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Another Reason for NOT Granting a Big Three Bailout

If you’re looking for another argument why the Big Three should not receive a bailout, it’s in today’s Wall Street Journal print edition article entitled “South could Gain as Detroit Struggles".

The article looks at how foreign car manufacturers (e.g. BMW, Honda, Toyota, Volkswagen and Kia) are locating their production facilities in the Southern US because the region’s labor is non-union. It then goes on to document a litany of disadvantages the Big Three union labor has vs. non-union labor.

Among the disadvantages Big Three labor is saddled with:
* Guaranteed jobs for workers
* Far more generous benefits and wages that surpass most other US manufacturing sectors
* Legacy costs for Big Three payrolls; for each active worker on a Big Three payroll, the Big Three must pay pensions for as many as three former workers and dependents.
* Big Three assembly lines can take up to weeks to switch over production to another model while some foreign manufacturers can switch over in a matter of minutes.

This is yet another great argument for not bailing out the Big Three. Any bailout of the Big Three would only serve to artificially prop up these outdated and non-competitive union labor practices.

I say provide “Incentive Money” (this is no longer a bailout in my mind) to the Big Three if, and only if, they agree to revise these outdated practices (among other mandatory changes). This incentive money would be provided in increments once the Big Three company has complied with certain performance improvements.

If the US Big Three are really interested in survival, then many aspects of these company, including labor unions, must agree to change their practices, and then have their changes documented and measured.

What do you think? Is this a good idea or a bust?

November 20, 2008 in Small Business Marketing | Permalink | Comments (1) | TrackBack

Should there be a Big Three Bailout?

In today’s issue of the Wall Street Journal, Rick Wagoner, Chairman and CEO of General Motors, argues forcefully for a Big Three bailout in Why GM Deserves Support In the article, Wagoner cites several key actions his company has taken as reason for a General Motors bailout. They are:
* Hourly workforce reductions
* US Salaried workforce reductions
* Transformed labor agreements
* Capital spending cuts

To his credit he does reference that fact that cost cutting cannot establish market dominance, so he cites the introduction of the new Chevy Malibu as an important telltale sign that the company can now produce the products its customers want.

But I’m not so sure.

A few pages later, there’s an article entitled U.S. Car Makers Fail to Improve Resale Values that provides the most crystal-clear reasoning for why the Big Three (including GM) should NOT get a bailout. The article profiles the Top 5 and Bottom 5 vehicles by resale value; that is, the percentage of a vehicle’s sticker price expected to be retained after 5 years of ownership.

BMW, Honda and Toyota occupy the Top 5 positions while Ford, Chrysler and General Motors occupy the Bottom 5.

Very clearly, U.S. automakers have not been producing vehicles that the market values. These companies missed the consumer shift to smaller, more fuel-efficient vehicles, period. May 2004 was the first month regular gas topped $2.00 per gallon. That should have been a harbinger of things to come.

In March of 2005, prices lurched past $2.00 a gallon permanently. So the Big Three have had roughly 4 years to adapt. They haven't until just recently.

What’s the lesson here for small businesses? Stay close to your market. Every day, ask how your market is changing. Listen to what your consumers tell you.

You don’t want your business to end like the Big Three car makers do you?

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November 19, 2008 in Small Business Marketing | Permalink | Comments (3) | TrackBack

How about a Balanced Scorecard for the Government Bailout(s)?

Now that our leaders have passed the largest bailout in our nation’s history, I’d like to ask a simple marketing question: “What metrics will be used to monitor the use of these funds?” What I’m suggesting is that whomever loans money the next time around, they should insist on using a balanced scorecard of metrics to measure the use of these funds.

For example, when you or I invest in a business venture (e.g. buy stock) we might look at the return on this invested capital (ROIC).

OK, what is the expected ROIC for the $700 billion bailout?

Sometimes we investors want to know specifically that money we invest will improve the efficiencies of a company.

OK, what will be the new labor productivity rates for these financial firms?

Sometimes, a firm will use new funds to advertise in order to boost its market share.

OK, what will be the targeted market share numbers for these financial firms in 12 months?

Other times, invested funds will be used to improve service levels to customers.

OK, what will be the expected improvement levels for customer service levels?

What is missing from this massive $700 billion bailout is any dose of realistic accountability; most often measured through metrics.

The next time the government wants to bailout a sector of our economy (automobiles are next) we should all ask, as investors in this operation, “What is the balanced scorecard you’ll be using for this bailout?”

If we’re not measuring the performance on these funds (and to my knowledge, we’re not) then this whole process could use a healthy dose of business acumen.

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November 18, 2008 in Small Business Marketing | Permalink | Comments (0) | TrackBack

A Tip for Your Small Business Marketing Plan

In The Marketing Toolkit for Growing Businesses, I cover the process of developing a small business marketing plan in great detail.

But here's just one tip from that book that can help your small business marketing plan be even better...

