Wednesday, September 28, 2011

Accentuate the Positive, Eliminate the Negative...

New Cone research reveals 80% of consumers have changed their minds about purchasing a recommended product or service based solely on negative information they found online. This is up from just 67% of consumers who said the same in 2010. Online information, a trustworthy source for 89% of consumers, has the power to make or break a product recommendation, concludes the report.

Positive information has a similar effect on decision making, with 87% of consumers agreeing a favorable review has confirmed their decision to purchase. But, negative information is gaining traction and is now just as powerful in tipping the scales against a recommended purchase.

Bill Fleishman, president, Cone, says that "... online content on buying decisions cannot be ignored... marketers must... connect with those who have significant influence over their peers and will champion the brand message."

Easy access to the Internet sends more consumers online to verify purchase recommendations. As compared to one year ago, consumers are more likely to purchase when they can find online recommendations to support offline advice (85% versus 77%).

The report says that this year-over-year increase in online verification may be attributed to near-universal access to the Internet and the pervasiveness of the smartphone. Today, online product or service information is literally at consumers' fingertips with 59% reporting that they are more likely to research recommended products online because they can easily access applications on their mobile phones, and 81% crediting wide-spread access to the Internet.

Consumers turn to product/service information and customer reviews, but blogs are gaining traction.

The increase in online purchase verification may also be attributed to careful spending. Americans are nearly 25% more likely to verify recommendations for high-cost purchases, such as cars, today than they were in 2010 (89% today vs. 72%), while moderate- and low-cost purchases did not experience the same jump.

Mike Hollywood, director of New Media, Cone, concludes that "... consumers want reassurance... personal recommendations alone are not enough to guarantee a purchase... word-of-mouth channels and the adoption of online verification have changed the marketing landscape... "

The 2011 Cone Online Influence Trend Tracker presents the findings of an online survey conducted June 27-29, 2011 by ORC International among a representative U.S. sample of adults. The margin of error associated with a sample of this size is ±3%.

(Source: The Center For Media Research, 09/13/11)

Social Site Elders Click Through More

SocialCode, reporting on a new Facebook advertising research study examining over four million data points from a wide variety of industries, says that for ads with a 'Like' button, older Facebook users have a higher CTR while younger Facebook users will tend to click 'Like' directly within the Facebook ad.

While propensity to click-through on Facebook is positively correlated with age, writes Marketing Charts, propensity to like is not. Age has a strong positive effect on whether a user will click, but has a less pronounced opposite effect on the likelihood of them becoming a fan of a page.

Fifty-plus-year-old users, the oldest segment in the study, are 28.2% more likely to click through and 9% less likely to like than 18-29-year-old users, the youngest group observed. Compared to the rest of the younger population, 50-plus users see a 22.6% higher CTR and 8.4% lower like rate.

Laura O'Shaughnessy, CEO, SocialCode, observes that "... younger Facebook users are more comfortable using the 'Like' button than older users at this point... (though) older users have a high level of interaction and curiosity about the ads... (but) are also the newest subset to join the social network... "

When broken down by gender, age has a much more pronounced effect on CTR for women than it does for men, whereas for men there is a stronger effect on 'Like' rate than women:

  • Overall, women are 11% more likely to click on an ad
  • 'Like' rates are almost even for men and women; men are actually 2.2% more likely to 'Like' an ad than women
  • For women, CTR is 31.2% higher for the 50+ age group versus 18-29 year olds; men only see a 16.2% difference between the age groups
  • Versus all age groups, 50+ women's CTR is 22% higher versus a 16.4% difference for males
  • The oldest male segment has an 11.7% lower 'Like' rate than the youngest segment, and 9.5% lower 'Like' rate versus all age groups; Women only see a 7.2% and 7.9% difference respectively
(Source: The Center for Media Research, 09/09/11)

Social Media Report: Spending Time, Money and Going Mobile

Social media not only connects consumers with each other, but also with just about every place they go and everything they watch and buy. Nielsen's new Social Media Report looks at trends and consumption patterns across social media platforms in the U.S. and other major markets, exploring the rising influence of social media on consumer behavior.

Highlights of Nielsen's "State of the Media: The Social Media Report" include:

  • Social networks and blogs continue to dominate Americans' time online, now accounting for nearly a quarter of total time spent on the Internet.
  • At over 53 billion total minutes during May 2011, Americans spend more time on Facebook than they do on any other website.
  • Tumblr is an emerging player in social media, nearly tripling its audience from a year ago.
  • Nearly 40 percent of social media users access social media content from their mobile phone.
  • Internet users over the age of 55 are driving the growth of social networking through the Mobile Internet.
  • 70 percent of active online adult social networkers shop online, 12 percent more likely than the average adult Internet user.
  • Across a sample of 10 global markets, social networks and blogs are the top online destination in each country, accounting for the majority of time spent online and reaching at least 60 percent of active Internet users.
(Source: NielsenWire, 09/11/11)

U.S. Auto Sales on Road to Recovery

The leader of the largest U.S. auto dealership group, AutoNation Inc., predicts U.S. automobile sales will accelerate the last three months of 2011 and rise in each of the next two years.

AutoNation CEO Mike Jackson said last week he expects U.S. sales of cars and light trucks to reach a 13 million vehicle annual rate by the end of the year.

"The auto recovery is going to resume probably in October," Jackson said in an interview with Reuters. "We're on a journey back to 16 million, 17 million. I can't tell you exactly when we're gong to get there, but we are going to get there."

Jackson spoke on the sidelines of a meeting of AutoNation dealers and employees from Colorado in downtown Denver led by the CEO, as well as AutoNation President Mike Maroone that was part business and part rally.

Jackson said it was too early to project U.S. auto sales for 2012. He said he wants to wait to see the trajectory of the recovery near the end of the year.

However, a slide Jackson showed in a presentation to the roughly 200 employees last week projected U.S. auto sales at about 14.2 million vehicles in 2012 and 15.9 million in 2013.

Research firm J.D. Power and Associates expects U.S. auto sales of about 12.6 million vehicles in 2011, about a 9 percent increase over 2010. J.D. Power expects U.S. auto sales to reach 14.1 million in 2012.

Jackson said much of the U.S. auto industry will have recovered by October from the March earthquake and tsunami in Japan that limited inventory for Toyota Motor Corp., Honda Motor Co., and, to a lesser degree, Nissan Motor Co.

Jackson, 62, said he is "convinced" U.S. new auto sales will return to more than 16 million per year in part because consumer auto loans have become available after the 2008-2009 recession quicker than home loans.

"We have reasonably good financing available for our customers; not what we had in 2005, 2006, 2007, but we may never have that again," Jackson said, adding that there is pent-up demand to drive sales.

No price wars
Maroone and Jackson said they do not expect a "price war" among automakers and dealers as they try to appeal to consumers in the fourth quarter.

"The whole business is much more disciplined, rational; much more focused on the long-term," Jackson said.

He pointed to the discipline on incentives by the Detroit automakers during the inventory woes of Toyota and Honda.

"Incentives are going to be better than they have been for the last six months," Jackson said, adding that they would not approach a level that would trigger a price war.

(Source: Automotive News, 09/23/11)


Thursday, September 22, 2011

Online’s Granularity Compliments Broadcast’s Reach

Combining online audio with the broadcast radio can be a benefit in a combination buy, according to agency panelists who participated in the Internet Advertising Bureau’s first “Streaming Audio for Agencies Day” held in New York City this week. While online audio provides listener data culled from registrations and server-side resources, broadcast radio delivers the critical one-to-many mass reach. A Targetspot study revealed that adding Internet radio to broadcast can increase recall up to 3 times, depending on the category.

“The hurdle,” said Chris Fontana from MediaVest, “is audio – not digital or broadcast,” indicating that radio, whether on-air or online, still has work to do in conveying its compelling story to the advertising community. Agency representatives acknowledged the challenges of working across what used to be defined areas, and agreed that collaborative efforts between digital and radio buying had advanced.

