Sometimes The Most Urgent Thing You Can Possibly Do Is Take A Vacation

There’s a proverb that goes, “No matter what happens, a vacation gives you a story to tell.”


With that maxim in mind, we shall return to this blog after Labor Day with more stories to share with our readers.


See you back here September 8th.


We hope you have a good vacation too





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A Shock to the System

A week ago GM announced its plans to plug into the alternative-vehicle market with the Chevrolet “Volt,” an electric car Chevy claims will get 230 mpg in city driving. This would make it the first car to break the triple-digit barrier for mileage, and deliver over four times the mpg of the most popular car in the category, Toyota’s Prius. The price tag? Also a lesson in multiplication for car buyers: $40,000, or nearly twice the cost of the entry level Prius II.

While clearly GM needs to restructure the brand in serious ways, there remain some unanswered questions about how the buying public—already jaded with GM products—will respond to an electric car that comes with sticker shock, not to mention the challenge of plugging in, especially for city dwellers whose outlets may be out of range of any power cord. The “build it, they will come” philosophy was never a very good one, and is less so today when our research in the category continues to demonstrate that consumers expect their cars to be increasingly green, while more green stays in their wallets.

And while “green” and “fuel economy” are certainly high-percentage loyalty contributors, the current overall rankings in, for example, the smaller sedan and crossover vehicle segment demonstrates the marketplace reality of the data and match up pretty well to the top sellers in the recent “Cash for Clunkers” program:

1. Toyota
2. Ford
3. Honda
4. Jeep
5. Hyundai/Nissan

Faith, they say, is like electricity. You can’t see it, but can see the light. For consumers recently too often that light has not been a new car, it’s been a train. As Americans, and thus part-owners of General Motors, we would like nothing more than to see it move up in the world. But it will be consumers’ belief, and not faith, that will turn on the GM brand. And that belief will come when the brand delivers against the expectations consumers hold in the category, not before.



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Back-To-School Basics (Part 2)

That anticipated back-to-school sales are down should not be a surprise to retailers. But consumers are spending close to last year’s spend – parent can’t do anything about growth spurts or the need for larger shoes – so which retailers will get A’s in brand management and sales this season? See the categories below (numbers in parentheses indicate changes from last year’s Back-to-School consumer choices):

Discount Retailers

Wal-Mart 70% (+10)
Target 50% (-0-)
Kmart 40% (-5%
Best Buy 30% (-5%)

Department Stores

Kohl’s 40% (+15%)
Macy’s 35% (-5%)
Dillard’s 35% (-0-)
JCPenney 30% (+5%)
Sears 15% (-5%)

Office Supply

Staples 50% (+5%)
Office Max 35% (-0-)
Office Depot 35% (-0-)

On-Line

Amazon.com 80% (+5%)
Zappos.com 55% (+10%)
Staples.com 40% (+5%)
Apple 40% (+10%)
Dell.com 35% (+5%)
Overstock.com 20% (+3%)

While there will be some clear winners, despite massive discounting other retailers continue to struggle. Our Customer Engagement metrics have been predicting what has manifested in the marketplace over the last several years: What brands get what piece of the academic pie depends upon how much the retail brand has truly learned that brand meaning has become a surrogate for value in today’s marketplace.

And that’s a fundamental lesson for all marketers.



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Back-To-School Basics (Part 1)

According to the U.S. Census Bureau, New York public schools invest $15,981 per pupil to teach the 3 R’s. Tennessee spent $7,113. On average the states paid $9,666 per student. That’s up nearly 6% overall.

The average parent, on the other hand, anticipates spending $531 this year for back-to-school clothes and supplies. Despite retailers’ deep discounting and promotional activities, consumers are showing steadfast frugality, with a figure that’s 10% below 2008. That’s because the 3 R’s for consumers are now ‘Retailer,’ ‘Rates,’ and ‘Requirements,’ or which retailer is going to offer the best prices for the things the kids require most?

