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Posts Tagged ‘marketing’

Target tests “green” refrigerant at 11 stores

May 18th, 2011 Comments off

As mentioned in class, companies are taking a close look at environmentally-friendly initiatives and sustainability.  Management accountants can help with this by identifying opportunities and measuring performance against environmental criteria.  In a local example, Minnesota-based Target was featured in a Star Tribune piece this week as testing a new refrigerant at 11 stores with the idea that it could be expanded to other stores if it is successful.  This new material is supposed to result in fewer leaks and, ultimately, reduce operating costs though I’m sure Target will play up the fact that it is using “green” chemicals and processes as well.

The bottom line is that the gas is a “high temperature” refrigerant less prone to leakage and more energy efficient. It is also used in automobile air conditioners.

“These are very complex systems,” said Target’s Dan Riley of the coolers and freezers in the chain’s “PFresh” food sections. “In each Target store there are many, many miles of coils. At every junction there is an opportunity for a leak. These [existing] gases are very leak prone. They are under pressure.”

In December, Target announced its commitment to sustainability and the GreenChill program fit into the chain’s intention to use resources responsibly and reduce the company’s carbon footprint.

Ultimately I don’t think many companies will do things like this if they don’t see a benefit in terms of reduced costs or marketing opportunities, but those opportunities exist and the planet and society can benefit as a result.  Management accountants need to be prepared for this role and to seize the opportunities.

Target tests green chillin’; The retailer is trying a new, more energy-efficient refrigerant in 11 stores around the country as it tries to go green. By David Phelps. Star Tribune. Minneapolis, Minn.: May 15, 2011. pg. D.4

Volkswagen to make U.S. push

October 5th, 2010 Comments off

The Wall Street Journal today has an excellent front-page article documenting some missteps made by Volkswagen in the United States market that has resulted in VW claiming a paltry 2.2% market share along with plans to turn that around in an effort to become the world’s largest automaker by the end of the decade. One of the ideas being implemented is designing, for the first time, a car to specifically meet American tastes rather than selling what works in Europe in North America in nearly identical form.  This is interesting to me because I’ve read elsewhere that Ford is taking the opposite approach trying to produce car models that are virtually identical no matter where in the world they are sold.  VW also risks, in the process, alienating the small but devoted following that it currently has.

“A lot of people worry that we are going to start making VWs for the masses,” says Mark Barnes, VW’s U.S. chief operating officer. “I like to say we’re going to bring the masses to VW.”

The retooled compact sedan marks the first time VW engineers have designed a model specifically for the U.S.

Next year, a new family-size sedan is scheduled to roll off the assembly lines at a newly built $1 billion plant in Chattanooga, Tenn. It is VW’s first U.S.-made car since the 1980s. On its heels comes a revamped New Beetle.

“I am fully aware that Volkswagen was too cautious for too long in North America,” Volkswagen Chief Executive Martin Winterkorn said at a test-driving event for the new Jetta in San Francisco this summer. His remark was a nod to the car maker’s decades-long penchant for deploying cars designed for European tastes across the Atlantic. That left its U.S. operations with models too small and expensive to go head-to-head with Asian and American rivals. Now, he vowed, “we have turned that upside down.”

Adding to the challenge is the constant change at the top in VW’s American operations:

Adding to the challenge is an unanticipated switch at the helm of VW’s U.S. operations.

In June, Stefan Jacoby, a blunt-spoken German who took to wearing cowboy boots to dealer meetings and car shows, left his post as U.S. chief to become Volvo Cars’ new chief executive. His departure came just a week after he presented the new Jetta at a splashy launch party in Manhattan’s Times Square featuring pop singer Katy Perry. VW bosses scrambled much of the summer to fill the void left by a key architect of its American comeback strategy.

Mr. Jacoby’s replacement, former General Motors executive Jonathan Browning, is new to the U.S. market, having spent most of his career at GM’s European operations and managing Jaguar under Ford Motor Co.

Some U.S. dealers complain that the revolving door of U.S. chiefs—Mr. Jacoby was the third to go in five years—reflects a culture at VW’s headquarters in Wolfsburg, Germany, that views the U.S. as a career way station, or worse, graveyard.

Assuming that the leadership and design challenges can be met, there is still the issue of getting Americans to notice.  Marketing has been ramped up to target certain demographics such as Hispanics and families, but the results thus far appear to be mixed.  Before reading this article, I didn’t even know that Volkswagen offered a minivan even though my family purchased a Toyota Sienna less than a year ago. In an interesting partnership with Chrysler, VW rabadges the American van as it’s own with some minor tweaks but production had to be halted due to low sales.

After dropping plans for a modern version of its Microbus for fear it would be too niche and costly, it signed a deal with Chrysler to modify and rebrand the U.S. car maker’s Town & Country minivan under the VW Routan name. VW tightened the minivan’s suspension, gave it a sleeker front end and kept it in the same price range as the Chrysler. With an ad blitz featuring Brooke Shields, it aimed to capture 5%, or 45,000, of the 700,000 annual minivan market.

But the Routan’s launch coincided with the auto industry’s nose dive in late 2008. So many of them sat unsold on VW dealer lots last year that the auto maker asked Chrysler, which builds them at its Windsor, Ontario, plant, to temporarily halt production. While much of the rest of the minivan market has rebounded, Routan sales have slipped 0.8% to 12,539 vans so far this year, one-seventh of the number of Town & Country sales in the same period.

VW officials argue that the Routan has enabled them to sell to a key new customer segment. The company still expects the Routan’s market share to grow as more consumers become aware of it as a minivan option.

But Casey Gunther, VW’s top-selling U.S. dealer, says the Routan isn’t what people expect from VW.

“It’s like someone trying to sell you a piece of chicken and claiming it was a steak,” Mr. Gunther says.

VW, he argues, could achieve its 800,000 sales target, “but we need to elevate the brand with products that play up our heritage,” such as the Microbus concept or VW’s sporty Scirocco, which it sells only in Europe. “There are so many people out there who love the lifestyle VW represents,” Mr. Gunther says. “I’m worried we’ve turned into a follower and not the leader.”

There are countless other great examples in this article that address things we discuss in class like strategy, international competition, product design, and more.  It is not a short piece, but is well worth the read when you have 10-15 minutes.  Seeing where things are at in 2, 5, or 10 years will be even more interesting.

Volkswagen Aims At Fast Lane in U.S.. Vanessa Fuhrmans. Wall Street Journal. (Eastern edition). New York, N.Y.: Oct 5, 2010. pg. A.1

Groupon’s Success Disaster

September 19th, 2010 Comments off

There are some interesting strategic lessons in this blog post about a coffee shop’s brush with bankruptcy following a “successful” Groupon promotional campaign.  A couple that I’ll point out:

  1. Fixed costs are very real and need to be taken into account. High “revenues” are not a measure of success when the costs are even higher than the money coming in.
  2. Being a cost leader (or viewed as one — which is essentially the same thing) can be dangerous because all of the people that want a deal will buy — but only as long as they get a deal.
  3. In a related area, customers that search for “deals” will move on to the next deal when it comes along rather than becoming a long-term customers.

Read more at this link: Groupon’s Success Disaster | Redfin Corporate Blog.