Sponsored by Triton Digital and The Media Dash, the debut event was an opportunity for many industry experts and advertising agency representatives to share insights, research, and discuss broadcast radio and streaming audio as entertainment and advertising platforms. In conjunction with the event, the IAB released a Digital Audio Advertising Overview, compiled from various sources by the association’s Audio Committee.

Download the Report here: http://www.iab.net/media/file/IABDigitalAudioPSR11.pdf

- Renee Casis - Radio Ink  

Tuesday, September 20, 2011

More Mobile Campaigns Embracing Video

The appetite for watching video on mobile devices continues to grow. New findings from Rhythm NewMedia show views of full-length TV episodes on smartphones and tablets jumped 200% during the second quarter. The rise of video on mobile devices extends to advertising as well, according to the latest monthly SMART report from mobile ad network Millennial Media.

Ad campaigns on the network that allowed users to watch a video after clicking on an ad increased 69% in July, making up 31% of all campaigns on phones and tablets. (Think movie trailers.) Along with downloading an app and signing up for a subscription, watching a video is now the top post-click action that advertisers try to entice consumers with.

Ad efforts that feature some type of social media activity as a call-to-action are also rapidly growing, increasing 34% in July to comprise nearly a quarter (24%) of campaigns. Entertainment, telecom, and CPG advertisers employed social tools in ads to drum up fans and followers on sites like Facebook and Twitter as well as gather feedback on movie releases and new product launches.

In light of the summer vacation season, the Millennial report spotlighted travel advertising trends. App downloads were by far the most popular call to action, turning up in 86% of travel campaigns.

That's because travel brands promote their apps as tools for researching and booking trips, hotels and flights during the busy summer season. When it comes to creating utility and m-commerce applications, the travel industry outpaces all others, according to the ad network.

Travel booking sites accounted for nearly half (47%) of campaigns, hotels and resorts, 21%, and amusement parks, 20%. The mix also included tourism, transit and cruise advertisers.

Looking at the ad-targeting approach across all campaigns, 56% aimed for broad reach and 44% used some type of targeting. In the latter case, two-thirds (67%) were tailored to local audiences, 25% demographically, and 8% according to user behavior. Helping to boost the use of local targeting were finance, retail and restaurant advertisers appealed to customers with a variety of regional promotions to increase foot traffic into their brick-and-mortar locations.

(Source: Online Media Daily, 09/09/11)

A Healing Touch From Hospitals

Some advertising agencies weathering the economic downturn are getting a shot in the arm from the most suitable of sources: hospitals.

In the first six months of 2011, advertising by American hospitals, clinics and medical centers rose 20.4 percent, to $717.2 million, from $595.5 million in the same period in 2010, according to the Kantar Media unit of WPP.

Advertising agencies increasingly are trying to quicken the pulse of consumers, who have come to expect ads with doctors in scrubs posing with impressive machinery, ad copy boasting of "skilled" doctors and "caring" nurses, and the latest ratings from U.S. News and World Report.

A new television commercial for Lenox Hill Hospital in Manhattan, for example, features pedestrians on a busy sidewalk, and the text, "We can't help you with playoff tickets. We can't help you with co-op board approval, or getting your child into a preschool. But if it's really a matter of life and death -- we can help."

A print ad for the campaign, much of which celebrates the fact that the hospital has been around since 1857, has this headline: "We had cardiologists before the city even had arteries."

The campaign is by the New York advertising firm of DeVito/Verdi.

"We're looking to brand a hospital while breaking some of the clichés and unwritten rules of hospital marketing, like showing a building, showing pictures of the medical staff, or showing machines," said Andrew Brief, director of client services for DeVito/Verdi.

DeVito/Verdi also created a campaign for Mount Sinai Medical Center, which began running in 2003. Print ads featured patient success stories with catchy headlines such as "Ironic that a plumber came to us to remove a clog."

Also featuring patients' stories are television commercials introduced by New York-Presbyterian Hospital around the beginning of 2011. The campaign, by Munn Rabôt in New York, includes a spot featuring Heather McNamara, 9, in the commercial, who describes a lifesaving procedure when she was 7 to remove a baseball-size cancerous tumor.

Patient testimonials have become so popular in the last decade that some hospitals get their hearts -- and their heart clinics -- set on the approach.

"They say, 'We have really satisfied patients so why not use patient testimonials to tell our story?' " said Susana Cascais, managing director of Frank Unlimited, a Seattle agency whose local clients include the Group Health Cooperative and the Everett Clinic. "But we try as much as possible to steer our clients away from those clichés, because if you cover the logos in those ads, it could be anybody."

A billboard by the agency for Group Health last year, highlighting secure online medical records, read, "Helpful for when your wife yells, 'What is wrong with you?' " And a print ad, for the Everett Clinic about pediatric care and scheduled to be introduced on Sept. 26, reads, "We diagnose mumps, ear infections and Legos lodged in noses daily."

Also X-raying the funny bone is Bethesda Heart Hospital, in Boynton Beach, Fla., which recently ran billboards along I-95 in Boynton Beach and nearby Delray Beach, cities popular with retirees.

"Your heirs can wait," read one billboard; another, "Outlive your foursome."

Paul Amelchenko, the creative director at BFW Advertising in Boca Raton, Fla., which produced the ads, explained in an e-mail message that the strategy "was to focus on the benefit of the hospital (we help you live longer) versus the features that they have (great technology, world class physicians) that all other hospitals claim to have as well."

A television spot for the Mayo Clinic that began in August starts with a single firefly in the night sky, which gradually lights up with too many to count, and is accompanied by the voiceover, "You can make an appointment with one doctor -- or you can choose Mayo Clinic, where a team of experts works together for you."

The campaign -- by Campbell Mithun in Minneapolis, part of the Interpublic Group of Companies -- includes a similar spot with paper lanterns multiplying in the night sky.

Reid Holmes, executive creative director at Campbell Mithun, said an institution as well regarded as the Mayo Clinic need not "prove its performance ability." Instead, spots highlight the collaborative approach of the doctors and the fact that -- with facilities in Minnesota, Arizona and Florida -- it is more accessible than consumers may think.

"The reputation that the Mayo Clinic has is its own proof point," said Mr. Holmes. "But a predominant misperception in many ways is either, 'I'm not dire enough to need them,' or, 'I'm just a regular dude and I can't get access to them.' " The ads, he continued, demonstrate "that anyone can get an appointment at Mayo."

At UPMC, which is based in Pittsburgh and operates 20 hospitals, some current commercials and online-only videos take the unusual approach of de-emphasizing hospital care. The spots, which feature people who are not actors, highlight efforts like a college scholarship program.

The videos are part of a broader campaign, called "Life Changing Medicine," started late last year by Grey New York, part of the Grey Division of the Grey Group, which is owned by WPP.

"When looking at building the brand of the hospital, this organization goes beyond just the hospital and beds," said Dean Walters, a marketing vice president for UPMC. "What consumers don't usually see is the tremendous giveback to the community that UPMC makes."

(Source: The New York Times, 09/13/11)

Friday, September 16, 2011

Making Brands Relevant

Top Marketers Move Beyond Heritage

Chevrolet and Volkswagen are each blessed with a rich brand heritage, but making that tradition fresh and forward looking -- well, that's a challenge for their marketing chiefs.

At Volkswagen of America, for instance, new marketing boss Tim Mahoney plans to use the phrase "That's the power of German engineering" in advertising.

That pitch sounds familiar, so you might be steeling yourself for another round of VW commercials that tout advanced technology and driving performance.

But Mahoney says he can move beyond "cold sheet metal" and tell emotional stories about, say, the performance of VW's vehicles, environmental topics or VW's new plant in Chattanooga, Tenn.