The survey includes assessments from 10,000 households with school-aged children (pre-school through 12th grade), drawn from the 9 US Census regions, and found that the average-spends for the major back-to-school categories is expected to be as follows:

Clothing $275.00 (Unchanged from last year)

Computers, software, printers $189.00 (-11%)

Shoes (athletic & dress) $105.00 (-10%)

Supplies $ 95.00 (-5%)

Books and study aids $ 20.00 (-25%)

Unlike other major purchase events like Mother’s and Father’s Days there’s a more lopsided distribution in terms of which retailers will be the beneficiaries of consumers back-to-school shopping:

Discount Stores 95% (+ 12%) over last year

Department Stores 55% (-0-)

Office Supply 55% (+ 10%)

Online 50% (+ 25%)

Specialty Outlets 30% (- 6%)

Catalogs 30% (+ 20%)

That the average share of back-to-school wallet is going to be down 10% from last year may be of little solace to retailers. Still, most kids will be going back to school pretty well kitted out in the classroom, and anyway, even in this economy, it’s still true that any investment in knowledge always pays the best interest.



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CAR ALLOWANCE REBATE SYSTEM

If the car you own has a combined 18-mpg rating or below, you may qualify for the U.S. Government's trade-in rebate program, aka "Cash for Clunkers." If you qualify your old vehicle may be worth up to $4,500 towards the purchase or lease of a new, more efficient car.

The “Cash for Clunkers” program has been such a big hit with consumers that the government announced it was actually in danger of running out of funding for the program. Some dealers are running low on inventory due to the program's popularity.

But don’t worry; the Senate has cleared the way for a vote to extend the program through Labor Day. Transportation Secretary Ray LaHood said, "In about eight or ten days, the government has proved we can get money out the door and sell almost 160,000 cars, and push about $600 million out the door in order to do it," he added. "This is a huge boost for the economy."

What are “Cash for Clunkers” participants buying when they trade in their clunkers? A new report released by federal transportation officials indicates that 4 out of 5 drivers are putting the rebates toward foreign-made automobiles. That doesn’t surprise us though. According to the Brand Keys Customer Loyalty Engagement Index, when it comes to being “Fuel Efficient and Environmentally Friendly,” here’s how the top-10 auto brands rank on those loyalty-drivers:

1. Toyota
2. BMW
3. Mercedes
4. Hyundai
5. Subaru
6. Honda
7. Nissan
8. Saab
9. Volkswagen
10. Jeep

Of course, those are just the rankings for fuel efficiency and being green – reflecting the program’s raison d’être – but still, even with other emotional and rational aspects making up the automotive category, 9 out of 10 of the cars are foreign-brands. If nothing else, these numbers reveal a lot about how consumers perceive the brands vis á vis good gas mileage, and because they’re linked to loyalty, they are leading-indicators of how they’re going to behave in the marketplace.

So if more mileage is what you’re looking for, you can check out the brands listed above. Or you might follow another route once suggested by George Carlin: Kilometers are shorter than miles. Save gas and just take your next trip in kilometers!



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Passengers May Not Stand For Big Airlines Savings

Ryanair, the low-cost Irish airline, headquartered at Dublin Airport that operates 190+ Boeing 737-800 aircraft on some 830 routes across Europe and North Africa, wants more people on their flights.

Well, why not? The beleaguered airline industry, beset by the recession, diminished business and pleasure travel, and increased fuel costs has already resorted to abolishing amenities and charging for checked luggage. But here’s a new tactic: Ryanair has asked Boeing to design a plane where passengers would stand for the entire trip.

The idea is that standing passengers would fly with a belt around their waists, buckling them to a metal pole and have them kind of huddle next to ledges that have been described as something like “bar stools.”

Well, we can’t say whether US travelers would stand for this kind of treatment, but as we’re going into high Summer vacation mode, we can tell you – as found in our Customer Loyalty Engagement Annual Research – how US airlines rank when it comes to “In-Flight Comfort.” Their standings look like this:

1. JetBlue
2. Delta
3. Southwest
4. Continental
5. USAir
6. American
7. United
8. Northwest

Ryanair head, Michael O’Leary apparently got the idea from the Chinese airline Spring, which put forward similar plans — estimating they could pack in up to 50% more passengers and slash costs by 20%.

An airline would have to withhold a lot of dry roasted peanuts to up make those kinds of savings, but we suppose things could be worse. O’Leary also unveiled plans for planes with just one toilet instead of three, which would add six extra seats to the plane.

None of these cost-savings affect travel time, although, we suppose that just like on the ground, how long a minute is depends on what side of the bathroom door you're on!



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