Henry Phish

I found a good article on the New York Times site that shows how add campaigns for home loans have changed over the years. It’s interesting to see how the campaign evolves with changes in the economy, going from sales of second mortgages to people in dire financial straits to home equity loans for upper class types needing money for home improvement or a better car. The ads themselves change quite a bit as well, moving from more practical advertising model that sells the direct benefit of the product to more sympathetic better life advertising. It just goes to show how customer needs and an expanded demographic have, over time, changed the marketplace.

Home Equity Frenzy Was a Bank Ad Come True

So in part 1 of this article, I wrote about several car companies that were making the leap into the Plug-In Hybrid business with cars and SUV’s. In Part 2, I want to discuss the eventual results of these technological enhancements and how they may affect the world at large.

First, we’ll start by saying that the current infrastructure we have in the United States will not be enough to support future growth of the automotive sector.

Automobiles that require a plug-in jack will require electricity from power plants, and the added drain on the current power grid would most likely not leave enough electricity for everyone. Even today, many parts of the country have difficulty keeping up with demand for electricity, and the added strain on the system would most likely cause brown outs in many parts of the United States.

Ultimately, this means we need more power plants, and that electricity will become more expensive as demand increases. Coal and nuclear power are the two most likely utilities to be affected by this change, and it wouldn’t surprise to see a change in the pricing of these utilities even within the next few years.

The positive side of moving from gas power automobiles to coal and nuclear power plants is the resulting drop in carbon emissions. Air quality across much of the US will increase. Pollution caused by the power plants themselves will rise, but will only affect localized areas.

As paraphrased in an article by one author:

One criticism of plug-ins is that, by shifting fuel consumption from cars to electric utilities, they potentially concentrate particulates and other nasty emissions in certain geographical areas. The study mostly allays these concerns. A small number of areas do see an increase in pollutants, but the large majority of the U.S. will experience a meaningful improvement in air quality.

One final result of moving from a traditional gas engine to electric hybrid is the ability to build these vehicles with the idea of using non-traditional fuels such as ethanol blend or biodiesel, both of which are renewable resources and burn cleaner than traditional fuels.

As stated in the study above, adopting plug-in technology could result in about 10% of the carbon exhaust reductions we need to stabilize the climate.

I stumbled upon an article the other day about the creator or Super Mario Bros and Zelda. Apparently Nintendo has issued a gag order against him talking about his out of work activities because many of his hobbies have been turned into award winning games worth millions of dollars. It’s fun to see this kind of success come so naturally from someone.

Check it out:

Mario Creator Gagged by Nintendo Brass

I noticed the other day that Subway had an advertisement on Yahoo for a Subway Scrabble game so I decided to take a look. It’s a game similar to McDonalds Monopoly game where you collect pieces to win instant prizes or build your letters to collect bigger prizes. It’s an interesting ploy from a company that got rid of a perfectly good sales pitch with the Subway Club card several years ago, and it makes me wonder what exactly the marketing gurus are thinking over at their corporate.

I’ve always liked Subway, I subsisted mostly on meatball subs all through college, but with current trends in fast food quickly filling up the market with restaurant chains such as Jimmy Johns, Quiznos, Milios and with the decreasing popularity of the health food trend, it seems like the niche that Subway once held as the number one growing fast food chain in America has diminished, leaving them a mature company at a crossroads.

Looking back, when fast food restaurants reach mature status, only one of two things happens; either the company figures out a way to re-market and re-brand like McDonalds did several years ago, or it stumbles like Burger King, Hardies, or Little Ceasars; companies that either lacked a real brand identity or that have near completely disappeared due to disparities in their business model.

Looking at the Subway website, www.subwayfreshbuzz.com, and watching the commercials on television, Subway is closer to the McDonalds model than any of the others. Subway definitely knows it’s market with Jared and the Subway Card (a subway debit card for the college crowd) but the Scrabble Game is an obvious attempt to bring itself into the realm of McDonalds, and to do that they will need a larger marketing presence than they’ve had in the last few years.

They’ve lost that pop and pizzazz that you used to feel when Adam danced around the counter as he changed outfits, or when Jared first told us he’d lost several sizes eating their product. If Subway wants to continue to succeed, it needs that next big thing to keep them in the limelight.

I stumbled across another video on the creation of the Chevy Volt and how GM is beginning to release details of the car to prove the seriousness of their claims. Generally car makers are overly secretive about their unreleased products, but the Volt is different, and could ultimately be a game changer for the the struggling automotive industry.

