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….{and what they did was they were like, ok, we’re going to change the model, so people will have the desire to keep up with Plymouth. ________________________________. I mean you pay attention to their needs, wants, and desire, but you make them desire.}

Oh yes. And then you promote the hell out of the fact that, hey, I am better than you, because I have a new car. And so they really get into the psyche of people’s minds. And that’s the science of marketing. It’s a whole lot of that. And you’re right, up until then, there were very few choices. Ford…when he first came out with the Model A and Model T, you couldn’t even chose a color, as they were all black. They came out of the production era. Then we went into sales era, and now we’re into the marketing era. Actually, we’re now into the marketing plus era, because it’s all about customer service. And we’re really more into a service economy than we are a product oriented economy.

Market oriented…yeah. But I went through the Ford Museum and they asked why did he choose black paint? Well, he chose black paint because it dried the fastest. He could produce more cars that way. And when you’re originally producing cars, it’s like, the more we can produce, the lower the price, and more people can afford to buy. Ultimately, when everyone has an option, then we start getting into more of customer choices. And customers wanted a different car. They didn’t want one that was just like the neighbor’s. They wanted a different color, they wanted…

So, Ford launched the Mercury Division. I mean, what’s the difference between my Explorer and the Mercury Mountaineer? Virtually nothing, they are the same thing. I’ve got the Eddy Bower Edition, which is the fancy version of the Explorer. And Mercury makes the fancy version of the Explorer. And, actually, if you go to the Mercury dealer, they have the Lincoln version. So, now I can get the ones that the governor drove, which is the Navigator, which is bigger and fancier and whatnot. You can’t get a Navigator in the Ford line, but what can you get? They have the Explorer, and then they have the Expedition, and yeah. It’s basically the exact same car, but it’s got just a bit of different designing, and label. They took the basic package of my Explorer, and teamed up in a marketing effort with Eddy Bower, and gave him a little special paint job and put some other little do-dads on it, and gave it seat warmers, and other things. So they are actually trying to come up with a different product to meet all of those different consumer needs via their product line.

Back to the cycle…we ask questions, and that’s our market research phase. And what comes back to the producers is data or what I like to call “market Intel.” And from that market intelligence, they have to make decisions. So this is the first step, we ask questions, we find out what they’re doing, what they are up against… We look at trends; we monitor the environment. And if we do a good job there, we’ll be successful.

I have a friend of mine who worked for RCA, and then they were bought out by GE. And he got to launch a new washer/dryer line. Well, what that washer/dryer line was was the opposite of what I thought he was going to say. I anticipated that they were going to build them smaller yet for single people, because there are a lot of single people. Not to mention the seniors, because there will be more of them as well. And, these days, younger people are often waiting longer to get married and wait until they’ve started in their careers. Anyway, I thought he was going to say that we’ve got, now, a washer/dryer combination. It’s all in one, it takes very little space. It’s kind of based on the European model of size. But, no, it turned out to be the opposite. He said they were working on smaller stuff, but this one is a king-sized one. And I’m like, “Well, I don’t get it…” And he says, “No, we did a lot of market research and we’ve found that with a lot of families, husband and wife are both working. They need to do laundry on one given day .They can’t find the time to do laundry in multiple times on multiple days. There’s not enough hours. Everyone’s busier and busier and busier. You want to keep your job; you want to be a mom; you want to be dad; and you also want to do your community stuff, right? So we need to be able to have a washer/dryer the same size as the commercial ones in the Laundromats. And I’m like, “Wow, that’s really interesting.” Heavy duty, faster cycles, you know, the whole thing… And that’s what they launched. They come out with a bigger, more powerful product.

