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GM Bankruptcy; A question
Tweet Topic Started: Jun 1 2009, 10:11 AM (522 Views)
Mr Gray Jun 11 2009, 08:45 PM Post #61
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yawnzzz
Jun 11 2009, 08:18 PM
aaronk2727
Jun 11 2009, 03:58 PM
on your Kroger analysis: In Indy you will see Meijer, Walgreens, CVS, Marsh, and Kroger all within pissing distance from one another, all selling Wonder bread, Pepsi, & Coke. They are essentially dealers of this product. Do you think it would be better for the consumer and the manufacturer if Walgreens, CVS, & Marsh were no longer allowed to carry Wonder, Pepsi, & Coke?
I don't think there's a comparison... at all. The average person shops for groceries based on what's closest to their home. Time is worth more to the average person than the price differences between small items. While there's always a few people examining all the coupons every week, they're not the majority. Most people just go to a store, and barely glance at the price tags for items under a couple dollars. They're not going to drive across town because Marsh has a 24-pack of Coke for 30 cents less because they'd waste more than that on gas. If Marsh is underselling everyone and therefore selling more bottles of Coke, when they're only able to afford to have a 1/4 of their checkout lines open, you don't wait for 45 minutes thinking, "I'm never buying Coke again." You place all the disgruntledness of the situation on the store versus the Brand.
ok, so you just contradicted your own point. But anyway, your a consultant right? If you were brought into a company to help turn it around. The company is on borrowed money and your 1st objective is to increase sales. Are you telling me that you would close half of your independant dealerships and/or distributors who create almost ZERO costs for your company but do help establish your market share? If so, then please let me know the name of the company you work for so I can make sure to never purchase their consulting services.

Next, to one of your original points. The "customer" is only going to buy one car, as you mentioned. If they are choosing between a Ford Taurus and a Chevy Impala they will be looking for the best combination of price, features, warranty...etc (overall value). If 2 GM dealerships are competing in the same city, helping keep their prices low, they are going to have a MUCH MUCH better chance of selling the Impala over the Taurus, especially during times like we are seeing today where price is such a major factor in the value formula. This equates to the consumer saving money (leaving more money available to purchase other items and stimulate the economy), and GM sold a car, helping to keep their factories moving.

Your equation does the opposite.
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The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism.
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yawnzzz Jun 11 2009, 10:16 PM Post #62
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Jun 11 2009, 08:45 PM
ok, so you just contradicted your own point. But anyway, your a consultant right? If you were brought into a company to help turn it around. The company is on borrowed money and your 1st objective is to increase sales. Are you telling me that you would close half of your independant dealerships and/or distributors who create almost ZERO costs for your company but do help establish your market share? If so, then please let me know the name of the company you work for so I can make sure to never purchase their consulting services.

Next, to one of your original points. The "customer" is only going to buy one car, as you mentioned. If they are choosing between a Ford Taurus and a Chevy Impala they will be looking for the best combination of price, features, warranty...etc (overall value). If 2 GM dealerships are competing in the same city, helping keep their prices low, they are going to have a MUCH MUCH better chance of selling the Impala over the Taurus, especially during times like we are seeing today where price is such a major factor in the value formula. This equates to the consumer saving money (leaving more money available to purchase other items and stimulate the economy), and GM sold a car, helping to keep their factories moving.

Your equation does the opposite.
How did I contradict my point? BG compared it to Kroger's, and I said there's little comparison... and I said that again listing more of the same points on how they differ.

As to your jab at my consulting work, I've just stated a company I worked for in which we did consolidate their distributors. They're now known for providing the best service in their regions. The builders are happy because they know they have one contact, which means less time dealing with multiple vendors, and they're extremely happy because they know that distributor is going to provide excellent service. Previously, they had to deal with multiple distributors that undercut each other. Their model of business was very similar to GMs where each distributor had to purchase cabinets from their factories, so the only way to cut cost was through their services. Their installers were chosen by lowest bid, which meant the quality of work differed depending on who was the cheapest installer in a given week. What would probably be even more surprising to you would be that the cost for the builder hasn't went up with this consolidation. Why? Because previously distributors in the same region had to maintain an overhead staff of designers and pricing associates that had to bid every community even though they'd only land 42% of the business with the other 42% going to the other distributor and 16% going elsewhere. Without competition, they now land all of that 84% and have managed to increase their sales share to 92% in the year after the switch. How'd this happen? They've used the money they've gained by rarely bidding a project they don't land and diverted it to hiring their own installers, and the consistency of their work has spread through word of month amongst builders. It's not only helped that distributor, but a lot of their builders are divisions of corporate accounts, which have used this downturn in the economy to consolidate vendors corporate wide and now that cabinet manufacturer has landed all divisions for several builders all based on the quality of work at a few distributors.

As to your second point, I pointed out that it wouldn't hurt sales in the short-term, but the whole point of brand recognition is based on the long-term sustainability of making your customers happy. How many people do you know that have a brand of car they refuse to buy? In my community, you'll hear the majority of people talking up Toyota and bashing Chrysler. The reason why is partially the quality of the product, but it also has a lot to do with service. The Toyota dealership will pick-up your car for service and return it to your work free of charge. All of their mechanics have passed training done by Toyota, and I've only heard one person complain about having to take their car in more than once to fix a problem. On the other hand, Chrysler is known for horrible service. It's not uncommon for someone to take their car in at least 3 times to get something fixed, and people murmur that their car seems to comeback with new things wrong every time. Now that didn't hurt Chrysler when they were a relatively new dealership, but I'll tell you that right now you could buy a brand new Chrysler for the same price as a comparable car that's two years old at Toyota, and yet the Toyota dealership can hardly keep a car on the lot and Chrysler is struggling to not go under.
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Mr Gray Jun 12 2009, 08:20 AM Post #63
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yawnzzz
Jun 11 2009, 10:16 PM
aaronk2727
Jun 11 2009, 08:45 PM
ok, so you just contradicted your own point. But anyway, your a consultant right? If you were brought into a company to help turn it around. The company is on borrowed money and your 1st objective is to increase sales. Are you telling me that you would close half of your independant dealerships and/or distributors who create almost ZERO costs for your company but do help establish your market share? If so, then please let me know the name of the company you work for so I can make sure to never purchase their consulting services.