Of specific note in this article is the reviewers comparison of the vehicles interior to an IPod, as well as the description of the new lithium-ion battery powering the car the size of which is nearly half of it’s first generation predecessor. It’s also good to see the renewed excitement coming out of GM these days, since the domestic car industry has taken a pounding in recent years for it’s low ratings in both mpg and hybrid technologies.

My first thought is wondering if GM will make a more economical version of the Volt in the Intel Celeron or IPod models, with a stripped down battery that would, for instance, only run 20 miles on a single charge as opposed to 40 as the Volt is currently spec’d. It would be an interesting idea, as no doubt concepts from the Volt will eventually be integrated across the GM line.

I also like the idea that the cars gas engine could run on biodiesal, which is a good move for the future of the brand, since renewable alternative fuel sources are a strong selling point for an economy overly dependent on oil; which is essentially the entire concept of the Volt in a nutshell.

It should be interesting to see how this progresses.

The Electric Car That Could Save GM

General Motors new concept, the highly touted and electric plug-in compatible Chevy Volt, has begun to ramp up it’s ad campaign in recent weeks. I’ve seen articles on the internet, television commercials, and a plethora of videos on youtube. The car is set to roll out full production by 2011.

I read an article the other day on CNN that cited the decreased use of credit cards. It seems that people aren’t using credit cards as much as they have in the past. Personally, I couldn’t live without my plastic, as long as I keep up with the bills, but a lot of people, especially with rising fiscal constraints from gas prices and mortgages are turning to cash more and more to keep their finances straight and true.

It makes sense that people would switch to cash as a way to keep down their expenditures. Credit cards are easy and convenient, which makes them good for people on the go, but more difficult for people who like to micro-manage their budgets. Personal finance experts have been touting cash only accounting as a strategy for years. Corporations tend to appreciate it as well, since they don’t have to pay the transaction costs for purchases…just ask any McDonalds employee why they look a little glum when you pull out your VISA to pay for a .95 cent cheeseburger. Personally I always feel a little guilty.

It is interesting to note however that credit card use has been on the rise in recent years over checks and cash, so I’m a little skeptical as to how important this statistic is to the overall economy.

Check out the article at:

Credit Card Use Down

I’ve written about Hybrid Plug In’s before in relation to my ethanol articles, but having read an article on the future of the industry, I thought it only safe to say I should address it again.

I’ve mentioned before in the article The Bad Side of Ethanol that a few third party companies have begun retrofitting cars to use a battery that can plug into a standard wall socket to recharge. Charging takes something along the lines of 9 hours with a traditional socket or less with an upgraded supercharger. Officially, these after market cars have never been officially sanctioned by the automotive industry, but now companies such as Chevrolet, Saturn, and Toyota are jumping into the mix with cars of their own.

Cars such as the Chevy Volt, Saturn Vue, Ford Escape, Ford Edge, Toyota Prius and 1/X Concept, Dodge Sprinter, and Jeep Renegade are leading the pack to bring this relatively recent technology into the mainstream. Of special note is the Chevy Volt, which in a departure from its predecessors, runs completely on electricity, a significant change that could inspire a whole generation of clones.

Another interesting side note is that most of these cars are actually SUV’s, which makes an interesting point: how do you continue to sell automobiles that have consistently had the worst gas mileage in the market? The other day I saw a documentary that stated that mpg for SUV’s has barely changed since the 80’s in comparison to the dramatic changes we’ve seen in cars over the last few years. With high interest in these continued markets, and the high rate of return for these big ticket items for the sellers, these items should continue to set a precedent over time.

Otherwise, the more or less traditional Toyota 1/X Concept and the Prius Hybrid come as no surprise but continue to support rising demand. Still, as technology changes, the future of the hybrid industry seems more and more to be in all electric cars such as the Volt, as opposed to the more traditional gas guzzling models of yesteryear.

So I guess my only questions are: how does this affect the power companies as they try to keep up with new demands for electricity? Also, how does this affect the fuel cell industry?

Just some things to think about.

Carmakers’ Plug-In Plans

Marketing has always been a subject that has fascinated me. The idea that changing the presentation of a product, even a simple change, can make a drastic increase to it’s value is a fundamental staple of modern economics. Given two products of almost identical nature, the perceived idea that one product is better than another is often based more on the color of the toy rather than any inherent value.