Well, when they did their research, I thought it was only my family that had laundry day. Every Wednesday, and we don’t do this anymore, but when we had two kids in the house, every Wednesday was laundry-party night. And I never taught a Wednesday night class, and my wife never worked on Wednesday nights, so that was the night that we were all at home. So in the middle of the week, when we still had energy, so we would order pizza and we would do laundry. The prize for the kids was that they would get the pizza and a nice treat, and then they had to help fold and put the laundry away. And, so we would watch TV or we might rent a movie, but it was a family thing that we did together. Well, I thought it was just our family that was so creative, but the bottom line is that this is what a lot of families do it.

So here’s Mike telling me that they’ve discovered this thing called laundry party night. Well, it must have been on a “Dr. Phil Show” or some magazine article talking to young couples who were stressed, or something like that. And part of the idea is, when are you going to have enough time in our lives to have sex anymore? You know, we have kids, how do we find the time to anything these days, much less, the laundry? And the answer is to do the laundry on Wednesday night and make the kids do half the work. Then maybe you can find some time on Saturday evening for yourselves instead of doing the laundry.

Well, I was just blown away by what this guy is telling me through their research. And it turns out that that is kind of a trend. Recall we talked about the environment and we talked about trends? So there’s a lot of numbers out there.

And that’s what we looked at…what are the numbers, and how does that equate into dollars? So what GE saw was an opportunity, or what my dad used to call profituning, ok. How many people are willing to buy this? And so they see an opportunity to launch a new product and capture market share, and take business away from their competitors who didn’t jump on this trend or opportunity. And on another day, we’ll talk more about evaluating business opportunities. We’ll talk about an idea that I had, one that I thought could make me a lot of money.

But in this cycle we look at that and what consumers are doing. By the way, GE launched that product line and it became incredibly successful right away. Because their research was true, accurate, and correct. They sold, he said, almost to the unit in each zone or region of the country, what their sales forecasts had predicted. So can the U of M train quantitative minds to predict in a sales forecast of what should or could be sold? Yeah! He said it was almost to the unit. Basically, saying this is how many that Best Buy will sell, and here’s how many Warner’s is going to sell, etc. But it’s amazing. By the way, they do that with a really really, really, good system methodology, and now it’s computerized, right?

But a feasibility study is essential as well as a part of all of this. So once you have your marketing plan in place, then you launch a feasibility study and generate more detail, and then you do your test market and generate a little more detail, and then you go ahead.

So constantly we are gathering information and making decisions. How we interpret that data is critical. If we make a mistake, we could be totally off.

So here’s Chrysler, back in the 1970s thinking, “Wow, I’ve got the best marketing research firm in the world. These people really know cars, they really know car customers… I can go off and play golf, now, because I got them doing the work. Except, they weren’t monitoring the environment, they were only looking at what customers said. What did the customer say? Well, I want a car with a long hood and a fancy ornament on the end that looks like Mercedes. Now Chrysler owns them, which is kind of ironic. But they stole the Mercedes ornament/logo kind of thing. They wanted to look like a Mercedes.

They wanted power. This was back when there weren’t as many freeways ass there are today. But they wanted to be able to go out onto a two-lane road and be able to pass three semis in a row. And, basically, this meant that they wanted to hit the accelerator, and in the length of three semis, they wanted to be going over 100 miles an hour. And that’s when the hemi became popular in all the cars. They all had 4 barrel carburetors with posit traction rear end, so when you would hit the gas, and that huge engine lit up with this huge 4 barrel carburetor sucking down the gas in your tank, you wouldn’t spin your tires and you could maintain control and go straight, right.

People wanted safe cars, so that’s what they built. People said, we want a lot of hip room; we want big old bench seats. If you look at those old Chrysler New Yorkers, they had these monster-huge bench seats. I had a friend of mine whose dad was a pilot for Northwest, and his mom had this car. And it’s like, “What does she need this car for? She’s a tiny woman.” But he had bought her that car… And we used to take it to the drag strip when we were younger; it was so powerful. It had a push button transmission. What we would do is push it into neutral, floor the accelerator, and then push the drive button. But it would do pretty well in a quarter mile. We’d take the mats out, we’d take the back seat out, and we would poor nitro into the fuel tank. And if his dad ever found out what we did… we’d disconnect the headers, you know… Anyway, we had a great time with that car.

