Target Misses the Bullseye in Canada

Joe Cataldo writes a detail story that serves as a solid autopsy on how Target failed in the Canadian market. His story moves beyond the superficial analysis of another American company failing to understand a foreign market. Through interviews with several people associated with Target's Canadian operation, Cataldo paints a pictures of a company that did not properly allocate its resources. The money list:

  • Human - Target hired people with little retail operations experience to develop its inventory and distribution systems.
  • Informational - Target could not provide properly and accurately complete the fields in its inventory software system. Indeed, Target bought an off-the-shelf title that it had no experience with using.
  • Organizational - Target had never expanded into a new country and lacked the competence to manage issues such as different currency, distribution centers, and suppliers.
  • Physical - Target acquired locations from Zellers, a poor performing Canadian retailer, that proved to be inadequate. Customers were not willing to drive to them regardless of the brand on the front of store.
  • Relational - Target and its suppliers could not agree to a receiving date for ordered goods. As a consequence, warehouses were stuffed with inventory while shelves at retail were empty.

Given the misallocation of its resource, Target ultimately achieved inferior financial performance. It reported a $5.4 billion quarterly loss. However, in reading Cataldo's story, the loss seems bigger than what has been reported.

Possible Target employees try to enter data in its inventory system.

Sports Analytics Continues to Create Opportunities

Haynes Henrickson, president of Turnkey Intelligence, provides three reasons why sports analytics creates opportunities for people who want to work in athletics. The money list:

  • The opportunity for advancement is now a reality, and ISN’T confined to database/technology-specific positions.
  • The growing presence of third-party companies in the sports analytics space
  • Sports business education’s increased emphasis on the importance of analytics

He concludes by noting that sports analytics has become the growth area for the industry.

Wrangler Truck and Bronco's Return

This year is shaping up for an exciting time for utility vehicles as Fiat Chrysler of America (hereafter, FCA) and Ford will produce long rumored marketing offerings. Following the demise of the Scrambler, rumors bubbled up that Jeep's latest corporate owner would launch a fully formed truck on the Wrangler's platform. Meanwhile, Bronco's fans pined for a return of the first generation version of the iconic vehicle that was developed to blunt the Jeep and International Harvester's Scout. Indications point toward a formal launch of the Jeep Wrangler truck and a return of the Ford Bronco. Compact utility vehicle fans, rejoice.

FCA CEO Sergio Marchionne announced that the company will offer a truck variant of the Wrangler. The truck's launch will occur with the launch of a new (e.g., major refresh) Wrangler.

Compact utility truck fans rejoice. Your product is here.

The last Jeep truck was the Comanche (history here and discussion here), which was based on the Cherokee platform and was produced from 1985 to 1992.

Chrysler's desire to protect Dodge truck sales doomed the Comanche.

The Scrambler (history here) was produced from 1981 to 1986.

The ultimate sales niche. Everyone who wanted one bought it 3 years after launch.

Toyota and Nissan left the compact utility truck market to concentrate on bigger trucks that offer greater profits per vehicle. It could be argued that this market met its demise when Ford cancelled the Ranger.

The Bronco (history here and discussion here) began its product life as Ford's attempt to fight the AMC's Jeep CJ and International Harvester's Scout.

Back to the future for compact utility vehicles

At the time of its launch, Ford had found success with the Mustang, the small sports car. Donald Frey and Lee Iacocca, who were responsible for the Mustang, designed the initial Bronco to be smaller than the Scout and lighter than the CJ. Regardless of the standard V6 or the optional V8, the Bronco lived up to Ford's demand to produce a Mustang for the off-road set. Indeed, the Bronco appears as the first truly compact utility vehicle.

Proving that history does not repeat but merely rhymes, Ford is bringing back the Bronco because of the Jeep Wrangler's success. For nearly six years, Wrangler sales have increased. Competitors such as the Honda CR-V and the Toyota Rav4 have moved out of the market segment while Suzuki completely exited the American market.

Low gas prices, low-interest rate loans, lower production costs, and soaring truck sales support both companies' decisions. The time seems right for the launch of two iconic looking vehicles.

