…to contribute.

Which is what Disney has done with their new Memories website at which people can post pics and videos of their family outings to Disney theme parks. Think YouTube, but Disney is footing the bill.

Now User Generated Content is not exactly a new thing. We have been entertained by UGC ads for Doritos the last few Super Bowls. UGC materials have run the gamut of consumer products. By embracing UGC, Disney and others have recognized that consumers have a valid voice (not to mention sophisticated electronic gear), and so it is better to invite them to the party than to run the risk of them holding their own.

The fact that I can upload memories created the next time we go to Disney is actually very effective means of brand reinforcement. Sure, the odds are slim that my videos will go viral, or even be seen by more than a handful of people, but my kids will have a blast returning to the site in the months and years to come. It will be a repository of our memories, all of which came about because of Disney in the first place.

Did I say that this will reinforce the whole Disney experience?

Granted, opening your website to every Spielberg wannabe carries great risk, for it means there must be some semblance of governance. Disney had better make sure each and every pic and video is fit to appear on their branded site, or run the risk of being embarrassed. Or insulting others. This is not like YouTube, which is digital land grab of the highest order.

And should viewers take the time to peruse the uploads of total strangers, perhaps they will be inspired to the return to the park…or others in the Disney line-up. It wouldn’s take much to get me to consider going to Anaheim next time instead of Orlando anyway, so maybe all I need to see is some footage of Disney’s California Adventure.

As a former collegiate journalist, I am fully aware of the conflict that has occurred because of all this technology and access. You know what they say about opinions, right? Yep. Everyone’s got one…along with something else I won’t mention. And when everyone starts spouting off those opinions on a public forum, it can only spell troubling times for the old guard. I suspect that this revolution is a big part of the reason why newspaper readership and TV news viewing are down. Who wants to listen to others when our voice can be just as loud?

That the extremely conservative Disney has now come to grips with this reality speaks to the need for all traditional media and corporations to recognize the change that has occurred. Each and every customer who totes a camera is now embraced. Each time Mickey, Minnie and friends appear online is just another advertisement. Each upload is an advance ticket sale on a future visit.

That lemonade taste pretty good, doesn’t it?

Dr “Fresh Squeezed” Gerlich

Driver’s Seat

25 09 2010

It was somewhere around the late-1980s. My younger brother had just purchased a new car, a very inexpensive model from a relatively unknown maker. The Hyundai excel was the first entree from the Korean manufacturing giant to the American market, and it offered the perfect mix for budget-minded consumers: low base price and good mileage. It was a strategy used by Toyota 20 years prior as they tried to establish a presence on our shores.

That Excel did anything but excel, because it was a bucket of bolts.

So bad was that little car that I quickly dismissed the brand. It rattled as it went down the highway, leaving parts along the curb. You could get cited for littering.

But the Koreans were not willing to let this misstep kill their chances. They regrouped, retooled and reintroduced. Today, they have nearly a 5% US market share, which is phenomenal in our crowded marketplace. They even have a manufacturing plant in Montgomery AL.

And they are hungry to grow that share by going up-market with ever more prestigious cars aimed squarely at luxury import competitors. Take the 2010 Hyundai Equus, for example. With a base price of $55,00 – $60,000, this is not targeted for folks needed a cheap drive. Watch out, Mercedes, Hyundai has your number…and they’ve got it on speed dial.

True to form, Hyundai is entering at price points well below those of like-quality competitors. The Genesis (at $38,000) is aimed at the Lexus market, while the Azera ($24,000) is going toe-to-toe with the Toyota Avalon. The only problem is that when you’re dealing with fussy and fickle upper-class consumers, it can be hard selling prestige with a discount price.

And that is the major challenge facing Hyundai today. They have recovered completely from the shoddy quality of two decades ago. Their cars will rival any Japanese model, and even many European machines. All at the tune of $10,000 – $20,000 savings.

But it is hard to establish a prestige image when your first step on our sandy beaches was with the equivalent of a Far East Yugo. Consumers have memories like elephants. Changing consumer minds can be tough when everyone remembers that you danced like Elaine.