As shown in one study as posted on Livescience.com:

Study participants were presented products ranging from cordless phones to lawn mowers. The goods were presented in three ways:

The study is detailed in the August issue of the Journal of Consumer Research.

So now we come to Toyota.

When it comes to socially ineffective, Toyota is not the first company that comes to mind. Quite the opposite in fact. With cars such as the number one selling Toyota Prius that runs predominantly on electricity and gets a gas mileage of 48 MPG city and 45 MPG highway, Toyota is paving the way in social conscienceness.

Even their less prestigious models such as the workhorse Toyota Corolla have excellent gas mileage and continue to have a high resale value even after five years of ownership. It’s this commitment to excellence that makes Toyota a great company and a major indicator of things happening in the global market.

From their initial creation and implementation of the Toyota Production System, a precursor to the Six Sigma concept, Toyota blew the lid off of the competition by making the workers own experiences the focal point of their company. The workers know what works, and they know what doesn’t, and each employee is given the power to make their own mark on the company and deliver the best possible quality product. Everyone from the line workers to management are accountable for the end result, and if one of the line workers sees an issue crop up with one of the cars, they have the power to stop the entire line operation with the push of a button until the issue is fixed. This kind of empowerment gives workers the ability to control outcomes, it also allows for a greater sense of satisfaction, and in turn better workforce engagement. With Prius leading the charge as the number one alternative fuel vehicle and the company positioned as the number one company in worldwide sales, Toyota is the best at what it does.

GM and Toyota — Who will be Number One?

This trend toward quality over quantity has been growing in the last few years. Companies like Toyota and Honda are recognizing the need to grow their brand, and to do so they’ve emphasized giving the people what they want, affordability, comfort, craftsmanship, and ultimately resale value.

As stated in one article by Jeff Zygmont:

“Recognizing the allure of low depreciation, Honda pursues a strategy aimed at maintaining high resale rates.

The pillars of that program include striving for high quality and durability so its models will remain desirable even after they rack up lots of miles. Honda avoids building more cars than it can sell and adjusts its factory output to match consumer demand, Naughton says. It also avoids selling to car-rental and commercial fleets. Both strategies prevent over-supplying the market, which depresses used-car prices. Balancing supply with demand also negates the need for sales incentives, which reduce used-car values by reducing new-car values.”

This method of marketing appeals to both new car buyers and used car buyers alike in that it is much less wasteful than many current marketing strategies. The cars themselves maintain a significantly higher value than many other automobiles, and this translates to higher values for used car dealers at the time of trade in as well. Further, you maintain brand loyalty for their next car, as well as a built in sales pitch for an up sell later on in life. A person buying a Toyota will most likely buy there again when shopping for the family sedan or SUV. Likewise, you may even be able to interest them in an Avalon or Lexus if luxury is more their style. But ultimately, the key idea to take away here is that customer demands have driven the market, and what the consumer wants is something that fits their lifestyle.

Other companies have joined this Solid State marketing revolution as well. Solid State meaning: giving consumers a product with a high sex appeal and less breakage. Apple Inc, for instance, maintains it’s prices by limiting operation issues and creating computers, phones, Ipods, etc that last longer and perform better than their competition. Resale on Apple products is far superior to its comparable PC counterparts. Another example is Pixar, now a division of Disney. Their production quality, always phenomenal, continues to bring audiences to the theater year after year. Likewise, Disney has had similar success in marketing the videos releases of these films, inflating the market by limiting the quantity; videos are released only every few years to high demand. Consumers continue to use the product until it’s eventual demise, and often pass these movies on to their children, continuing the consumer cycle. The high sentimental value of the brand lends itself to open other avenues of revenue as well, in the sale of toys, books, and games.

This method of selling Solid State appeals to a wide variety of customers and raises the bar for other companies in their respective industries as well. Customers get a better product, and while they may pay more up front, they can hold on to the product longer. Unlike the disposable culture of the early 2000’s, where E-Machines were completely un-upgradeable, the Windows platform experienced the blue screen of death, and everyones favorite cell phone always seemed to fail at the most inappropriate of times, technology has advanced to the point where these items must work better than their predecessors and must have a consumer life cycle that assumes that the product can be reused or recycled; consumers demand it.

The moderate to low end solutions will always have a place in the market, but it’s the high end of technology that continues to advance the industry and paves the way to better, and less wasteful, consumerism.