Nothing is more forceful than committing your ideas to paper. If you say to yourself “Gee, I’d really like to upgrade our website this year”, that’s an idea. It’s nice, but it hasn’t committed you to any course of action.
However, if you write on a piece of paper the:
Objective (“We will upgrade our website”)
Rationale (“because our site looks outdated vs. our competitors”)
Project leader—that is who’s responsible for the quality and completion of a project.
Timeline—including the launch date and all intermediate due dates
Budget—for the entire project.

Now you’ve committed time, people and dollars to this project, and its likelihood of success has grown exponentially.

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November 17, 2008 in Small business marketing plans | Permalink | Comments (3) | TrackBack

Small Business Marketing: Use Emergent Marketing Strategies to Grow your Small Business

Many small business marketing efforts rely on a marketing plan to develop a set of structured strategies. However in my experience, emergent strategies, or strategies that are unplanned responses to unforeseen circumstances, often yield the most impressive results. Here’s an example…

Honda motorcycles – In 1959, Honda wanted to establish a market for motorcycles in the U.S. market. Their original aim was to sell 250-cc and 350-cc bikes here, rather than the 50-cc Honda Cub bikes which were very popular back in Japan.

However sales of the 250-cc and 350-cc models were sluggish in the states and the bikes ended up having mechanical problems. However, the Japanese executives were using the 50-cc Honda Cub bikes to run errands around Los Angeles and people started noticing them. One day the executives received a call from a Sears and Roebuck executive who had seen one of the 50-cc bikes and wanted to offer it through his stores & catalog. The 50-cc bikes took off and by 1964, nearly one out of every 2 motorcycles sold in the U.S. was a Honda.

Pay a great deal of attention to your small business’ structured marketing plan and strategies, but also give your marketing effort the room it needs to develop emergent strategies. They may end up being the most successful marketing strategies of all.

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November 12, 2008 in Small Business Marketing | Permalink | Comments (0) | TrackBack

Use Another Marketing Tool besides Email

There's a tendency among many these days to over rely on email. Here's a story of a guy who varied his marketing tool away from email and recognized an immediate impact:

Recently, I met with a friend who was trying to land an internship with a video production company. He had completed several rounds of interviews and was waiting to hear back from the executives of the company about his status. When I met with him, he had emailed his contact several times wondering about his status, but hadn't heard anything back.

He related to me that some contacts during his interviews mentioned that company employees participated in Friday afternoon Happy Hours. Several of these contacts also mentioned that they enjoyed beer.

After hearing this, we agreed that he should stop emailing them for a status update and adopt another tactic. This is what he did:

Thursday night, he went out and purchased a 6 pack of beer. He also wrote a note to go along with the beer that said "I heard you guys take your Happy Hours seriously, so I wanted to help you get started on today's with this 6-pack of beer." He then delivered the 6-pack and note to the receptionist early Friday morning.

What do you think happened?

He was contacted less than 1 hour after dropping off the 6-pack and he's now completing his paperwork to begin his internship.

There are several lessons here for all small business marketers.
1) Email inboxes are clogged these days...don't rely solely on email to get your promotional messages across.
2) The more you vary the delivery of your promotional messages (delivering a 6-pack and email), the more likely your messages will get heard.
3) You get bonus points for taking note of the personal interests of your audience. The fact that my friend took note of the fact these folks liked beer during their happy hours was amply rewarded when he shifted tactics away from email marketing.

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November 10, 2008 in Small Business Marketing | Permalink | Comments (0) | TrackBack

Small Business Marketing: A Tip for Marketing Presentations

When I was a marketing manager for Novartis, I worked with several folks who were notorious for meddling. They were very indecisive in their marketing actions and it started to seep over to my area.

We were all in Jacksonville to give a presentation to the national sales force one year....about 75 sales reps in all, along with all the executive staff. I had finished organizing my slide presentation and was comfortable with the flow and the info provided. The day before the big presentation I did not want to fuss and fidget over the whole thing. I really wanted to play golf with the sales force (can't emphasize enough the value in building bridges with sales folks if you're in marketing).

Anyway 2 hours before my tee time I got a call from my boss who wanted me to cancel my golf and come over and "just practice your presentation in front of us". I politely declined and went off to play golf.

The next day I was first on for the presentations and I must say it went well. Flowed well, got the audience engaged....was happy when I stepped off the stage. Then my counterparts (all of whom "practiced" their presentations at the session I took a pass on) proceeded to go on.

What do you think happened?

Every one of their presentations was jumbled, poorly organized...heck, some slides (this is before the days of ppt) were backwards and some were UPSIDE DOWN. In short, these presentations, the ones that had been "practiced" the day before, had clearly suffered from changes, edits, and reedits up until the 11th hour.

Why am I telling this story to you?

To suggest you always institute a 48 hour lockdown on your final presentation before it is given. That way you can focus on how you want to present the content , and tell your "story" the best way possible.

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November 4, 2008 in Small Business Marketing | Permalink | Comments (0) | TrackBack