But it had these huge seats both front and back. Well, later on he confessed that back seat was just great for the girls. And I’m like, “Well, I never thought about that…” I had a Mustang, and never thought my dad would let me have the car, because it didn’t have a back seat. It was basically too small. But they asked what people wanted. And people said they wanted a car that they could take their whole family in, which means 4 kids in the back seat and one kid in the front plus mom and dad.

Well, what else did they want? Well, power seats that go up and down, and back and forth. We want to be able to sleep in the car on a family trip if we’re tired at a roadside stop. So they asked for seats that would go all the way back. Well, that’s cool. They also wanted a big trunk. And if you look at the trunks that those old Chryslers had, they were cavernous. You could put twelve sets of golf clubs back there. It was amazing.

What they didn’t ask was a critical part. What they didn’t ask was, “Well, ok, you want all of this stuff, but will you buy at a given price of oil? If the price of gasoline is this much, what will you buy?” They should have done another focus group, another piece of research, but they failed to look at that. So here’s Chrysler with all of these big cars. And literally ever one of those cars had big motors, and were very big and fancy, and very heavy. For a while, you couldn’t buy any of the Chrysler cars without power steering, power breaks, automatic transmission. For a while, there, you couldn’t get any of these cars with a manual transmission. They all had automatics.

What did people really want? Well, when it came to the push and shove, and when the price of gas went up, people wanted more fuel efficient cars, didn’t they.

{__________that when they made those cars, OPEC wasn’t even a factor. At that time, we actually controlled the oil. It wasn’t until 1976 when they had _____________, and then they suddenly began to realize that ….}

It was in the mid seventies and it completely turned upside down. And they didn’t expect that, they didn’t predict that. However, I was reading U.S. News and World Report, which is something you all should read, and I was reading the economist, and both publications predicted that would happen. In 1968, 69, 70, 71, and 72. I knew it was going to happen. They were out playing golf, they weren’t out in the library reading.

Yeah, but they were saying that OPEC will form. They were saying it would. And in 1968 they were saying, these are the known world deposits of oil. Do the math; with the rise in population, we are going to be in a crisis. It is going to happen. And now we’re living it. So they completely misread that, they completely ignored that.

Yet, they were so excited, because they had the car that consumers said they wanted. Chevy went, “Well, we’re going to hedge our bets, so they came up with the Vega and a couple of other little economy cars. We can see Volkswagen, over there, and we see what’s going on in Japan, and so we’re going to play it safe. Well, Chrysler didn’t; the only thing they had was the damned Dodge Colt, which was a piece of crap. So now this shift in gas prices happens, and they’re caught. And it was just horrific. The dealers were saying, “Hey, nobody wants to buy these cars; take them back.” So they had paid to get them into the dealers lots, the dealers are sitting on them, and now the dealers are saying pick them up. Now they have to go through the expense of shipping them back. Can you see what happened to their profits? They predicted that there would be sales and profits, and now they’re having to pay to have them shipped back and pay to store them.

I had seen a photo of a lot that contained 1,400,000 Chrysler vehicles. They had taken them from off the railcars, and they would take all the cars that came from the west, and a bunch of them from the Midwest, and they were all sitting in a lot. Well, they didn’t have room in Detroit to store them. Ultimately, some of those cars were shipped abroad and used as embassy vehicles, they were shipped to Mexico… Some of them were shipped to Cuba, probably illegally, because my friend said that he had seen some of those cars in Cuba. And, ultimately, they were converted to dragsters and racecars, funny cars, and monster trucks. They threw the car away and kept the hemi, right?

But this is a classic example of what you don’t want to do. You want to make sure that your market research is correct, it’s true, it’s right. And that’s something that McCarthy preached; and people who didn’t listen, didn’t really get it, and they lost out.