Next, to one of your original points. The "customer" is only going to buy one car, as you mentioned. If they are choosing between a Ford Taurus and a Chevy Impala they will be looking for the best combination of price, features, warranty...etc (overall value). If 2 GM dealerships are competing in the same city, helping keep their prices low, they are going to have a MUCH MUCH better chance of selling the Impala over the Taurus, especially during times like we are seeing today where price is such a major factor in the value formula. This equates to the consumer saving money (leaving more money available to purchase other items and stimulate the economy), and GM sold a car, helping to keep their factories moving.

Your equation does the opposite.
How did I contradict my point? BG compared it to Kroger's, and I said there's little comparison... and I said that again listing more of the same points on how they differ.

As to your jab at my consulting work, I've just stated a company I worked for in which we did consolidate their distributors. They're now known for providing the best service in their regions. The builders are happy because they know they have one contact, which means less time dealing with multiple vendors, and they're extremely happy because they know that distributor is going to provide excellent service. Previously, they had to deal with multiple distributors that undercut each other. Their model of business was very similar to GMs where each distributor had to purchase cabinets from their factories, so the only way to cut cost was through their services. Their installers were chosen by lowest bid, which meant the quality of work differed depending on who was the cheapest installer in a given week. What would probably be even more surprising to you would be that the cost for the builder hasn't went up with this consolidation. Why? Because previously distributors in the same region had to maintain an overhead staff of designers and pricing associates that had to bid every community even though they'd only land 42% of the business with the other 42% going to the other distributor and 16% going elsewhere. Without competition, they now land all of that 84% and have managed to increase their sales share to 92% in the year after the switch. How'd this happen? They've used the money they've gained by rarely bidding a project they don't land and diverted it to hiring their own installers, and the consistency of their work has spread through word of month amongst builders. It's not only helped that distributor, but a lot of their builders are divisions of corporate accounts, which have used this downturn in the economy to consolidate vendors corporate wide and now that cabinet manufacturer has landed all divisions for several builders all based on the quality of work at a few distributors.

As to your second point, I pointed out that it wouldn't hurt sales in the short-term, but the whole point of brand recognition is based on the long-term sustainability of making your customers happy. How many people do you know that have a brand of car they refuse to buy? In my community, you'll hear the majority of people talking up Toyota and bashing Chrysler. The reason why is partially the quality of the product, but it also has a lot to do with service. The Toyota dealership will pick-up your car for service and return it to your work free of charge. All of their mechanics have passed training done by Toyota, and I've only heard one person complain about having to take their car in more than once to fix a problem. On the other hand, Chrysler is known for horrible service. It's not uncommon for someone to take their car in at least 3 times to get something fixed, and people murmur that their car seems to comeback with new things wrong every time. Now that didn't hurt Chrysler when they were a relatively new dealership, but I'll tell you that right now you could buy a brand new Chrysler for the same price as a comparable car that's two years old at Toyota, and yet the Toyota dealership can hardly keep a car on the lot and Chrysler is struggling to not go under.
you're trying to compare wholesale specialty product (construction) to retail consumer product (automotive). It just makes no sense whatsoever yawnzz. I don't need to write 2 paragraphs about it, but the bottom line is simple...if you want to sell more product to CONSUMERS, then you need to have it as readily available as possible. Additionally, many people like having multiple GM dealerships in their town because getting warranty service becomes much more convenient. I have heard countless times (although this is as anecdotal as your Toyota reference) that people won't buy certain cars because they aren't close to a warranty service station...etc.
Edited by Mr Gray, Jun 12 2009, 08:22 AM.
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The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism.
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yawnzzz Jun 12 2009, 12:02 PM Post #64
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aaronk2727
Jun 12 2009, 08:20 AM
you're trying to compare wholesale specialty product (construction) to retail consumer product (automotive). It just makes no sense whatsoever yawnzz. I don't need to write 2 paragraphs about it, but the bottom line is simple...if you want to sell more product to CONSUMERS, then you need to have it as readily available as possible. Additionally, many people like having multiple GM dealerships in their town because getting warranty service becomes much more convenient. I have heard countless times (although this is as anecdotal as your Toyota reference) that people won't buy certain cars because they aren't close to a warranty service station...etc.
Listen, I'm not saying its identical, but it's also not identical to selling Coke like your analogy. In the same paragraph where you apparently feel that you've debunked my claim that service dictates sales, you go on to say that people enjoy having multiple dealerships BECAUSE of having service closer to them. So to your point, do you think a consumer would be more happy having a service center a block from their home if the service was lousy? That's the real debate, and neither one of us have the analysis that the person making the decision has, so it's impossible to debate with any certainty.

My only point was that it is possible that consolidation where dealerships are close to each other can in certain situations use the profits from consolidating overhead costs to improve service. Even to your point of having multiple service centers, a dealership can open satellite service centers and even sales departments where consolidating their overhead (accounting, purchasing, customer service, etc.), so that they can provide the same service and sales at more than one location with less overhead.
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