"It's about the human feeling that people have" for the brand, he says. Mahoney joined VW in May from Subaru of America Inc.

Recently, Mahoney and six other leading auto marketers shared their ideas with reporters and editors of Automotive News about brand identity, product advertising, social media and other topics.

At Chevrolet, brand strategists will move beyond the current heritage campaign, "Chevy Runs Deep," with advertising that stresses the brand's technology and products, such as the Volt plug-in hybrid.

"We have a new (Volt) campaign coming out soon that will explain the car well, which people say we haven't done," says Jeff Goodby, co-chairman of Goodby, Silverstein & Partners. "It will bring to the forefront what Chevy is doing, as the bellwether of what the brand can be. But a lot of the power of this car comes from knowing what it does, not from zingy commercials."

Jim Farley, Ford Motor Co.'s marketing chief, is devising new ideas to sell a luxury brand, Lincoln, as the company strives to improve the brand's vehicles.

He plans marketing that emphasizes "elegance and design excellence and excitement of driving."

Another upscale brand, Buick, needs a fresh brand identity. Joel Ewanick, General Motors' global marketing chief, says Cadillac and Buick will play to different luxury customers.

Cadillac is "very distinctive, high-powered, has lots of energy," he said. Buick, on the other hand, is "this very approachable, very human kind of luxury, understated luxury."

Engage consumers
Marketing today is not just a matter of having the right message. That message also needs to be delivered in new ways, reaching consumers where they gather in ways that are appropriate. The marketing chiefs are using social media, such as Facebook and Twitter, as a tool to engage consumers in ways that are more personal than traditional advertising.

For instance, Toyota Motor Sales U.S.A. Inc. asked consumers to vote for a charity that most deserves a free car.

"There are ways to get them engaged in products and the brand so that it's genuine and they want to participate, as opposed to forcing it on people," says Bill Fay, Toyota's group vice president of marketing.

At Ford, Farley likes to start social media campaigns early, well before the car goes on sale. And his spending on social media and other digital marketing is growing.

"Now social media and our investments are right up there with search and other digital banner advertising," he says.

Some of Ford Motor's ideas on using social media arose from what Satish Korde, CEO of Team Detroit, Ford's ad agency, saw in China. Because state TV is managed, bloggers in China are very important, he says.

Farley also is trying to make greater use of smartphones. But finesse is required, he says, because the smartphone is a "personal device," on which advertising can be annoying.

"You have to add value to people's life if you're going to market on there," Farley says. "People want something that's very practical such as "I'm in your showroom. I have a smartphone. I don't want to go home and watch a video on how the inflatable seat belt airbag on the Explorer works. I want to find out right now. I have a smart device, so make it easy for me.'"

Relinquishing control
With social media, marketers should be willing to relinquish some control of the message. Doing so, they say, can boost the credibility of the message.

For example, for the 2011 Buick Regal, consumer comments about the car -- good, bad and otherwise -- were compiled and posted for all to see "in a very open, transparent and honest way," says Rich Stoddart, president of Leo Burnett North America, which handles Buick and GMC.

"It became a way to get the word out about what was happening and let the consumer control it. We got a whole lot of positive response to that in terms of buzz."

Toyota's Fay believes social media can reach young people, who are watching less TV. "We're looking for where they are spending their entertainment time," he says. "Largely, that's on the Internet, through different gaming and Sci-Fi and comics."

At VW, Mahoney will use social media for the Beetle. For the U.S.-made Passat, though, he plans a significant increase in TV advertising.

He says: "If you don't see our advertising this fall, you must be out of the country."

(Source: Automotive News, 09/12/11)

Sales Tip: Uncovering the REAL Reason

As a business owner or sales manager, we constantly hear the same responses from our sales team when they fail to close a deal. Here are some common examples: "The competition bought the business;" "Everything is on hold right now;" "Budgets are frozen;" or the number one response, "Our price was too high."

What's the real reason they turned us down? We'll never really know, unless we ask the right, and sometimes tough, questions up front. The more accurately you identify the issues and the prospect's concerns, the easier it is to qualify the opportunity.

Identifying our prospect's resistance to buy also requires listening between the lines. Not everything said in conversation represents the whole story. Your sales team needs to read body language, eye contact and voice inflection throughout the sales process to identify where their prospect is raising an objection -- even when they don't say it out loud. For example, did they cringe when the salesperson mentioned price, delivery schedule or quantity. When that happened, did the salesperson seize the opportunity to ask direct questions on that issue?

By asking the right questions and "reading" the prospect, salespeople may not always get a "Yes" answer, but at least they'll find out why the prospect said "No' or "Not right now."

Three Years After Crash, Pipe for Used Cars Slams Shut

When Lehman Brothers collapsed three years ago this week, new-car sales did, too.

So, starting this week, the shortage of late-model used cars -- already causing used-vehicle prices to soar -- will worsen dramatically because so few three-year lease cars are returning.

Only 90,000 leased BMWs are returning this year, for example, compared with 146,000 in 2008.

Dealers are having trouble getting enough used cars. And the short supply means used-car prices are bumping up against some new-car prices. For example, kbb.com lists a used 2008 Chevrolet Malibu LTZ with 23,000 miles at $19,950 -- and a new 2012 Hyundai Sonata GLS at $22,450.

And things will stay that way because three years of far-below-trend new-car sales mean tight supplies of used cars until 2014 or later if the economy doesn't pick up. Jonathan Banks, an analyst at NADA Guide, said returns of three-year leases will be especially low starting in the fourth quarter.

The short used-vehicle supply is a problem for dealers because they depend more than ever on used-vehicle volume to make up for low new-vehicle sales.

Compounding the problem: The high values of cars coming off lease now mean more customers will buy their vehicles at the end of the lease term because the purchase price is significantly lower than that of a comparable replacement.

Keeping lease cars
At Mercedes-Benz of South Orlando in Orlando, dealer Dorian Boyland says owners are buying 30 percent of their Mercedes vehicles at the end of leases -- a higher percentage than in the past.

Boyland said he keeps most trade-ins and lease returns for his used lot, but he must also buy at auctions to stock his certified used-vehicle program.

"You cannot live on your lease returns...to be in the certified pre-owned business," says Boyland, owner of the 13-store Boyland Auto Group. "There is not enough off-lease inventory to do that."

Factories once subsidized low-cost lease deals mainly to boost new-vehicle volume. Now they are setting leasing strategies with an eye on eventually feeding dealers and the automakers' own certified used-vehicle programs, said Eric Lyman, director of residual value solutions for ALG, which forecasts future used-vehicle prices and supplies.

"Leasing can be a sales channel for used-vehicle stock that a manufacturer controls," he said.

That has increased significance since automakers ceded control of rental-car returns. Back when automakers, especially the Detroit 3, sold hundreds of thousands of "program cars" to rental companies and bought them back at a loss, dealers got lots of same-make used cars. Today, rental fleets buy fewer vehicles, keep them longer and take the risk of reselling them. So automakers can't funnel them to their dealers.

Shaun Bugbee, vice president of sales and marketing for BMW Group Financial Services, said a strong supply of late-model used vehicles for BMW dealers is key to setting a leasing strategy.

"It's extremely important that our dealers have a good supply of used vehicles," he said.

Limited availability is forcing dealers to sell older, high-mileage vehicles. Publicly held Penske Automotive Group is among dealership groups now selling vehicles that they used to sell at wholesale.

For example, penskecars.com recently listed a 1995 Nissan Pathfinder with 197,292 miles for $1,588 and a 2003 Ford Taurus with 164,945 miles for $2,988.

NADA Guide says used-vehicle supplies will fall 5 percent this year and another 4 percent in 2012. ALG says supplies will hit rock bottom in 2012 and 2013 and won't return to 2008 levels until 2017.

Counting only 3-year-old used, kbb.com sees the bottom 12 to 18 months out.

