Learn Lessons from GM and Chrysler

A new Chrysler may be emerging just a GM slips into bankruptcy. Chrysler’s experience has been extraordinary: it is going through a smoother, faster bankruptcy with the federal government playing the unprecedented role of both task-master and mediator.

GM is not Chrysler: GM is far larger and more complex. Still, the Chrysler experience should be cause for some optimism that GM’s experience will be similarly efficient.

What other lessons can GM take from Chrysler’s experience?

1/ Consumers will do business with a bankrupt brand. Prevailing wisdom was that with a major purchase (like a vehicle) consumers would avoid the risk of buying from a company in bankruptcy.

Edmunds.com data shows that not to be the case. Consumer sales share dipped in April before bankruptcy was filed, but has rebounded since. Clearly, media coverage of a potential bankruptcy or liquidation does impact sales, but the stigma of being in bankruptcy seems to have been vastly overstated, with Chrysler consumer sales share back up to January levels for the month of May.

Changes in share of Industry Purchase Intent vs. baseline (the four weeks before the bankruptcy announcement—the all-time low for Chrysler):

Week Ending		Chrysler LLC		Chrysler		Dodge		Jeep
5/3		+12%		+24%		+9%		+6%
(Bankruptcy announcement)
5/10		+27%		+51%		+21%		+21%
(New incentives announcement)
5/17		+27%		+49%		+20%		+23%
5/24		+72%		+141%		+56%		+58%

2/ Consumers aren’t as familiar with brands as one might think. The pattern where sales share drops pre-bankruptcy and climbs during is most pronounced for Chrysler Division vehicles, less so for Dodge division and almost not notable for Jeep division. Clearly consumers aren’t keeping tabs on which vehicle brands are owned by which automaker.

This could be good news for GM, whose divisions will most likely parallel the experience of Dodge and Jeep; not Chrysler division. (The exceptions being Saturn, Hummer and Pontiac where sales or shutdown have been covered extensively.)

Changes in share of industry purchase intent vs. April average:

Week Ending		GM		Hummer		Pontiac		Saturn
5/3		-1%		+7%		+26%		-8%
5/10		-6%		-8%		-13%		-16%
5/17		-9%		-14%		-18%		-15%
5/24		-6%		-6%		-5%		-17%

3/ Consumers will have questions and want answers. Chrysler invested heavily in a brand marketing campaign immediately after filing. Edmunds.com CEO Jeremy Anwyl feels that may have been premature. “Like a salmon swimming upstream, Chrysler’s lofty paid messages ran counter to a heavy flow of news reports covering bankruptcy. The messages appeared tone deaf, or just were ignored.”

Consumers do have real questions about their dealer, their vehicle and the deals available in bankruptcy. Consumers flocked in record numbers to research these issues on the Internet; GM has the opportunity to proactively reach out and address these concerns head on.

4/ Consumers think that “bankruptcy” equals “deal.” One reason that sales have been strong for Chrysler is that bankruptcy has brought “deal-seekers” into their dealer’s showrooms.

During the bankruptcy process, Chrysler is terminating 789 dealers with little advanced notice. This created a situation where some dealers have been selling Chrysler vehicles at significant discounts. The below chart sets out month-by-month analysis of the dealer profit margin trend, comparing closing dealerships to the average:

Average Profit Margin Differential
		Chrysler		Dodge		Jeep
January 2009		$610		$830		$710
February 2009		$115		$1844		$1112
March 2009		$679		$725		$311
April 2009		$828		$888		$354
May 2009		$2672		$823		$1204

5/ A deal is what a consumer thinks it is. Despite the terminated dealers selling vehicles at a unusually high discounted rate, overall profit margins for Chryslers dealers actually increased in May. How could this be? There is an intuitive logic around the idea that vehicles purchased from a bankrupt automaker must be a great deal. Consumers accepting this logic actually negotiate less aggressively and pricing trends up.

Instead of a brand campaign, GM would be well served to consider a bankruptcy sales event. This type of campaign would reinforce and build upon consumer beliefs – a highly efficient marketing strategy.

