MARKETING FOR DUMMIES!

Observation of the Day!

After a couple of days the Cash for Clunkers blew up. This gives us all a reminder the government doesn't do anything very well.

I would like to teach a basic marketing lesson to the marketers at Government Motors. I have to relate it to the foodservice industry for comparison. In foodservice manufacturing and marketing we sell to a distributor, who sells to a foodservice operator. The manufacture is Government Motors, the dealer is the distributor and the guy with the clunker is the operator.

The operator is the target market, sometimes referred to as the end user. It worked just as designed, It created a clunker frenzy. The marketing manager says to himself, "Aren't I brilliant?" However, the devil is in the details. A promotion is never over 'til it's over.

One of the basic premises to any marketing program is that it must be easily understood by all levels of the market involved in its execution. The consumer understood easily that he or she was going to get a$4,500 deal on a car worth about $200 in trade in value. Even a dummy could understand that. Hence the rush to get the "deal", Success!

Now for the poor dealer who gave the deal to the customer, sends the paper work via the internet to Government Motors. First of all there was a set of instructions as to how to get their money back. It was 138 pages long. The actual submission form was 25 pages long. If there was one mistake, the rebate was rejected. The dealer would then have to correct and re-submit. It also takes a long time to transmit 25 pages of data. The computer system could not handle the load and crashed.

The fund set up by Congress was gone in a couple of days, or so they think. Actually at this point in time they don't know for sure, but Congress is ready to anti up more money. Minnesota dealers have as much as $3.5 mil outstanding. Some dealers luckily put a clause that the deal must go through with the government before the deal is final. However, the rules said the car must be made inoperable, so there is nothing to return, if needed, and if the consumer had $4,500 they might nor even be driving a clunker.

All clunkers are not created equal. A '91 Caravan with a 3.0 liter V6 engine and 3-speed 18mpg could qualify for a rebate. But a '91 Caravan with optional 4 speed transmission rated at 19mpg does not. A clunker must get 18mpg or below to qualify. Go figure? Aren't we for equality? The marketing genius must have has a bad experience with his '91 4-speed van.

This just in: Edmonds, the company that keeps track of all things auto, stated that they expected about 250,000 new units to be sold under the program. However, they would have probably sold 200,000 anyway. And if the buyer bought a used car it would add nothing to auto production numbers.

The government never seems to anticipate the unanticipated consequences.

One congressman said his State's chicken industry is also suffering and is proposing Cash for Cluckers. Was he kidding? Probably not.

NEXT UP: GOVERNMENT HEALTHCARE.

Here comes the government man with the magic finger putting it where the sun don't shine!

I can hardly wait!

Have a nice day!

Samuel C. Arnold