"We won't bottom out until late 2013," said Greg Russell, national risk manager for Toyota Financial Services, counting up to 5-year-old vehicles. "It may be a decade until we return to the supply of used vehicles we once had."

Less auction action
With dealers keeping almost every used vehicle traded-in, auctions are being hit hard. And dealers also are more willing to buy used vehicles online and outside of the traditional auction channel.

Auction operators are consolidating sites and buying competitors. In June, privately held Manheim, the nation's largest auto auction company, closed half a dozen auctions. It now has 73 North American auction sites.

In August, Jim Hallett, CEO of KAR Auction Services Inc., parent company of No. 2 auction house ADESA Inc., said forecasting future conditions is difficult. ADESA recently agreed to buy online auction competitor Openlane Inc.

In the second quarter, ADESA's vehicle volume fell 14 percent. Nationally, auction volume fell 11 percent in the second quarter, the National Auto Auction Association said.

Larry Dixon of NADA Guide said: "We're very bullish on the used-car market," although he doesn't see prices continuing to rise.

"On the flip side, we don't expect prices to drop off dramatically either," he said.

ALG's Lyman forecasts prices for used vehicles will peak in January and then slowly ease.

"As a recovery starts, the first buyers to come back are focused on used cars, the rational, safe buy," he said. "But as the recovery gets stronger, buyers shift their attention to new cars."

Projected residuals on 3-year-old off-lease vehicles at mainstream brands are 48 percent of retail value so far this year, up from 45 percent in the first eight months of 2008, Lyman said.

But the residual forecasts set by ALG and others are not high enough to suit some carmakers. Eric Ibara, director of residual value consulting at Kelley Blue Book's kbb.com, expects captive finance companies to increase their projected residual values on leased vehicles, thus cutting the payments for consumers.

Essentially, automakers would be betting that those cars will be worth more three years from now than kbb.com thinks they will.

Said Ibara: "As long as they reserve for the difference between their enhanced residual and the more realistic residual, they should be OK."

(Source: Automotive News, 09/12/11)

Auto Price War Looms as Japanese Restock Showrooms

Here comes an auto-incentive war, says Kelley Blue Book's kbb.com.

As Japanese automakers refill their inventory pipelines, they will be offering big incentives to get shoppers back into their showrooms and keep them away from a basketful of credible rivals.

That will trigger incentives by rivals hoping to hang on to gains they've made since the March earthquake and tsunami in Japan wrecked production of cars and components.

Also figuring into the kbb.com forecast: New models from the Japanese brands. Among them: An updated Toyota Camry that will offer a lower-price, higher-power, better-mileage, gas-electric hybrid version; a freshened Honda CR-V, which is the second-best-selling SUV in America, behind only the Ford Escape, according to tallymasters at Autodata.

KBB.com "anticipates strong incentives late in the year in the form of cash and attractive lease offerings. As the Japanese replenish inventory and begin to throw cash on the hood, expect to see the domestics follow suit, setting off an incentive battle."

Bad news for automakers' bottom lines. Great news for auto buyers. Here's more from the kbb.com report:

"Prior to the earthquake, Japanese brands were consistently capturing close to 40% of all United States sales, but since April they have seen their monthly share of sales dwindle to nearly 30%. As Japanese production facilities return to full capacity in the near future, expect to see strong incentive support from these manufacturers as they aggressively try to recapture lost market share.

"While (South Korean brands) Hyundai and Kia sales are strong, neither currently has high-enough inventory levels to support incentive programs big enough to compete with the Japanese brands. Neither of the Korean brands have the production capacity to satisfy current demand for their products as evidenced by their ultra-lean 19-day supply of vehicles currently available to consumers.

"Under those conditions, consumers in the market for a new vehicle will likely find plenty of attractive deals in the latter part of the fourth quarter."

"While the earthquake in Japan halted sales recovery earlier this year, the anticipated push by the Japanese to recapture market share will likely help sales later this year," said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book. "Since May, Japanese brands have given up considerable market share to both domestic and Korean manufacturers."

(Source: USA Today, 09/12/11)

Friday, September 9, 2011

August sales had every reason to fizzle … but didn't

Surprise!

Sales of new cars and light trucks did not go to hell in a hand basket in August, as many had expected. There was every reason for sales to fizzle, but they didn't. Sales weren't great, but they were better than last year's and better than July's.

Remember early August? Congress fiddled and fussed for a month before passing a debt extension measure that pleased nobody. Standard and Poor's shook its statistical head in disgust and reduced the United States' debt rating.

Wall Street reacted in true Wall Street fashion. It panicked. It flittered and fluttered -- down, up, sideways, up, sideways, down. Like Washington Irving's headless horseman, Wall Street rode off in all directions.

Bankers covered their eyes, their ears, their mouths -- "see no evil, hear no evil …" -- they sat on their meager or major piles of pennies and dollars and brushed aside any businessperson who was brash enough to think of a loan for expansion. Americans lost some $3 trillion of their personal wealth in a couple days. IRA accounts took an $18 billion drubbing.

Better than July

So new-vehicle sales should have collapsed. Instead, at 1,072,379, they were 8 percent better than last year's. That's hardly whoopee material. Sales in August 2010 were frightful.

More important, August sales snapped a four-month string of month-to-month declines. Deliveries were up 1.2 percent over July. Slim pickin's … but every little bit helps.

Automotive News has predicted 12.6 million sales this year. It would require an average of 1,033,704 in each of the remaining four months. That would be 5.3 percent higher than last year's September-December average. For the first eight months of 2011, sales were up 11 percent.

The industry should be able to sustain its current rate of sales. A full-year total of 12.6 million would be 8.6 percent better that last year's anemic 11.6 million.

Perspective on those numbers cuts two ways. That 11.6 million was a heckuva lot better than the recession low of 10.4 million in 2010. And 12.6 million would be eons short of the average of 16.9 million a year for 1999-2007, the industry's Golden Years.

After topping 13 million in February, March and April, the seasonally adjusted annual rate of sales was 12.1 million in August.

Detroit gains share


The Detroit 3 had 48.5 percent of their home market in August with each company reporting a gain. The share was up 4.2 percentage points from last year. The improvement reflected stronger sales by the domestic makers plus the losses sustained by Japan-based manufacturers as a result of the earthquake and tsunami in northern Japan last March.

The Japanese are returning to full production, but it will be a few months before dealer stocks are back to normal.

In August, General Motors reported a gain of 1.8 points in make share; Ford Motor was up half a point, and Chrysler Group added 1.9 points. On the other side of the ledger, Toyota Motor Sales (Toyota-Scion-Lexus) was down 2.8 percentage points and American Honda (Honda-Acura) lost 3.2 points.

Ford division topped Chevrolet by 14,000 sales in August and extended its lead to 160,000 for eight months. The next five spots on the eight-month chart are occupied by import-badged brands: Toyota, Honda, Nissan, Hyundai and Kia. Rounding out the Top 10 are Dodge, Jeep and GMC.

John K. Teahen Jr. - Automotive News

Salespeople Need to be Great at Closing

Actually, this is true, but not in the sense most people think.

A sale is not a sale until it is brought to a conclusion or closed. Good salespeople know that. Successful salespeople know that closing the sale is not a tactic to trick or maneuver a buyer into a decision. When buyers feel manipulated, they may later cancel the order they felt pressured to place.

Great salespeople know that the best conclusion is getting the buyer to say yes, then following through to see that the buyer is satisfied enough to continue to order again, or to make a referral to someone else who'll buy.

Selling is just finding out what the person wants -- that's the first step. The second step is to help them get it. That's closing the sale -- satisfying the buyer's want.

To close a sale a salesperson must first invest the time to understand exactly what the buyer wants. Second, the salesperson must show how his or her product or service meets that want. If the salesperson really understands the buyer and makes recommendations based on the want, the buyer will close himself or herself as soon as the connection between the want and the product or service is understood.