By the way, the U of M, where he started, has had a head start on the teaching of marketing. We have the best marketing research courses and professor anywhere in the world. When I was there in…I took a few courses there in the late 60s to early 70s…who was there? Japanese students were all over campus. And then, later on, when I got my master’s degree, I still ran into all these Japanese students. Some of them had their coursework paid for by their employers, Honda, Toyota, or Mitsubishi, or Yamaha. Some of them had their tuition paid for by the government and some by their families, but they took all of what McCarthy had to say. They thought it was gospel.

Meanwhile, a lot of American people were thinking this was bunk. McCarthy, what a bunch of bunk. The customer is king…what a bunch of bunk. Later on, they began to realize that he was right. Now we’re in the midst of the quality movement, and the Japanese first picked up on the quality movement, now American firms are going, “We need to pay attention to this too.”

And Deming was actually in Japan teaching this stuff. And Deming and McCarthy were buddies and they talked a lot. So the bottom line is that when you read this stuff in the book…I mean, this is really important stuff, and it makes the difference between success and failure.

And if you get this first part right, well then these other steps go pretty well. If you make the right decision about product; if you make the right decision about place; if you make the right decision about price, and if you promote it well, customers will buy the product. And now you’re test market is a go.

And that’s basically what test markets do is to determine whether it is a ‘go’ or a ‘no go’? Yeah, it’s a go, that’s the area where I have checked off my list. So we do our test, and it’s a go.

My Signs For Sale keeps coming back as a yes. My health thing that I first talked about, at first looked good, but the more I researched it, the more I found a lot of no, no, and no. And we’ll talk about that on another day. But once we make those final decisions then we have to get the product into the hands of the consumer. So distribution, or place things, has to happen. So we put it out there: wholesale, retail, whatever. Obviously, the more locations the product is for sale, you are more likely to sell that product. The more people you have talking about it, telling about its advantages and benefits and features are, the more likely you will sell the product.

So, back to the days of when I was choir, the fact that I had things out there on consignment, meant that we were going to sell a lot more records. There was just that much more access for the people to buy them. Of course you’re sales will go up.

So is Best Buy looking for multiple ways to put their products into their stores with the more stores the better? The more locations in a given community that has a lot of spendable money? Yeah. They look at where to build a store based on how many teenagers there are, and how much wealth those teenagers have. If you look at where they build their stores, they don’t build them where nobody has any money. It’s all predicated in terms of distribution on what they learned from their research.

By the way, Coke-Cola was one of the first companies to follow McCarthy’s principles to the letter and move massive and intensive distribution. And Coke-Cola is now everywhere. It originally was only available at soda fountains. Now, it’s available in a bottled product, a canned product, a vending machine product. It’s at the racetrack, it’s at the metro dome, it’s at your grocery store. I actually remember a time when soda pop was not sold in grocery stores. But Coke-Cola looked at this and said, hey, McCarthy says wherever customers are going to be thirsty, wherever they have the need…that’s where you’re going to put your product. Did you know that it was they who invented the first vending machine? There were no vending machines at the time. Coke-Cola following McCarthy’s concept and principles invented the first vending machine. It was basically a low-lying refrigeration unit, and they had recently figured out how to bottle their product. And you would slide the product through a tray. Someone would have loaded in so that the neck of the bottle was held within this narrow tray. You would slide it down, you would then insert your quarter, and it would release it.

Yeah, and then it had a little bottle opener on the front. Now, my dad used to sell bottle openers, and he and the company that manufactured them thought that was the end of their business. Well, people still would want to buy six and twelve packs, so you would still need a bottle opener at home. You don’t want them open when you’re on a fishing trip or on the boat. So we still sold bottle openers. But you would slide it down, pull it out, and you would drink it. And Coke is only good when it’s cold, it’s not good warm.

