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Billy Mays-Death of a true salesman

The passing of Michael Jackson had overshadowed all other news but I thought we should not miss out celebrating Billy Mays. I find Arthur Miller's play somewhat unkind to the sales profession and thus the "true" for Billy Mays. Billy Mays was a true salesman and a great pitchman on TV.

What makes personal selling so effective is that when you speak directly with a prospect,face to face and one to one, it has the biggest impact on closing the sale.To do so via television is very difficult and Billy Mays was very good at it . You wanted to believe him and put out the $20 or so that he suggested you spend to acquire a product that sure looked useful.He did the "convincing that it is useful" really well. To do so for a mass TV audience is a rare and remarkable skill.  My guess is that Billy Mays was not only able to sell the products he pitched but the products "stayed" sold. Probably customers who bought Billy Mays pitches returned less product as he upped the satisfaction levels right at the sell stage.

Here is a clip from the Tonight Show to learn enthusiasm from Billy Mays:

MBA lessons from GM Bankruptcy

MBA classrooms across the world will reverberate with lessons from the GM Bankruptcy for future MBA's. Strangely though,since MBA's starting working for GM  in the 1970's the lessons were already there!  For example, MBA's  in the seventies knew that moving with changing customer needs was  the simplest way to win. But fuel efficiency and smaller cars was a "no-no" for Detroit. Important stakeholders like the Unions clung on to expensive health and retirement as the sun set on US auto as the world literally turned and changed.

As an industry old timer told me, it was plain arrogance, complacency and the unwillingness of managers to speak up,in time. It was easier to deride the Japanese automakers ( ha imports) rather than emulate them, at least in part.

On the labor front the UAW is reduced to   a shadow of its old belligerent self.  This probably gives no pleasure to retired auto managers who were given such a hard time when they wanted to change things when there still was time.

This blog has been talking about the US auto industry for some years but academics have been writing about key problems for decades. US Auto is forever changed - the question is -will managers really learn in other industries?

"Animal Spirits" by Robert Shiller- time to look across disciplines

 "Animal Spirits"  is a new book by Robert Shiller and George Akerlof. It's sort of interesting that Shiller  an Economist, refers to Psychology pretty often in this video from McKinsey and also throws in Sociology and Political Science in the context of the current "fear" among both businesses and customers. It's sort of interesting that Schiller does not talk about business disciplines at all in the video but I hope does talk about in the book. For example ,Marketing ( an academic discipline that explicitly recognizes economics and psychology as "mother" disciplines) , Management (which draws a great deal from Sociology and informs Operations that studies Supply Chain) and Innovation (which is a lot about "Spirit" the human kind!). The fact is that Economics is a dominant discipline and has an annual Nobel Prize while no other liberal arts or business disipline does. Globally economists have powerful influence  on public policy. And sadly, Econometric models without behavioral variables are unable to explain the current fear in the market as Schiller says. Time to look across disciplines !

New Business Model for Music Industry needs new ways of capturing value

First record stores were closing in the US as everyone wanted to download music.The record stores were affected as distribution moved online with iTunes selling millions of downloads. The music recording industry was kind of okay with this as they still had a method of capturing value or monetizing their efforts of promoting artists and marketing music. But that was in the US.

It turns out that in China most music ( over 99%) is simply acquired free ,violating copyright laws and disabling the music industry from capturing value. Google in China is offering free music downloads and hoping that AdWords will help capture some tiny piece of value through ad revenues. This ad revenue will be shared by the music industry and Google. In other words, music companies have given up on trying to implement the US business model in China.

Musicians and artists I suppose love all of this as their music gets exposure and anyway they did not make big money in the traditional model where record companies,distributors and retailers made most of the margins and customers had to pay. This industry is sort of different because the musicians work primarily on the premise of "live to work" rather than "work to live" in sectors like banking and auto which seems to be having trouble in recent times.In fact,bankers are leaving banking (they don't love banking ?) given the cut back on bonuses.

The restructuring of the music industry in China  should spread to the US in due course and dis-intermediation of the distribution channels and record companies will create interesting opportunities. You can be sure that musicians and artists will proliferate and new ways of "capturing" value will have to be built.

The Stimulus Package, Recovery and Diffusion of Innovations

Innovation is about change, change in a product, in a service or process. However, no matter how appropriate the innovation is it takes an understanding of innovation diffusion to get the target market to adopt it.

The stimulus package is an innovation to deal with the recession and hopefully most pieces will work. The "diffusion" of each initiative will take time.And every time you get stuck in traffic because of lanes closed due to repair think positive ! Maybe it's the stimulus package making its way to your town or commute....

Local Governments should consider  putting  up signs at construction locations that are funded by the stimulus - so that drivers feel more upbeat as they get through traffic congestion.

Some visible and physical signs will also start reducing the fear that people feel in a recession.

Closing Newspapers changing Ad World

I have found myself not signing up for subscriptions renewals for magazines and papers I love even when the rates are really cheap ( some as low as  10$/year promotional rate). It's simply that I can't find the physical magazine or paper when I need to find it. On the other hand, I can always find the same thing online- pretty easily.