The close simply becomes pointing out the desired outcome to the buyer. A close is not trying to wrestle with the buyer and pressure him or her into making a purchase he or she may regret later.

Dual TV/Radio Ad Campaigns Up Reach

Results from a TV-radio station test indicate that jointly selling radio and TV advertising together in simultaneous campaigns can increase audience reach -- and deliver near prime-time viewership levels -- all with the help of a single-source measuring system.

Arbitron Inc. and Entravision Communications, a Spanish-language media company that owns TV and radio stations, said a test with Entravision's Denver, Colo. stations showed improved audience reach. It also includes out-of-home viewing, thanks to Arbitron's portable people meter (PPM) ratings service.

The test discovered -- as other studies have shown -- that usage patterns of television and radio complement each other. From 6 a.m. to 4 p.m., radio delivers 70% to 80% of the combined television/radio audience; television delivers 80% of the audience from 7 p.m. to midnight. Each platform delivers a distinct and separate consumer.

All this offers advertisers gains by using a single-source measuring system such as Arbitron's.

Jeff Liberman, president of the radio division of Entravision, stated: "This single-source, cross-platform PPM pilot project reaffirms what we've been proving to our advertisers for years -- utilizing both radio and television is an efficient and effective way to increase reach over a radio-only or television-only advertising schedule."

(Source: Media Daily News, 08/16/11)

Dallas Morning News, LA Times Layoffs

There is no rest for the weary in the newspaper business, and precious little job security, either. This week brought a fresh round of layoffs affecting newsroom staffers at the Dallas Morning News, owned by A.H. Belo, and the Tribune Co.'s Los Angeles Times.

Both newspapers have already seen several waves of layoffs over the last couple of years, reflecting the broader trend in the newspaper business, which is enduring steep revenue declines.
 
The Dallas Morning News laid off 38 newsroom staffers, including a number of copy editors, deputy editors, reporters and two photographers, according to "DMNcuts," a blog devoted to tracking layoffs at the newspaper. This is the third round of layoffs at the newspaper since 2008, following the elimination of 40 positions in September 2008 and 200 positions in January 2009, although not all in the newsroom.
 
DMN owner A.H. Belo has cut its workforce from 3,400 full-time employees at the end of 2007 to 2,200 full-time employees at the end of 2010. The most recent round of cuts will lower the total to about 2,162, down 36.4% from the 2007 figure.
 
The Tribune Co. has laid off over 30 employees from its operations department, with staffers getting word of the cuts last Friday. This round of cuts follows several earlier waves that trimmed 150 positions in February 2008, 250 in July 2008, 75 in October 2008, 300 in January 2009, 80 in January 2010, and 20 in June-July 2011.
 
Tribune Co. has trimmed its workforce from around 23,800 in 2004 to approximately 14,000 currently, for an overall reduction of 41.2% over this period.
 
Although Tribune Co. has not released official financial results since it went private as an employee-owned company in 2007, in 2010 total revenues probably came to around $3.18 billion, according to court documents related to Tribune's Chapter 11 bankruptcy proceedings -- down 44.5% from $5.73 billion in 2004.
 
In the second quarter of 2011, A.H. Belo's total revenues came to $114.5 million, down 40.4% from $192.1 million in the second quarter of 2007.

Many Retail Industry Analysts Predict a Good Holiday Season

As retailers head into the all-important holiday season, they have reason to be optimistic: Months of solid sales are widely expected to carry through to the end of the year, when shoppers are most likely to open their wallets.

Positive holiday performance could have a far-reaching effect. With consumer spending accounting for about 70% of the nation's economic activity, robust sales could breathe life into what has been a sluggish year so far for the broader economy.

Many industry analysts are predicting a good -- but not great -- holiday season.

The chief economist for the International Council of Shopping Centers, a major retail trade group, estimates that sales will rise 3.5% for November and December combined. Last year, sales during the same period beat expectations, rising 4.4% in what industry analysts called the best holiday results since 2006.

"It's a time when we do the greatest amount of our business, but it is also a season that defines retailers," said Jim Sluzewski, a spokesman at Macy's Inc., which last year saw 28% of its sales in the last two months of the year.

After the recession-plagued 2008 holiday season, the worst in more than four decades, retailers say they've become much more savvy about confronting economic challenges. They're not ordering too much inventory and they're making sure that prices are budget-friendly.

"We are well prepared," Sluzewski said. "Our business is very flexible and we have a lot of ways to adjust our business no matter what happens."

Retailers, which ring up as much 40% of their annual sales during the last two months of the year, also are relying on a tried-and-true rule: Consumers love to splurge when the holidays roll around.

Shopper Deven Ronnquist, 63, was already keeping an eye out for holiday gifts for her family on a trip to the Glendale Galleria in California recently, setting a loose gift budget of $3,000.

"We have a tradition of spending way too much -- we just have a ring of presents around the tree," the La Crescenta administrative assistant said. "I'm going to work hard to pay down some of my credit cards in the meantime."

The start of holiday shopping comes amid skittishness over the volatile stock market, stubbornly high unemployment and tight credit that has constrained business growth. Strong holiday sales could provide much-needed momentum, said Michael Dart, a retail strategist at consulting firm Kurt Salmon.

"If we have a solid holiday season and there's a sense that the consumer is resilient...I think you get more bullish on hiring and it could start to move the employment rate," he said. "It could ease a lot of the anxiety that permeates every business and permeates the consumer psyche right now."

Retail analysts say the key segment to watch will be middle-income consumers. Wealthy Americans have spent freely on luxuries such as designer handbags, jewelry and watches, and lower-income shoppers seeking bargains have led to steady sales increases at discount chains, dollar stores and warehouse clubs.

Analysts say the back-to-school selling season, which often provides a hint of how the holidays will fare, has so far produced solid results. Despite stock market turmoil and Hurricane Irene, sales at major chain stores rose 4.4% year over year in August, the key month of the period, according to Thomson Reuters' tally of 23 retailers.

"We've been seeing consistent spending occurring even in discretionary sectors," said Michael McNamara, vice president of research and analysis at data service MasterCard Advisors SpendingPulse. "This is just a consistent thing that has not correlated with the deterioration in consumer confidence. It's been an interesting phenomenon in 2011."

Retailers are still keeping their biggest plans under wraps, but they have been busy preparing for the holidays all year: ordering merchandise, designing festive window displays and special holiday catalogs, and planning Black Friday promotions.

"Target begins preparing for the holiday season right after Christmas," said Cary Strouse, senior vice president of stores for Target Corp., which recently announced four exclusive designer partnerships that will be in stores in time for the holidays, including a fashion line with Gwen Stefani.

Wal-Mart Stores Inc., the nation's largest retailer, will be adding to its holiday selection this year, including stocking more Christmas villages and outdoor lawn decor. The company said its focus would be on offering the lowest prices to its shoppers.

"We know our customers are feeling budget strains, and we are committed to helping ease that strain," said Tara Raddohl, a Wal-Mart spokeswoman.

Jodi Odell, 46, said she intends to spend big for the holidays even though she has been trimming expenses because business has been slow at the architecture and design firm she and her husband run.

"My husband and I have already talked about it," the Encino resident said recently as she shopped at the Americana at Brand in Glendale. "We plan it out in September. The kids give me their lists early and I will have it all knocked out by November. It's therapeutic when nothing else is going well."

Although Odell won't be cutting back on gifts for her four children, she and her husband, Otis, will only do stockings for each other this year, she said.

Still, she's hoping for a little blue box.

"Tiffany," she said, "fits very well in a stocking."

(Source: Los Angeles Times, 09/05/11)

Know Why You Are Calling

Sounds obvious, but we have all been guilty of making a call just because it was on the list, having long since forgotten why we were calling. Or worse, never calling at all because you aren't sure of your reason.