Fastlane Finally Closes

The public relations blog that everyone stopped carrying about finally stopped running. To be fair, Fastlane ran out of gas roughly five months after starting.

General Motors launched Fastlane in 2006 with little notice or fanfare. Initially, readers were treated to unfiltered comments from Maximum Bob Lutz. The Truth About Cars blog provides some of his greatest hits including one of my favorites:

This business isn’t all that complicated. Do the best product you can do, and if it looks better and drives better than the other guy’s, you win.

Good words for Marketing Management students participating in the StratSim Marketing competition.

All good things must come to an end. GM's corporate PR folk found the blog and immediately erected enough filters to clean water from the Flint River. No one was interested in reading a sanitized version of Maximum Bob. The links, the sharing, and the "oh, no, he didn't" came to a thudding stop. From that point, Fastlane suffered PR death because no one was talking about it.

When He Is Not That in to You

We have all been there. The relationship starts with all kind of promises of things to come. Filled with hope and these promises, we rush out to tell the world about our new relational partner. Then, nothing. The new relational partner never mentions us to friends. We are left wondering if we misheard all those promises and felt foolish for having hope. We all know this experience. Welcome to the group, Google.

Google brought a lot to the table. It spent years getting itself into dating shape by developing an autonomous vehicle. It cleared various regulatory hurdles, technological glitches, and many nay-sayers. The market offering actually seems viable.

Enter Ford, who wooed Google with promises of production facility in far-away North Carolina. On paper, the match between Detroit muscle and Silicon Valley brains seemed headed for a happily ever-after ending. Alas, relationships do not exist on paper; rather, in life. And, in life, Ford does not seem that into Google.

When it came time to the world the new-found partnership at the Consumer Electronic Show, Ford never mentioned Google. So, much for that announcement.

Google now claims they were never exclusive with Ford, who says that they talk up a variety of relational partners. Perhaps when Ford can afford that place in the Carolinas that it and Google talked dreamily about, these two crazy companies will commit to each other. Until then, Google will probably nurse its wounded pride by chatting with Nissan and Mercedes-Benz while Ford will continue to see Apple and Microsoft. All the while, they give furtive looks at each other from across the room

Google, Ford still listening to possible partners.

US Auto Market Sets New Sales Record

For 2015, 17.47 million new vehicles were sold in the United States. This mark eclipses the previous record of 17.4 million set in 2000. The sales volumes matches a patter started in 2013. AutoBlog's Chris Bruce provides the money quote:

The new record should put the final nail in the coffin of any lingering bad feelings about the Great Recession, and the industry has made an amazing turnaround. According to Automotive News, the dire times of 2009 saw a 30-year sales low of 10.4 million vehicles.

Consistent with signaling theory, the 34 million new vehicles sold over the last two years represent more than a nail; rather, optimism. American consumers feel confident about their long-term economic fortunes as well as market conditions. While cheap gas and easy credit help drive those sales, consumers needed confidence that today's economic good fortunes would exist not only today but for the life of a five, six, or seven-year loan life.

The new sales mark should also lead to decrease in used vehicles prices. In turn, more Americans will buy more vehicles. The increased sales activity should reduce the average length of vehicle ownership from its record of six years.

Based on the six-average ownership figure, 20014's and 2015's sales marks are not surprising because 2009 was a low point. That is, consumers were ready for a new vehicle.

Given that gas prices and interest rates are forecasted to remain at levels similar to as 2015, and 2010's sales mark was consistent with 2009's, the sales forecast for 2016 auto sales should be in the 16-million range.

Millions more vehicles ready for purchase.

J. Crew's Goodwill Slashed to Zero

Little doubt can exist that Mickey Drexler performed a turnaround J. Crew. When he took over the retailer in 2003, the brand seemed headed to the retailing graveyard. In the next seven years, Drexler repositioned J. Crew toward a preppier look and refreshed the store layout. J. Crew appeared better suited to compete with Ralph Lauren's stores and brands instead of Gap. When J. Crew went private in 2011, TPG Capital and Leonard Green & Partners valued the retailer's goodwill at $1.7 billion. Four years later, that figured was reduced to zero. Shelly Banjo and Gillain Tan provide the money thought:

Its older customers -- the only ones who can afford its high price points -- have aged out of its casual collegiate wear, and its younger shoppers have moved on from the preppy style to cheaper, fast-fashion brands like H&M and Zara.