Average Transaction Price
		Jan 2009		Feb 2009		Mar 2009		April 2009		May 2009
Chrysler LLC		$29,046		$28,278		$28,504		$28,650		$28,288
Chrysler		$29,572		$28,877		$28,959		$29,103		$28,624
Dodge		$30,355		$29,229		$29,499		$29,671		$29,432
Jeep		$26,691		$26,451		$26,536		$26,757		$26,422

Average Gross Profit per Vehicle
		Jan 2009		Feb 2009		Mar 2009		April 2009		May 2009
Chrysler LLC		$712		$457		$483		$477		$660
Chrysler		$538		$322		$358		$420		$662
Dodge		$915		$587		$623		$630		$776
Jeep		$488		$332		$316		$269		$487

New York Becomes a Bioscience Leader

New York ranks among the nation’s leaders in the bioscience industries, according to recent reports from the Milken Institute and trade publication FierceBiotech. The reports show New York to be a significant and growing locus for bioscience development.

According to the FierceBiotech’s “Top 5 Regions Targeting Biotech”, New York’s focus on stem cell research, abundant funding resources, and unique Qualified Emerging Company capital tax credit make it a key location for developing biotech. This is the second consecutive year in which New York has been named to the FierceBiotech “Top 5 Regions” list.

In the report, FierceBiotech says that “New York has been leveling the playing field to a point where start-ups could make a good case for setting up shop in a city that never sleeps. . . . New York has scientific talent to spare. With the right kind of support, it can also create a surge of new biotech businesses to commercialize the scientists’ discoveries.”

Likewise, a new report from the Milken Institute ranks Greater New York biotech as second only to Greater Raleigh-Durham in terms of the industry’s current impact. With the largest number of biotech workers of any metropolitan area in the U.S. and a relative growth rate far exceeding the national average, Greater New York ranked high in all categories of the Milken report, entitled “The Greater Philadelphia Life Sciences Cluster 2009: An Economic and Comparative Assessment.” The full report can be downloaded here.

“We in the State have long known that New York is a great place to build a biotech business,” said Nathan Tinker, Executive Director of NYBA. “Biopharma directly employs over 55,000 people in the state and is responsible for more than 130,000 jobs. And the industry generates more than $29 billion in total output annually or nearly 7% all direct biopharmaceutical output nationally.”

Homeless Mom Turns Entrepreneur

Linda Russell, owner of Mugshots School Photography, is an inspiration to entrepreneurs everywhere.  Russell received a $300,000 loan from Oakland’s One California Bank to market her company, expand its online presence, and potentially franchise it in other parts of the country. Russell, who was homeless with two young children 20 years ago and living in a women’s shelter, started Mugshots Photography in 1993. Her first job involved photographing 200 students for one school in Marin County. Today, she contracts with several photographers and shoots over 17,000 students a year in public and private schools throughout the Bay Area.

Priceline to Now Offer Condos and Vacation Properties

Priceline.com and LeisureLink announced today that priceline.com’s published-price hotel service will offer its customers booking access to LeisureLink’s network of condos, timeshares, vacation properties and boutique resorts in the U.S., Canada and Mexico.

“LeisureLink’s extensive inventories in the condominium and vacation property categories will enable priceline.com to offer our customers even more choice and value when it comes to making their vacation lodging reservations,” said Tim Gordon, priceline.com’s Senior Vice President, Hotels.

“Vacation rental management companies have taken a cue from hotels and the explosive growth in online lodging sales over the past decade. They are increasingly offloading legacy practices to adapt and compete in a more hotel-centric distribution landscape,” said Douglas Quinby, senior director of research and co-author of PhoCusWright’s Vacation Rental Marketplace: Poised for Change. “The step by priceline.com to incorporate vacation rentals in its lodging shopping path is a significant indicator of the transformation underway in the vacation rental industry marketplace.”

“We believe that LeisureLink’s broad array of vacation condo, timeshare and boutique resort properties will make a great addition to priceline.com’s lodging service,” said Erik Hovanec, president and CEO of LeisureLink. “LeisureLink’s properties also mesh well with priceline.com’s commitment to deliver quality and significant savings to the budget-conscious leisure travel market.”