Make it a habit to keep a note with each person's contact information about where you left off in your last contact and what is the appropriate next step.

The most productive calls are about something you know or suppose the other person wants from you, rather than something you want from them.

Millennials High on Digital and Friends

According to the "American Millennials" study from Barkley, with Service Management Group and The Boston Consulting Group, Millennials, compared to other generations, reported greater awareness of newer, youth-oriented cause marketing campaigns and greater exposure to campaigns through social media, while Non-Millennials rely on newspaper and direct mail.

Jeff Fromm, senior vice president, Barkley, says "... since the Millennials generation is larger than the Baby Boomers... and three times bigger than Generation X... understanding of Millennials' needs, tastes and behaviors will clearly shape... future business decisions... "

Highlights from the Study:

  • Millennials watch significantly less TV than Non-Millennials, says the report, watching 20-plus hours/week (26% versus 49%). When not watching live TV, Millennials are much more likely to watch shows mainly on their laptops (42% versus 18%), with DVR (40% versus 36%), or On-Demand (26% versus 18%)
  • 70% of Millennials reported feeling more excited when their friends agreed with them about where to shop, eat and play. Only 48% of older adults were as heavily influenced by their friends and colleagues. Additionally, more Millennials than Non-Millennials reported using a mobile device while shopping to research products (50% versus 21%)
  • The majority of all respondents shop alone (60% Millennials, 69% Non- Millennials). However, Millennials report more shopping than Non-Millennials with family unit, spouse and children (13% versus 6%) and with adult friends (4% versus 2%)
  • 70% of Millennials want to visit every continent in their lifetime. Fewer than half of older adults report that goal
  • Millennials accounted for 18% of their monthly restaurant spend in the fast-casual format, compared to only 13% for Non-Millennials. Additionally, Millennials crave snacking opportunities, and are more than twice as likely as older people to seek them out mid-morning, mid-afternoon and late at night
  • Millennials demand more knowledgeable and fashionable sales associates (29% versus 19%) while Non-Millennials value sales associates who know to apply discounts and offer promotions (65% versus 51%)
And, additional study information reported by EMarketer, shows that a third of Millennials like brands more if they use social media, nearly double the percentage of older adults who said the same. In addition, over 30% of Millennials thought it was annoying for brands to be on sites like Facebook and Twitter, making this group less tolerant of social media marketing.

23.5% of Millennials interacted with content from a brand's Facebook page at least once a daily, vs. 17% of older adults who did the same. Millennials were also 4.4 percentage points more likely to interact with brand content between one and six times per week. Overall older adults were nearly twice as likely never to engage with brand content on Facebook.

(Source: The Center For Media Research, 09/7/11)

Adult Use of Social Media Soars

Sixty-five percent of all U.S. adults now use social-networking sites, up from 61% a year ago and just 5% in 2005, reports Pew Research Center. The findings are based on telephone interviews conducted in April and May by Princeton Survey Research Associates International.

Most of the growth over the past year came from Americans over the age of 30, with seniors accounting for the bulk of it. One-third of adults ages 65 and older say they now use social-networking sites, compared with 26% who said a year ago. Still, young folks between 18 and 29 years old remain the overall biggest group tapping social networks today, accounting for 83% of the total.

On a typical day, 43% of U.S. adults said they visit sites like Facebook and Twitter, up from 38% a year ago, the survey finds. Among just Internet users ages 50 to 64, social-networking usage on a typical day increased to 32% from 20%. Compared with other online activities, respondents overall said they only use email and search engines more frequently than social networks.

(Source: The Wall Street Journal, 08/31/11)

Interactive Marketing Spending to Hit $76.6 Billion in 2016

A new report by Forrester Research forecasts that U.S. interactive marketing spending will reach $76.6 billion by 2016, equal to TV spending this year and comprising 35% of all advertising. That's a big jump considering that this year interactive will comprise 19% of all spending, according to Forrester.

Search and display will continue to be the biggest pieces of the interactive spending pie, comprising 44% and 36%, respectively, in 2016, though search will have lost share from 55% in 2011. Mobile paid advertising and search will experience astronomic growth and are surpassing email and social this year, according to the report.

"This is the first year we saw growth due to interactive tools really gaining legitimacy in the mix," said Forrester analyst Shar VanBoskirk, noting that search, display and email have become well-established lines in marketers' budgets.

The report, "U.S. Interactive Marketing Forecast, 2011 to 2016," projects the overall compound annual growth rate of interactive marketing spending at 17%, but the fastest-growing category is mobile at 38%, set to reach $8.2 billion in 2016. It attributes the surge to a push toward creating more targeted, dynamic mobile ads instead of so much repurposing of online ads; the rise of mobile commerce; and experimentation with new ad formats for tablets.

Search marketing will continue to be the biggest piece of the interactive spending pie -- rising from $18.8 billion to $33.3 billion between 2011 and 2016 -- but will actually lose share of all interactive spending in the same period, falling from 55% to 44%. Ms. VanBoskirk said the rise of biddable display media, the growth of mobile and investment in social networks and alternative search networks such as Facebook, YouTube and ratings and reviews sites such as Yelp will be factors in the drop-off of search's interactive market share.

Investment in display advertising will rise from $10.9 billion in 2011 to $27.6 billion in 2016, driven by greater than 20% compound annual growth rates in rich media, text listings and online video. The rise of biddable display media and improved online ad management tools are cited as key factors.

Email marketing is projected to have a growth rate of 10%, bringing it to $2.5 billion in 2016, but the total spending is kept down because of its low cost of reaching 1,000 consumers, or CPM. And widespread adoption of social media will continue, reflected in a projected 26% growth rate, but total spending will reach only $5 billion in 2016 as it's also an inexpensive tool. (The report notes that listening platforms cost $5,000 to $10,000 per month, but a paid search budget can run up to $500,000 to $3 million per month.)

The report also predicts the rise of subsidized hardware from media giants such as Google and Yahoo, which would look to embed ads into the displays of smartphones, tablets and e-readers in return, creating the possibility of enhanced user targeting for advertisers. It also foresees the onset of daily deals fatigue.

"That will create consolidation and thin out the number of daily deal offers that are available," Ms. VanBoskirk said.

(Source: Advertising Age, 08/25/11)

The Myth of "Shovel Ready" Jobs

While government and the media promised that the American Recovery and Reinvestment Act (ARRA), or stimulus package, would create "shovel ready" projects that would almost immediately create new jobs and develop the nation's infrastructure, the reality on the ground after the bill was passed did not match the political rhetoric surrounding it.  According to a report by researchers at the Mercatus Center, several bureaucratic entanglements created inconsistent measurements of the benefits of ARRA on job creation.

One major issue was with the way the jobs were being calculated.  For example, because employers thought about questions regarding job creation in different ways, their responses varied dramatically.  Additionally, there was a lack of consistency in the way questions were asked and the way value was measured across the federal government and throughout time.

Some of the report's findings include:
  • Some reported that the government formula counted every 520 hours of work within a quarter as one stimulus-funded-job. However, this formula does not ask whether the worker quit another job to take the ARRA job or whether the job would have existed but for ARRA. Thus, this is not an opportunity cost calculation -- it is a mere arithmetic sum.
  • Some respondents were at least initially told by federal officials to take the amount of stimulus funding they received and divide it by a figure (in one case, $92,000 per job) to determine the number of jobs their funds created. This method was job creation by assumption. Additionally, the methods by which ARRA recipients were to calculate and report jobs saved and created changed over time.
  • Other firms were given few if any instructions on how to calculate the number of jobs they saved or created. Instead they based the number they reported to the federal government on historical trends or simple head counts. Some respondents included as jobs created positions that existed for a matter of days or weeks, such as jobs for plumbers or painters.
The result was unclear and distorted reporting of how many jobs were actually created.  Confusion with government reporting and expectations means that the high number of "shovel ready" jobs was a myth.