When they first moved to China, they had to bring in vending machines. China didn’t have any refrigeration. People would line up to go to a Chinese Coke-Cola vending machine. And the lines were literally blocks long. My father, when he went there, said that he saw a line that was four and a half blocks long. There was a truck there that kept the machine full with two workers pouring Cokes in, one bottle at a time, they were the plastic bottles, from the top. And it was a brand new machine. And he had asked, “How do you do that? It can’t get cold enough by the time the purchase gets made.” But he found out that it was a super chiller machine. This machine was designed for this Chinese Coke-Cola market. And this product will be chilled within the twenty-eight second that it takes to get from the top to out the door. But that’s amazing.

Have they thought all of that through in advance? Yeah. They knew there was no refrigeration, and that people wanted it cold. By the way, if you want to know where all of those good vending machines are, they’re in those poor countries. The one’s that you see on TV that talk to you, we finally made some improvements and have gotten some better ones here. But I used to get a lot of attention from my students, because the machines we had at this college were incredibly antiquated. We changed vendors and now we have some newer and better machines. But it’s like they were always bitching about the machine would take their money, and they had old machines. And I had said, “Well, you know where all the good machines are? They are in China.” My dad came back with a video of a vending machine. And I said, “Dad, I don’t believe this…” I had to call Coke-Cola to see if it was true. And the machine would talk to you. It was fully automated. And the machine would say to you in Chinese “Good morning sir” or “Good morning maim.” And talk to you. It would tell you how to operate the machine, how much money to put in, and the change you could expect. But it was like I couldn’t believe it.

We buy product warm in the grocery store and take home and put it into our huge refrigerator. If those people buy the product warm, there is no refrigerator at home. They have no way to cool it. And ice is sold at a premium. Ice is huge there.

By the way, Pepsi made a deal with the Russians. Coke said that they didn’t want the Russian market, it’s puny. And that was back when it was the Russian Empire, right? They said, we’re going for China, it’s a much bigger market. Who made the better decision? Who still has global dominance because of that one decision? By the way, Pepsi made the deal with the Russians and the Russians didn’t have any dollars. Coke got a deal where dollars came back. The Russians said that they would pay in vodka. So all of a sudden Pepsi is in the vodka distribution business, which has actually turned out to be pretty good for them. But when you look at that, who made the better decision? Coke did.

{Yeah, but ________ example of the Russian Empire. There’s a lot more opportunities for commerce within…}

And they set up multiple…and all of those contracts went dead then, so they got out of those bad contracts. Coke is still dealing with the original contract, and they formed new ones. There’s a lot more bottlers, so yeah… But actually Pepsi cheered huge when the wall came down, because they knew that contract would be null and void. They still had their relationship with the vodka folks and now they got to do a new contract in each country with the new locals. So they mushroomed, virtually over night, their number of bottlers. By the way, Pepsi and Coke will be very good clients for my Signs For Sales business, because I have studied and I know the soda business fairly well.

{In Japan they ___________. And they have cell phones that make us look like we’re still in the dark ages. Don’t they have __________. I mean this was like five years ago, _______.}

Yeah. They were the first to introduce self-service 24 hour gas stations, all based on cards at many of their retailing sites, because it’s so crowed, and they look for those economies. So anytime you can automate, or make something electronic…yeah. And, indeed, if you go there, my mom and dad’s best friends in the world own cable TV stations and they sell electronic stuff, so they always go to the shows. And they’ve been there; they took my mom there, and my mom said that it was amazing how much ahead they are on so many fronts. And the cell phone was just one thing. They were using video cell phones even before we knew they were available. They almost got the high density TV, the digital TV rights. But we kind of aced them out of that. That’s a whole other story for another day when we’ll talk about product.