Going Green at Balboa Park

Members of the Balboa Park Cultural Partnership are “going green” to enhance and preserve San Diego’s iconic park as it approaches its 100-year anniversary. Representatives of the park’s 24 cultural institutions are participating in a series of workshops to learn how to incorporate sustainability practices into the workplace. The curriculum covers sustainability techniques that, when implemented, will not only contribute to park preservation efforts but also save money and natural resources.

“These workshops educate by encouraging our Partnership members to adopt sustainability practices,” said David Lang, executive director of the Balboa Park Cultural Partnership. “By pooling our knowledge and resources, Balboa Park is well on its way to incorporating environmentally friendly operations. Our efforts in 2008 produced a cost savings of $420,000 through substantially reduced energy consumption.”

The workshop series covers an introduction to sustainability and life cycle costing, energy management, water management and green building basics.

“It makes so much sense that we continue to integrate sustainable practices into Reuben H. Fleet Science Center operations,” said David McGrew, director of Facilities and Engineering for the Center. “Balboa Park is not only a cultural treasure but it is also a natural resource for San Diego residents and visitors from around the world. It is in everyone’s interest to manage the park in a sustainable manner.”

Arts, science and cultural institutions participating in the Balboa Park Cultural Partnership include: Balboa Park Central, Centro Cultural de la Raza, House of Pacific Relations, Japanese Friendship Garden Society of San Diego, Mingei International Museum, Museum of Photographic Arts, Reuben H. Fleet Science Center, San Diego Air & Space Museum, San Diego Art Institute; Museum of the Living Artist, San Diego Automotive Museum, San Diego Hall of Champions Sports Museum, San Diego Historical Society, San Diego Junior Theatre, San Diego Model Railroad Museum, San Diego Museum of Art, San Diego Museum of Man, San Diego Natural History Museum, San Diego Youth Symphony, San Diego Zoo, Spanish Village Art Center, The Old Globe, Timken Museum of Art, Veterans Museum and Memorial Center, and WorldBeat Center.

Beat the Heat at the Summer Movie Clubhouse

Cinemark is once again launching their Summer Movie Clubhouse program in over 140 theatres across the country. The Summer Movie Clubhouse is a ten-week series of G and PG rated films, shown on various days, at a discounted admission price.

Admission for each film is $1.00 per person, ages 1 and older. Customers also have the option to buy a series punch card good for all ten films at the theatre box office for $5.00 each. Parents, or adults accompanying a child to the show, pay the same admission price as the children. A complete list of participating theatres can be found at the Cinemark.com web site, which includes the list of movies, days and times for each theatre.

“Cinemark’s Summer Movie Clubhouse is a very popular program with our customers. They look forward to it year after year,” says James Meredith, Vice President of Marketing for Cinemark USA, Inc. “Great films like Surf’s Up, Happy Feet, Shrek The Third, King Fu Panda, and Charlotte’s Web are just a few of the many classic family movies that can be enjoyed by everyone this summer.”

Hampton Hotels Sets Sail Towards Another Landmark Refurbishment

More than 200 years ago, local sea Captain Lemuel Moody ordered the construction of the Portland Observatory to serve as a communication station for Portland, Maine’s bustling harbor. Today, volunteers from Hampton Hotels’ Save-A-Landmark program worked an estimated 75 hours to preserve the treasured landmark, which now operates as a museum. Declared a National Historic Landmark in 2006, the Portland Observatory is the last known remaining historic maritime signal station in the United States.

Hampton Hotels’ Save-A-Landmark refurbishment efforts sent more than a dozen volunteers worked on various refurbishment projects to prepare the Portland Observatory for its busy summer season. These projects included the cleaning of the exterior of the tower, repair damage from the sea air and polish the interior. In all, Hampton Hotels’ Save-A-Landmark program donated $10,000 toward the refurbishment, which will also provide the Observatory’s exterior with a fresh coat of paint from contractors who specialize in historic structures.