Source: Garett Jones and Daniel M. Rothschild, "No Such Thing as Shovel Ready: The Supply Side of the Recovery Act," Mercatus Center, September 2011.

Debt Hobbles Older Americans

Most people used to pay off their debts before retiring.  But as wages have barely kept up with rising prices over the past 35 years Americans have pushed debt higher, living beyond their means.  Now, people are postponing retirement, cutting living standards or both, says the Wall Street Journal.

All kinds of debt held by this age group have risen, but the big problem is mortgages.
  • Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20 percent had secondary mortgages, according to research group Strategic Business Insights' MacroMonitor.
  • That was up from just 22 percent and 12 percent, respectively, in 1994.
Debt isn't the only issue clouding retirement prospects.  People aren't saving enough either.
  • As calculated in a Wall Street Journal article earlier this year, the typical American household nearing retirement with a 401(k) retirement account has less than one-quarter of what it needs in that account to maintain its standard of living in retirement.
  • Four out of five households with heads in their early 60s and with mortgages had too little savings in 2008 to pay off debts without dipping into retirement accounts, according to Boston College economist Anthony Webb.
Debt levels of older Americans have been rising for more than two decades.  Indeed, of households with heads aged 62 through 69 and with mortgages, the median amount of mortgage debt hit $71,000 in 2007, five times the 1987 inflation-adjusted median, according to a study by William Apgar, then at Harvard's Joint Center for Housing Studies.

Source: E.S. Browning, "Debt Hobbles Older Americans," September 7, 2011.

Wednesday, September 7, 2011

Saab files for court protection from creditors

Saab sought protection from creditors in a Swedish district court, the automaker's owner, Swedish Automobile, said today.

Saab is seeking court approval for a voluntary reorganization to secure short-term stability while it waits for funding from Chinese investors Pang Da and Zhejiang Youngman, Swedish Automobile said in a statement.

Victor Muller, CEO of both Saab and Swedish Automobile, said in a statement: "We have concluded that a voluntary reorganization process will provide us with the necessary time, protection and stabilization of the business, allowing salary payments to be made, short-term funding to be obtained and an orderly restart of production to be prepared."

Muller remains optimistic about Saab's future. "While the voluntary reorganization process will no doubt present us with a number of tough issues and decisions, I believe that Saab Automobile will emerge stronger from this process," he said.

Muller added that "the potential for Saab Automobile as a viable, independent premium car manufacturer is there, as shown by the rejuvenation of our product portfolio, approximately 11,000 orders and the conditional long-term funding already in place through the binding agreements with Pang Da and Youngman that will give us access to the Chinese market."

Muller has agreed to sell a combined 53.9 percent stake in Saab to Chinese auto distributor Pang Da and automaker Zhejiang Youngman for 245 million euros ($351 million). The deal is awating approval from the Chinese authorities.

Saab's subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB are part of the reorganization filing submitted to the Vanersborg court at 9 am local time. But other units, including Saab Great Britain, Saab Cars North America and Saab Parts AB, are excluded.

Muller said Pang Da and Youngman both support the reorganization.

"Swan and Saab Automobile are of the opinion that, considering Saab Automobile's current limited financial resources, a voluntary reorganization will entail the best preconditions for using existing resources in the most efficient way," a Swedish Automobile statement said.

Self managed reorganization
If the court approves, the reorganization will be a self-managed, legal process under Swedish law headed by an independent administrator appointed by the court who will work closely with the Saab Automobile management team, the statement added.

If the court approves Saab's filing, the reorganization will be for three months, although the court may later extend this period to a maximum of twelve months.

"Swan and Saab Automobile are confident that they will secure additional short-term funding for the reorganization period and are currently in negotiations with several parties about obtaining such funding," the statement said.

As part of the process, Saab has formulated a reorganization plan aimed at lowering its cost-base and creating a viable, competitive and independent organization. The plan will be presented to creditors in more detail within three weeks, although this period could be extended by the court, Swedish Automobile said.
It said it has proposed that the court appoints Swedish lawyer Guy Lofalk as administrator, who also was the administrator in the 2009 Saab reorganization after then-owner General Motors Co. withdrew support for the brand.

Muller and the Saab management team will cooperate closely with the administrator to execute the reorganization plan, the statement said.

GM sold Saab to Spyker Cars in 2010. Spyker changed its name to Swedish Automobile earlier this year.
Saab suspended production in late March amid a cash crunch. After brief restarts, the factory in Trollhaettan, Sweden, has been halted since early June.

Saab delayed paying wages last week, the third consecutive postponement in as many months, prompting labor leaders to start a process that may lead them to seek a bankruptcy declaration.

Ally Financial reaction 
Meanwhile, U.S. auto and mortgage lender Ally Financial Inc. -- the former GMAC Financial Services financier reorganized by the U.S. government -- said today that it does not expect any material financial impact due to the reorganization of ailing Swedish car maker Saab Automobile.

Ally Financial's Swedish subsidiary, GMAC Financial Services AB, is a creditor of Saab Automobile AB and as such is taking the appropriate steps to protect Ally's interests during Saab's reorganization, the company said.

Ally is the preferred finance provider for Saab vehicles in the U.S. and Europe and offers wholesale financing, consumer financing, insurance products to Saab dealers and consumers.

Ally said it will continue to provide automotive financing products and services to creditworthy Saab dealers and consumers during the reorganization process.
 
Paul McVeigh - Automotive News (Bloomberg and Reuters contributed to this report)

Friday, September 2, 2011

Boomers Will Be Spending Billions to Counter Aging

Baby boomers heading into what used to be called retirement age are providing a 70 million-member strong market for legions of companies, entrepreneurs and cosmetic surgeons eager to capitalize on their "forever young" mindset, whether it's through wrinkle creams, face-lifts or workout regimens.

It adds up to potential bonanza. The market research firm Global Industry Analysts projects that a boomer-fueled consumer base, "seeking to keep the dreaded signs of aging at bay," will push the U.S. market for anti-aging products from about $80 billion now to more than $114 billion by 2015.

The boomers, who grew up in a culture glamorizing youth, face an array of choices as to whether and how to be a part of that market.

Anti-aging enthusiasts contend that life spans can be prolonged through interventions such as hormone replacement therapy and dietary supplements. Critics, including much of the medical establishment, say many anti-aging interventions are ineffective or harmful.

From mainstream organizations such as the National Institute on Aging, the general advice is to be a skeptical consumer on guard for possible scams involving purported anti-aging products.

"Our culture places great value on staying young, but aging is normal," the institute says. "Despite claims about pills or treatments that lead to endless youth, no treatments have been proven to slow or reverse the aging process."

Its advice for aging well is basic: Eat a healthy diet, exercise regularly, don't smoke.

"If someone is promising you today that you can slow, stop or reverse aging, they're likely trying hard to separate you from your money," said S. Jay Olshansky, a professor at the University of Illinois-Chicago's School of Public Health who has written extensively about aging.

"It's always the same message: 'Aging is your fault and we've got the cure,'" Olshansky said. "Invest in yourself, in the simple things we know work. Get a good pair of running or walking shoes and a health club membership, and eat more fruits and vegetables."

But such advice hasn't curtailed the demand for anti-aging products, including many with hefty price tags that aren't covered by health insurance. These include cosmetic surgery procedures at $10,000 or more, human growth hormone treatments at $15,000 per year and a skin-care product called Peau Magnifique that costs $1,500 for a 28-day supply.

Another challenge for consumers is that many dietary supplements and cosmetics, unlike prescription drugs and over-the-counter medicines, aren't required to undergo government testing or review before they are marketed. The Food and Drug Administration and the Federal Trade Commission do crack down at times on egregiously false anti-aging claims, but generally there's little protection for people who don't get hoped-for results.