To be fair, Hyundai didn’t get its 5% share by virtue of our charity. They have earned those stripes by continually convincing the middle market that their cars are indeed good. And I will attest to that fact, for I drive a 2000 Sonata that has made its way through my family, from my parents to my brother (who apparently forgave Hyundai’s earlier sin), and then to me. At 10 years of age, it purrs like a kitty and likes nothing more than cruising down the open road at 90. Note to the law enforcement community: I didn’t really say that.

Hyundai’s high-dollar aspirations are really no different from those of Walmart and their efforts to reach the gentrified folks with cool TVs and other electronics gear. And as we discussed recently, WM is willing to downsize stores to be able to enter high rent urban neighborhoods, places not exactly known as being in the discount zone

But cars are not socks and underwear, and comparing $60,000 cars to $5 skivvies is probably not a fair comparison. People don’t normally see our underwear (boxer waistbands and bra straps notwithstanding), but they do see our cars. And those cars are a badge emblematic of our good taste. Our financial wherewithal. Our social rung.

It will probably take a little time before Hyundai can chip away at the high-dollar market owned by Lexus, BMW, and Mercedes. But if you recall, Lexus wasn’t in the game 20 years ago either. Toyota simply chose a different route (establishing a separate brand name). But for the many current Hyundai owners, if and when they are ready to move up a notch, this won’t be a leap at all. It’ll just be a simple lane change.

Because life in the fast lane can be fun.

Dr “Going Places” Gerlich

Davids and the Giant

24 09 2010

In the biblical tale of David and Goliath, a young lad finds himself mano-a-mano with the 9-foot-tall Goliath. Goliath huffed and puffed insults at the tiny David, who fearlessly stood his ground. Goliath was girded head to toe in armor and armed to the hilt, whilst David stood there all but naked, save for his tunic.

With a might heave-ho, the unprepared but fearless David hurled a stone at Goliath, striking him on his unprotected forehead. The mighty giant fell to the ground and died. Good triumphed over evil; a one-man army of God had toppled a mighty Philistine.

In the retail world, Walmart is the mighty Goliath, while everyone else is a David. Periodically the Davids hurl their own stones, hoping to find a hole in Walmart’s armor. Allegations of vendor abuse. Child labor in Asia. Low wages. Lousy benefits. Putting Main Street out of business. In spite of these well-aimed projectiles, Walmart has been able to weather the storm without fighting back.

But this time the mighty Goliath has had enough. Weary of efforts to keep them out of certain areas on the grounds of environmental impact, size, etc., Walmart contends they are the victim of the Davids creating subterfuges by hiring external firms to launch anti-development campaigns. Walmart has filed a discovery motion in court following a recent article in the WSJ stating that several competitors (Safeway, Superval and Ahold) had funded many efforts across the country, all designed to keep Walmart from growing.

Which is another way of saying they really do not want competition.

So by waging war under the guise of environmental concerns, urban congestion, etc., these Davids are not fighting fairly. It’s not about whether the store parking lot will create too much runoff, or that toxic chemicals may leech into the adjacent ditch. It’s not about whether the store is too big.

No, it is all about preserving a bunch of inefficiently run businesses who cannot (or will not) compete. They can wave the flag of Mom and Pop all they want, for they are not concerned about saving your parents’ little store. No, they just want to save their own.

Now I will be the first to admit that I really do not like Walmart a whole lot, but I shop there anyway. I feel just a little bit dirty when I leave. They have a little bit of a lot, but not a whole lot of anything. That often frustrates the daylights out of me. And don’t get me started on product quality.

But if it is a commodity item that I can get elsewhere, but WM has it at a lower price, then I’m there. It is my job to maximize the use of my paycheck, and if I can do that at Walmart, then so be it.

And I do not appreciate weaker businesses who couldn’t hit the broad side of a barn, moving boulders in the way of someone else’s journey. Put up a real fight like the biblical David, and we can talk. But as long as veiled protectionism is in the play book, I’ll go out of my way to sidestep your boulders and shop elsewhere.

Because sometimes you just gotta take your lumps and learn how to compete the old fashioned way.

Dr “Always The Low Price” Gerlich