“After weathering storms for more than 200 years, the Portland Observatory is in need of some TLC,” said Judy Christa-Cathey, vice president of brand marketing for Hampton Hotels. “The Portland Observatory stands as a beacon of the city of Portland and the important maritime history of the United States. In our year of ‘All-American Landmarks,’ Hampton is helping to ensure that future generations of visitors will have a chance to stand in the shadow of this iconic piece of Americana, through the hard work of our local Hampton volunteers.”

In 1807, native Portland resident, Captain Lemuel Moody, gave the order to begin building the 86-foot high tower to facilitate communication between ship and shore in Portland’s harbor. Before the construction of the tower, ships entering the harbor could not be seen from the docks of Portland. But with his ingenuity, Captain Moody developed a system to identify incoming vessels from as far away as 30 miles alerting subscribing merchants by hoisting signal flags identifying their vessels. He coined the phrase “signalizing” to describe his system.

Although the tower ceased its signal activities in 1923, the Portland Observatory still offers spectacular views of Portland’s harbor and serves as a symbol of the city’s rich seafaring heritage. Most importantly, as the last remaining maritime signal tower, the Portland Observatory stands as a symbol of the American “Golden Age of Sail.” Currently, Greater Portland Landmarks operates the Observatory as a museum and historic site, offering educational programs and seasonal guided tours.

This refurbishment is the third landmark of the nine “All-American Landmarks” that will be refurbished in Hampton’s 2009 Save-A-Landmark campaign. This year, Hampton is devoted to restoring sites that represent what it means to be American, such as the Robert Frost Farm and Washington House, the “Birthplace of the Ice Cream Sundae.” Communities across the country showed their American pride by casting thousands of votes to help elect the landmarks that will be restored this year. The public voted for their favorite “All-American Landmarks” in nine states, including Maine, Minnesota, Kentucky, Nevada, New Hampshire, North Carolina, Oregon, Wisconsin and Wyoming. Each site that Save-A-Landmark will refurbish reflects the individual personalities of the states and their residents, such as the Portland Observatory Museum, and signifies defining moments in the country’s past.

Celebrate Free Light Smoothie Day on June 19

Calling all smoothie lovers who crave the lighter side of refreshing and satisfying!  On Friday, June 19 participating Orange Julius locations nationwide will host “Free Light Smoothie Day” to celebrate the introduction of Light Smoothies in three richly satisfying flavors: Strawberry Delight, Berry-Pom Twilight and Tropical Sunlight.

Visit OrangeJulius.com to download a coupon for a free 20 oz. Light Smoothie, redeemable on Friday June 19. Packed with real fruit and only 250 calories or less in each, all three Orange Julius Light Smoothies are creamy smooth, blended with ice, non-fat milk and sweetened with SPLENDA to create:

• Strawberry Delight, sweet strawberries mingled with bananas and tropical fruit juice.
• Berry-Pom Twilight, an energizing mix of dark fruits including raspberries and blackberries, blended together with pomegranate juice, known for being rich in antioxidants
• Tropical Sunlight, a refreshing boost of mango, pineapple and tropical fruit juice.       

Top 50 Outdoor Dining Restaurants

Just in time for the warm weather, OpenTable announced the national winners of its 2009 Diners’ Choice awards for Best Outdoor Dining. The list of winning restaurants is derived from two million reviews submitted by OpenTable diners for more than 9,000 restaurants in all 50 states and the District of Columbia.

“The restaurants on this list offer a variety of wonderful outdoor dining experiences, from sweeping ocean views and desert cafés to urban rooftops and intimate gardens,” said Caroline Potter, OpenTable’s dining expert. “What the restaurants on this list have in common is that their carefully planned menus perfectly complement the settings with an emphasis on fresh, seasonal ingredients and delicious cocktails.”