Some time ago I had asked a Wall Street Journal subscription person if I could get only the online version, no - I was told because they need to sell the paper version to show the official "circulation" numbers. I guess - this was one of the drivers that drove the Newspaper business to the ground. Every region has its beloved paper going out of business. The Rocky Mountain News is one such example, closed just short of a 150 year run. How very avoidable!

Some reports suggest that Newspapers lost out to free online advertising on Craigslist. They also suggest that a slow move to "online" editions that were free ( like New York Times - now ) is another reason. I guess Newspapers did not understand the changing business they were in. The "news" business has been changing radically with the Internet and you can choose exactly what news you want to hear,read and see. Online Ad delivery systems like Google AdWords then appear with very relevant ads when you look at a particular news item online. The advertiser does not pay unless a reader actually clicks through. Sales results for Ad spending have become increasingly important- particularly in this tight economy and here again paper editions can't compete.

Should the print media be looking at "what business are we in" ? The perennial marketing question made famous by Theodore Levitt in 1960 in the Marketing Myopia  ....

Banks must start lending for supply chains and B2B to work

Supply Chains and B2B is about the flow of goods and services across links of the value chain. Three components that make up this flow is the actual good or service, information about demand and supply at various points of the value chain and money that moves from B2B in reverse. The money pays for the variable costs (like direct raw material) and other fixed costs like salaries, rent etc.

Normally payments take 30 days or more to materialize and in the meanwhile businesses work on bank credit for working capital. With payment uncertainty from the customer businesses must be able to borrow if the economy is to move. This is not happening and Banks are acting "once bitten twice shy". The US Fed is also reluctant to intervene. 

Unless Banks loosen up and loosen up fast, this downward spiral will continue.

Why Search Advertising like Google AdWords should work better in tough times

In tough times like these, Ad budgets tend to get cut across  swathes of industries and company sizes. "Tough times get the tough going," is the old adage- so what can tough advertisers do?  Some money on search advertising  may be a good bet.

 As David Ogilvy said “Ninety-nine percent of advertising doesn't sell much of anything,” and Ogilvy was referring to traditional advertising like TV, print,bill boards and so on. Traditional advertising  identifies target markets  and then follows a media plan that matches media to target market. Beer ads during the Super Bowl is a good example where the target audience and product match and sales spikes occur. However, other than Super Bowl where people actually watch the ads we have TiVo, channel flipping that really diminishes "push" traditional advertising.

Things change during Internet searches, you are no longer sitting in front of the TV passively but actively looking for specific stuff. At  this point you will click through on ads that are directly relevant to whatever your search is. The technique of writing effective Internet search ads is tough business - if you want to precisely match your ad to what an individual may be looking for. Search Ads like Google AdWords , Yahoo Search Marketing or Microsoft Search advertising typically charge the advertiser when someone actually clicks the Ad.

Imagine only paying for those prospects who saw your TV or print ad !  The Internet allows two way communication and is much more effective than an expensive   1800 number on TV when you want a prospect to contact you and you want "action." In these difficult times, you need to get "action" from customers and do so with cut Ad budgets. Trying search advertising may not be a bad idea.....

In fact, my students in my B2B Class at University of New Haven  are trying just that , as part of the Google Online Marketing Challenge. Will report more on this as things develop....

Towards global B-to-B trust and transparency in 2009

2008 has been a watershed year in many ways and everyone is talking about 2009 with hopes of better times.

There is one theme that should become important in 2009 given the learning from the Mortgage Crisis, Auto bailout and resulting  union supplier competitor unity and the Madoff scandal. And that is more trust and transparency that would have to be re-built from the ground up.

We should see more online transactions and use of the Internet both by businesses and also consumers as with the recent zoom in Amazon sales. When transactions are digital and open to scrutiny by those concerned on a real time basis- there is a real shot for everyone concerned- to chime in with comments and concerns- in time. So as more systems go online there will be more integration both for the sake of reducing costs and improving efficiency but also bringing real time trust and transparency in dealings.

Wishing readers a Very Happy and Prosperous 2009 !

700 or 2% of US car dealers may close- but could there still be light for US Auto?

With all the turmoil in financial markets the troubled US auto industry seems to be on the verge of total collapse.  700 dealers might close because customers can't get finance as Ford and GM stock touched a57 year low.

All may not be lost for US auto as the GM-Chrysler deal might promote receiving some federal funding to re-tool. On the distribution side with the closing distributorships I was cheered to read some comments here . According to these comments most if not all these 700 dealers will be US Auto dealers and not import dealers. These auto dealers are ones with large product lines,little differentiation among offerings and too much territory squeeze much like McDonald franchises who might wake up to find another McDonald just across the road and much more competition.

If this is indeed true for US auto distributors then there might be streamlining of the distribution channels and remaining dealers might become more healthy when the credit situation improves.

I tried comparing the "locate" the dealer feature for "Chevy" on the GM website and the locate a dealer for Toyota.Toyota offers one dealer when you search by ZIP code after which you have to dig deeper for more dealers.On the other hand, GM starts with 3 dealers on the first page and offers 3-4 pages of dealers. Too much choice for lesser numbers of cars sold and probably too many dealers.

Seems similar to the US auto upstream supplier policy of having many component suppliers who have a hard time turning a decent profit. Here downstream distributors seem to also have too much "internal" competition to turn in good profits. The situation is off course much more difficult in tough economic times.