Mary Engle, director of the FTC's division of advertising practices, said her agency focuses on the cases that could cause serious harm, such as bogus cancer treatments that might prompt an ill person to forgo proper care.

She said the agency lacks the resources to crack down comprehensively on ads with exaggerated claims that exploit customers' hopes for better looks or more energy.

"Often it doesn't rise to the level of fraud," she said. "There are so many problematic ads out there and we really have to pick and choose what we focus on."

In contrast to the caution of mainstream organizations, there are many vocal promoters of anti-aging products and procedures, including the American Academy of Anti-Aging Medicine. It hosts annual conferences in the U.S. and abroad, and claims 22,000 members, mostly physicians.

In its mission statement, the academy says the disabilities associated with normal aging "are caused by physiological dysfunction which in many cases are ameliorable to medical treatment, such that the human life span can be increased."

One of the academy's co-founders is Robert Goldman, a doctor of osteopathic medicine. He contends that much of the resistance to the anti-aging movement comes from sectors of the health and pharmaceutical industries that feel threatened financially -- for example by the surging use of over-the-counter nutritional supplements.

"It all has to do with who's controlling the dollars," he said.

Though many anti-aging interventions are expensive, Goldman said people on tight budgets still can take useful steps such as drinking purified water, taking vitamins and using sun screen.

"People should be healthy and strong well into 100 to 120 years of age," Goldman says in a biographical video. "That's what's really exciting -- to live in a time period when the impossible is truly possible."

Olshansky, who over the years has been among Goldman's harshest critics, believes there will be scientific breakthroughs eventually, perhaps based on studies of the genes of long-lived people, that will help slow the rate of aging.

In the meantime, Olshansky says, "I understand the need for personal freedom, the freedom to make bad decisions."

A look at some of the major sectors in the anti-aging industry:

Hormone Replacement Therapy

Numerous companies and clinics promote hormone replacement drugs, including testosterone for men and custom-mixed "bioidentical" hormones for women, as a way to slow the aging process.

Many consumers have seen ads featuring muscle-bound Dr. Jeffry Life, now 72. He used testosterone and human growth hormone in his own bodybuilding regimen and recommends hormonal therapy for some of the patients patronizing his age-management practice in Las Vegas.

The FDA has approved hormone replacement drugs for some specific purposes related to diseases and deficiencies, but not to combat aging.

"Finding a 'fountain of youth' is a captivating story," says the National Institute on Aging. "The truth is that, to date, no research has shown that hormone replacement drugs add years to life or prevent age-related frailty."

Dr. Evan Hadley, director of the institute's Division of Geriatrics, says hormone replacement drugs can have harmful side effects. He said there is a need for more research, such as an institute study of testosterone therapy, to identify the potential risks and benefits.

"There is indeed potential that people can be healthier in old age," Hadley said. "But it still requires evidence about what's going to help and what's not."

Hormone drugs can be expensive. HGH shots can cost more than $15,000 a year, according to the institute. A hormone-based dietary supplement known as DHEA (dehydroepiandrosterone), a precursor of estrogen and testosterone, is marketed online for $12.95 per capsule by Utah-based NutraScriptives.

Some proponents say over-the-counter DHEA supplements can improve energy and strength, boost immunity and decrease fat. The institute says there's no conclusive scientific evidence of any such benefits.

Life says he's a staunch advocate of exercise and healthy eating, but insists that hormone replacement therapy, under a doctor's supervision, is a crucial addition for some men, and that includes him.

"There's no way I could look and feel the way I do if all I had done the last 13 years was exercise and eat right," he said. "Even if you do everything right, if you have a deficiency in testosterone, you will lose the fight."

Life acknowledged that the cost of testosterone replacement, probably more than $5,000 year and not covered by insurance, could be daunting for some. But he contends the investment pays off in more vitality.

"It's hard to put a price on good health," he says.

Cosmetic Surgery

According to the American Society of Plastic Surgeons, there were 13.1 million cosmetic plastic surgery procedures performed in the U.S. in 2010, a 77 percent increase over a decade.

One notable trend is increased preference for less invasive procedures that enable patients to get back to work and social settings without a long leave of absence.

The most popular of these is treatment with the wrinkle-smoothing drugs Botox or Dysport. They account for 5.4 million procedures, averaging about $400 per treatment. Other popular noninvasive procedures include soft-tissue facial fillers, chemical peels and microdermabrasion.

More invasive procedures come at a higher price. Face-lifts can run from $6,000 to $15,000; the plastic surgeons' academy reported performing 112,000 of them in 2010.

Dr. Peter Schmid, who runs a cosmetic surgery practice in Longmont, Colo., says his field is flourishing because of evolving attitudes among appearance-conscious boomers. A recent Associated Press-LifeGoesStrong.com poll found that 1 in 5 boomers either have had or would consider cosmetic surgery.

"Cosmetic surgery has become table talk at home. There's a lot of satisfaction and acceptance from people who've had it, friend to friend, word of mouth," Schmid said.

While the noninvasive procedures cost less than a face-lift, the effects won't last as long and repeat treatments might be needed several times a year, Schmid said. He advised patients to calculate carefully which type of procedure makes the most sense for them financially.

Schmid, who is on the board of the American Academy of Cosmetic Surgery, cautioned against any rush to try new procedures that get a burst of publicity.

"There's a certain vulnerability because everybody's looking for that quick fix, that fountain of youth," he said. "Many people will shop emotionally instead of objectively, before something has been tried and tested."

Some critics of the anti-aging industry are supportive of cosmetic surgery, provided the patient can comfortably afford it.

Professor Robert Binstock, an expert on aging at Case Western Reserve University's School of Medicine, told of a recently widowed friend whose spirits lifted after getting the bags under her eyes removed. "If you feel better looking in the mirror in the morning, fine," he said. "I have no objection to people being narcissistic."

Skin Care

One of the industry's booming sectors is anti-aging skin care, featuring wrinkle creams and facial serums. By some estimates, the U.S. market for cosmeceutical products -- cosmetics with medicine-based ingredients -- is approaching $20 billion a year.

The FDA, which oversees cosmetic safety and labeling, doesn't require manufacturers to prove the effectiveness of cosmetic products before they go on sale, and many ads make claims which critics say are exaggerated or unverifiable. The American Academy of Dermatology recommends consulting a dermatologist on what skin care products have been proved safe and effective in human studies.

Consumer Reports has ventured into the realm of anti-aging cosmetics several times recently, using high-tech optical devices and other scientific methods to assess the products.

Last year, the magazine tested nine face serums, available at drug stores for prices ranging from $20 to $65 and all claiming to reduce wrinkles.

"After six weeks of use, the effectiveness of even the best products was limited and varied from subject to subject," according to the review. "When we did see wrinkle reductions, they were at best slight, and they fell short of the miracles that manufacturers seemed to imply on product labels."

Earlier, the magazine tested wrinkle creams.

"Even the best performers reduced the average depth of wrinkles by less than 10 percent, a magnitude of change that was, alas, barely visible to the naked eye," it said.

Its top-rated product, Olay Regenerist, cost about $19 at the time of the testing. La Prairie Cellular, the most expensive at $335, was rated among the least effective.

Similar conclusions were reached in testing 16 over-the-counter eye creams.

"Even among the best-performing products, wrinkle reduction around the eyes was generally pretty subtle," the magazine said. "After six weeks of daily use, none came close to eliminating wrinkles."

It said the most expensive, Perricone MD at $95 a jar, was no better than cheaper drugstore brands.

One recent development in anti-aging skin care is the use of stem cell technology. ReVive's expensive Peau Magnifique is among the new products, claiming to "recruit adult stem cells into brand new stem cells."

Neither Consumer Reports nor the FDA has conducted any specific assessment of Peau Magnifique's effectiveness. On a Web site called Makeupalley.com, some customer reviews raved about it; others trashed it as a waste of money.

(Source: USA Today, 08/22/11)