But can you imagine every American broadcaster having to buy all Japanese equipment? If they owned the standard, our military and our government would not allow that. So they kind of played some games, and…. But, actually, I have been to the Thomas Edison Museum in Fort Myers, where my mom spends her winters, and seeing Japanese on their hands and knees, bowing and praying to the wax statue of Thomas Edison. I mean, to the Japanese, he’s more influential than Bhuta. And when the guy first told me that, the first time I was there, I laughed and just thought of it as a cute line that the guy would say to the tourists. But the Japanese actually do come there to bow to this wax statue.

Well, the Japanese copied much of our stuff, right. The Japanese really haven’t created that much product line, they just copy stuff that we have invent, and then they just make it better, right. So when she told me that, I laughed. But when I went back there again with my friend, Roger, and we spend a lot of times in Museums, because I wanted to soak-up and absorb everything. And we actually saw them doing that. And I think that Roger took a photo of it. And it’s like they realize and recognize just how genius this man was.

By the way, Thomas Edison lived pretty well because of his inventiveness. And because he had a friend by the name of Mr. Ford, he was able to shelter him and set him up with workshops, and that changed the face of the world. Many of those new products that met the consumer’s needs… I mean imagine the fact that, no longer… we have electric motors now, so we don’t have to have our factories where there’s water power or coal generating directly. We can have the coal plant down by the river, where we can get cheap coal up from a barge, and we can build our plants up in the farmlands. All we have to do is string the power out to the middle of the prairie. Gateway has done that. Where do they make Gateway computers? Out in the middle of nowhere, where you can build a building with economic development funds from the county, state, federal, and then have farmers, who are nonunion people, throw up your building, and then hire employees who are starving, because the dairy business isn’t good anymore. And, by the way, they would only run the electricity at off peek hours to the farm, and get their electricity from the coop. Anyway, it’s brilliant.

Anyway, this distribution thing is critical. Now, what happens when you’re right on all of these things? These guys buy don’t they? They say yes, their decision is yes. And, hopefully, they will repeat. My dad used to say that the most important word in the Business dictionary was repeat. And I said, “I thought it was profit?” And he goes, “If there’s repeat, there’s profit.” First of all you have to get them to buy with attention, interest, desire, and action, right. Then you have to satisfy them, you have to go above and beyond and exceed their expectations. Well, McCarthy was the first to say that. And, now, it’s the maxim in business.

McCarthy 1950s

4 ps U of M economics

AIDA Formula

Product FAB Attention

Place Dist. Log Interest

Price Point Desire

Promotion Mix/con Action

How many of you work in the real world? Hopefully, most of you. By the way, that work is good practical experience aiding in your education, right. What do they tell you at work? What do they tell you at work? To satisfy the customer; the customer is king; the customer is right. Your private life means nothing. Take care of the customer. If you have extra time, then it’s your private life. By the way, if you take very good care of your employees, which is something that not all employers understand, if your employees are well taken care of, they’ll take better care of your customers. And you’ll have more profit and more free time. There’s a whole way of thinking that McCarthy imbedded into all of this. And Deming, really, picked up on McCarthy’s stuff and just put quantitative analysis to it, and process to it, in manufacturing quality.

Well, if they repeat, what comes back here? If they buy, what comes back here? Cha-chine. What were they doing at target headquarters during the Christmas rush? They were monitoring those computers every minute weren’t they. Those top brass, actually have a report that will print out on their computer and it blanks out every other screen that they are looking at, and it gives them the latest little tabulation of totals. [That must be executive software (Don Cassidy).] And they only have to see it for a few seconds, but they can see how well they’re doing and whether they are keeping on track. And if they’re not, then management has to react quickly and say, hey, we’re going to have a sale the day before Christmas, right. It’s amazing.