Smoke appears to emanate from J. Crew's 11 percent decrease in comparative sales, which is the fifth-straight of quarterly declines in comps. The fire rages in its cuts. Simply put, too many Americans cannot fit into J. Crew's apparel products. To reverse this decline, Drexler and Jenna Lyons should accept that more shoppers want size 18 and than 000.

Detroit 3 Put an End to Badge Engineering

Doug DeMuro wonders if rebadging among automobile manufacturers has died. The money observation:

...I chuckle when I hear people my age or younger talking about 'rebadges.' I heard the other day, for instance, that the Lexus ES is a “rebadged” Toyota Avalon. This is laughable. It’s like saying that central air conditioning is a rebadged ceiling fan.

Yes, the Avalon and the ES ride on the same platform and they share mechanicals. But my God, are these two cars not rebadged. Rebadging was when General Motors had four midsize sedans in the 1980s and literally slapped different badges on each one, while simultaneously changing things like the wheel covers and the shape of the head rests. The Avalon and ES are so different that even a small child could point them out in a parking lot. 'That’s grandma’s car!' he would say.

In modern times, automakers don’t really do the rebadge thing anymore because they’ve discovered that most people are just too smart for it.

The financial crash in 2009 appears to have been the death knell for badge engineering. Through its bankruptcy process, General Motors closed the Saturn and Pontiac brands. GM already closed Oldsmobile long before its bankruptcies. Chrysler jettisoned its Plymouth brand as part of its bankruptcy reorganization. Without benefit of bankruptcy, Ford brought the curtain down on its Mercury brand. All of these brands had morphed into recipients of badge engineered market offerings. In essence, the Detroit 3 received the message that consumers were no longer willing to spend a few thousands dollars more on a brand that offered only different tires.

At one point, the a rebadge vehicle appeared as a different product from its stable mate. Usually, the rebadged effort included a different, nicer interior, a few cosmetic exterior items, and better tires.

Pontiac 6000: The Ultimate Badge Engineering Machine.

The epitome of crass badge engineering could be General Motors' compact front wheel drive (FWD) X-body platform. The cars were badged as the Pontiac 6000, Buick Century, Chevrolet Celebrity, and Oldsmobile Cutlass Ciera. Body trims and options distinguished each market offering. At first glance, though, the distinguish characteristics were hard to spot.

By the mid-90s, these points of distinction between the original market offering and the rebadged market offering disappeared in a cloud of accounting ledger dust and a different set of tires. Consumers noticed the lack of similarities, leaving thousands of unsold Pontiacs, Mercurys, and Plymouths on dealers' lots.

Thankfully, rebadging seems headed to the auto graveyard along with fins, white wall tires, and manual transmissions.

A New Jack Car Lot

Mark Baruth argues for a new type of car dealer for a new type of consumer; a New Jack car lot. This car dealership would revolve around the experience. A dealership where the posted sale price means the actual sale price and staffed by sales representatives working on base plus commission. Oh, yeah. Digital. Left unsaid is why no dealer operates as a New Jack car lot. Perhaps as Saturn found, customers would resist such an effort.

Intersection of Sports, Analytics Moves From Field to Front Office

Analytics in sports has tended to focus on players and roster management. This thought remains rooted in the Moneyball-supported view of sports. Yet, sports extends beyond players and roster management. Analytics is moving from the field to the front office as these job openings show.

A person looking to break into this field needs to know cluster analysis and multidimensional scaling. To set his or her resume apart, this person should know factor analysis and conjoint analysis.

Additionally, this person would need to know how to communicate results to different audience with communication including both written and oral forms. A demonstrated ability to link analysis to tactical recommendations is essential.

Finally, this candidate should have experience with creating, collecting, and analyzing data from surveys.

Through Otterbein marketing major, we offer the opportunity to acquire these experiences and skills through our degree program.