The Last Day of the Third Quarter

Today is the final day of the third quarter, which is also the end of the fiscal year for many companies, plus the federal government. Today is also the last day at Disney for Michael Eisner. After 21 years at the helm, Eisner is moving on. I’m curious if Roy Disney will make it over to the retirement party. After looking over his resignation letter, I’d lean towards the doubtful camp.
Also, GM will end its employee-pricing discount today. Considering the state of GM’s pension plan, I’m a little worried that a GM employee would even consider buying a GM car. As a taxpayer, I might have to bail those folks out pretty soon. If this is going to involve me, I’d much rather have them buy a reliable car. Rich Aristotle Munarriz at the Motley Fool has more.

GM’s Employee Discount pitch is seen by many as a rousing success. I think history will reveal the move as a colossal failure. The marketing resonated with car owners right away. June deliveries were up 41%, the company’s strongest showing since September of 1986. It bled into July, where GM saw a 20% spike. By August, the public had already had their fill. US deliveries were off by 16%.
However, I don’t think the promotion was a mistake based on how it grew stale last month. No, I think it was a failure because it was a success. Let me explain: The “employee pricing” approach was so effective because it gave the perception that consumers were getting a great insider deal. GM started. Ford followed. DaimlerChrysler’s Chrysler tweaked the marketing with its Employee Pricing Plus approach, which offered smaller discounts but padded them with more conventional rebates.
The end result is the same in all three cases. How are these companies going to move their 2006 models? Some have already turned to offering lower prices on the 2006 models, but consumers now expect employee pricing. They were trained to forget the fluctuating cash rebates of the past. This one, they remember.

Posted by on September 30th, 2005 at 11:59 am


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