So, what comes back here is more data, more market intelligence. And it’s sales data, when and where they bought, ok. By the way, when you fill out a warranty card… you’ve already purchased the product, right? You fill out a warranty card, they want you to tell them what magazine you saw it in, when you bought it, when you bought it, right? What’s that? Well, it’s more data that comes back to them, right. So marketers are in the business of gathering data and analyzing data, and making decisions from that data. Your warranty card means nothing, except if you buy software. That’s you’re license isn’t it. If I buy a Toro Lawnmower do I have to fill out the warranty card to have the warranty honored? No, as long as it’s stated anywhere written or verbally, they have to honor that, don’t they. I don’t need to fill out a card. As long as I have what? My receipt; that is my contract. And the number one contracts in the world are sales contracts. So keep those receipts for things you think you might have a problem with. I always tape the receipt to the box. I keep the original packaging, and fortunately I have a big garage. So in the attic or garage is where I keep all my boxes. At some point, I flatten the box, because I might not have enough room to store everything, and I use that to insulate over my laundry room, because there’s no real decent insulation, there. But if I need a box, I can return it. I have the receipt with the thing.

So that’s what’s key. Well, when they tell you to fill out that warranty card, and they really encourage you to fill these out, they’re getting your name, your address, phone number… How many of you have gotten the call after you sent that in… “Thank you for returning your warranty card…” Now, I sent one in on my Explorer, but only because I bought the extended warranty. And I wanted to make sure that everything was in place for that. And they called me back and asked me if I was happy, and what I thought of the sales relationship, etc. They asked, do you want to extend your warranty beyond what you have already bought? They were giving me one more chance to actually buy more warranty, which I really didn’t think I needed, but….

{__________________. I just bought a camcorder, and what they did was they said, “If you send this warranty card in within ten days, we’ll give you an extra six months on your warranty. So that’s an incentive to send it in. Otherwise people will not do that.}

Yes. My wife and daughter just bought a digital camera for my wife’s business. But they researched it and checked it out, and I’m not 100% sure, but when they looked over the warranty, and they had heard me talk about this before, but there was a thing where if you send it in you got a free memory card…and it probably doesn’t cost them that much at all.

Maybe they were just getting a discount, I don’t know. But they ended up with two memory chips instead of just one that came standard. And, now, she’s really glad that she did that. They haven’t had any problems with it yet.

So you want to continue this repeat cycle, you want to continue the opportunity to have interaction with your client. And so it’s an ongoing thing. It allows you to capture their name, address, and phone number for more promotion. Who do I want to send out the flyers for Inver Hills for? Anyone who lives in our service territory? Well, maybe… But especially to the people who have already been here at Inver Hills, right? I want to make sure you’re getting that. That’s why we’re doing the calling campaign through the networking club to make sure those alumni are getting the alumni newsletter. We want to make sure that they are tied into the college. Who is better to promote Inver Hills than our alumni? It’s the best marketing venue we have.

By the way, it’s critical to establish our relationship with employers, establish our relationship with a four-year institution to have our alumni participate in our campus. It’s very important. And most faculty don’t get that. Well, I do; I’m a marketing guy; I get it. But for you guys, it’s important that you reach out and network with our alumni, because if they have success stories, we can talk about it, and they’ll make the Inver Hills legend better: we have a great business department, our reputation is solid, and I’m very proud of that, but we can actually make it better, can’t we, via our alumni.

So it’s like… when we think of this promotion thing, you want to make sure that you do that right. And who best to talk to already existing clients or former clients. We used to put into every box…and my dad was a genius, I don’t know where he figured this out, but in every single box our factories would be instructed to pack the box so that the bottom had a “Thank you for choosing Mitchell Advertising” along with a reorder number that told them all of the information that they needed to get that product again. So, basically, it’s like if you like your nametags, or your ring binders, or calendars, or your hats, or your pens, here’s how you can replace them via Mitchell Advertising. And then thank them one last time for their business. The guy was a genius; he was brilliant. But that was absolutely critical.

By the way, how many of our competitors did that? Zero, and I would hope, now, that most of them do, because it’s an old trick now. But I was surprised that 7, 8, and 9 years into the program, not one of our competitors picked up on that. And how did we know that? Well, I had asked one of our suppliers, “By the way, are any of our competitors forcing you to put their stuff in the bottom of the box?” And the answer was no. And I thought, “Thank God!”