The 2009 Winners of OpenTable’s Best for Outdoor Dining Awards

• A Fish Called Avalon – Miami Beach, FL
• Ácenar – San Antonio, TX
• Anis Café and Bistro – Atlanta, GA
• Arcadia Farms – Scottsdale, AZ
• Auberge du Soleil – Rutherford, CA
• BALEENmiami – Miami, FL
• BALEENnaples – Naples, FL
• Basil’s – Atlanta, GA
• Beachcomber Café, Crystal Cove – Newport Coast, CA
• Belden Taverna – San Francisco, CA
• Boathouse Forest Park – St. Louis, MO
• Café Pinot – Los Angeles, CA
• Calistoga Inn Restaurant & Brewery – Calistoga, CA
• Campiello, Naples – Naples, FL
• Dominick’s Restaurant – West Hollywood, CA
• Faz Danville – Danville, CA
• Flatwater – Chicago, IL
• Foreign Cinema – San Francisco, CA
• Fritti – Atlanta, GA
• Geoffrey’s Restaurant – Malibu, CA
• George’s Ocean Terrace – La Jolla, CA
• Hau Tree Lanai – Honolulu, HI
• Latitude – Rohnert Park, CA
• Lon’s at the Hermosa – Paradise Valley, AZ
• MarketBar – San Francisco, CA
• Metro Lafayette – Lafayette, CA
• Milagros – Redwood City, CA
• Ovations at Wolf Trap – Vienna, VA
• Pacifica Del Mar – Del Mar, CA
• Pacifica Seafood Restaurant – Palm Desert, CA
• Paradise Cove Beach Cafe – Malibu, CA
• Plouf – San Francisco, CA
• Poseidon – Del Mar, CA
• Red Fish Grill – Miami – Coral Gables, FL
• Sapphire Laguna – Laguna Beach, CA
• Sheerwater Restaurant at the Hotel del Coronado – Coronado, CA
• Spencer’s Restaurant – Palm Springs, CA
• Sundried Tomato Café – Laguna Beach – Laguna Beach, CA
• The Hall at Palihouse Holloway – West Hollywood, CA
• The Prado at Balboa Park – San Diego, CA
• The Smokehouse Restaurant at Ponte Winery – Temecula, CA
• The Turtle Club, Naples – Naples, FL
• Tommy Bahama’s Tropical Cafe – Palm Desert – Palm Desert, CA
• Twin Palms Restaurant – Pasadena, CA
• Vic and Angelo’s – Palm Beach Gardens, FL
• Villa Sorriso – Pasadena, CA
• Vin de Set – Saint Louis, MO
• Wilshire – Santa Monica, CA
• Wish – Miami Beach, CA
• Zin Bistro Americana – Westlake Village, CA

“Not surprisingly, Southern California and Western Florida are home to many of the award-winning restaurants, since the weather is warm more often than not in these locations,” Potter added. “But, there are also other great hot spots in between the two coasts, including some hidden gems in both Arizona and Missouri.”

Splash into Summer

Splash into summer with great rates and family fun for everyone at the Orlando World Center Marriott Resort with Advance Purchase Rates now in play from only $129 – $209 per room, per night through September 30, 2009. Venture around the world and have a ‘splash of a time’ in over one-million gallons of liquid refreshment encompassing six pools including the signature lagoon pool with 106’ waterslide and rock waterfalls; indoor pool; secluded spa pool; two children’s pools and six whirlpool spas. Daily poolside activities designed for kids range from beach ball drop to face painting. They can even build their dream castle in the sand play area. Celebrate summer’s favorite family holidays at the Orlando World Center Marriott Resort to include:

Fourth of July Week

June 28 – July 6, 2009

From $139 per room, per night

Labor Day Weekend

September 3 – 9, 2009

From $129 per room, per night

Golf around the world on the 18-hole championship links of Hawk’s Landing Golf Club; take a golf lesson at the Bill Madonna Golf Academy at Hawk’s Landing Golf Club; schedule a soothing massage at The Spa, or workout at the fitness center overlooking the lake.

Endless recreational activities set on 200 tropical acres include tennis, water volleyball, basketball, and arcade with pinball, air hockey and ping-pong. Enjoy a culinary excursion around the world with 10 diverse restaurants and lounges, including the award-winning Hawk’s Landing Steakhouse & Grille and Ristorante Tuscany. Guests can also tempt their palate with Mikado Japanese Steakhouse and Solaris, home to an expansive and popular buffet breakfast. For those on the go, visit Mangrove Emporium, a full-service indoor food court or grab a Starbucks coffee.

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