We paid our bills early. Do you get that respect and attention from a supplier if you pay your bill early? Oh yeah. Sometimes they will even give you a discount. Sometimes, you not so worried about the discount, but you might want something else. For example, we have paid you early three times in a row, that was seven total days of paying early. Can you give me 7 days off your production schedule and move this product out the door a little quicker. Yeah, they’ll ship it UPS and get it out of here early for you… Now my client is thrilled, their product came before their deadline by two days, and it came by UPS, and we only charged them for standard freight. Wow… So you learn little tricks, ok. And, that’s what you want from coming to class…what the hell is between Mitchell’s ears. And you’ve got to pay attention, because I talk fast, and I layer a lot of stuff in there. Kevin can tell you, he’s had one of my classes. There’s a lot of stuff layered in my lectures. And you want to pick up as much of it as you can.

All right, if you do the promo thing right, and you choose the right marketing mix, and you have messages that work, like Pepsi with “The Pepsi Generation.” You young people drink a lot of Pepsi product, don’t you? You favor Pepsi, you buy Mountain Dew, which is one of their products… They know how to talk to you; they use extreme sports in their ads and it’s cool, and rad, and hip, and whatever it is, ok. I’m probably already out of date using these terms… But they know how to talk to those customers.

Victoria Secret…I was flipping through the catalog. I was up really early on Saturday, and I’m going, “Whoa…” But they know how to talk to women, don’t they. I’m looking at this thing, and I’m saying, “Gee, there’s all this girl flesh in here…what’s the deal?” Well, women want to look like that, don’t they. They want to look like that. Last night, did you watch the Globe Awards? What did you see? A lot of Victoria Secret product underneath those gowns. Women notice those things. A lot of men are just going, “Whoa, that was a lot of cleavage…” By the way, I think they are going to start calling those the Cleo Cleavage Awards. Did any of you see the show last night? Or, were you all at home studying your homework?

By the way, does marketing touch on human needs…the desires, wants, dreams? Do we touch on sex and sexuality, stuff like that? So if this bothers you, this isn’t the right class to be in. I have to include that, because it’s a part of marketing. We have to understand what triggers people’s attention [Freudian marketing…the base levels of the subconscious.]. And, by the way, my wife noticed more and could say more about the gowns… All I could say was this morning was that the one girl made an inappropriate comment about her breasts. And my thought, when I saw her in the dress, “Those have got to be fake…”

{She just had a baby… Are you talking about the Golden Awards? She just had a baby.}

Oh, that’s what the mom-comment was! So, she had a baby? Ok. I’m sitting there going, “Whoa, I can’t believe…”

{I think she said something like, “I could have paid a $1,000, but I would like to thank my new-born son for these…}

But, I mean, that dress wasn’t hiding very much, though… But that’s how they get people to watch, don’t they. That’s how they get people to watch. It’s a part of what they do.

By the way, did any of you notice that the Golden Globe Awards were promoted in theaters for the last three weeks? If you went early to any theater, or most theaters, you saw a TV commercial, if you will, in the theater for that. I think that’s, by the way, for the movie business to do.

It is because I’m paying to see a movie in a theater, and I don’t want to see TV commercials. It’s one thing to see previews; it’s one thing for them to pitch popcorn, but it’s another thing when I’m seeing ads that I would see on TV. I think this is a problem; I think that they are kind of messing up their own backyard pool, so to speak. My dad used to say, “You don’t crap in your pool, you crap in your toilet.” Now, he was kind of crude sometimes, but some of the things that he had to say make a great deal of sense. Of course, what he was referring to…at one time, I wanted to go out and sell his samples that had “Your ad here with three lines or less,” And he said, “No, you destroy those.” I wanted stuff that was like rejects…like we had some bags that were printed for Norwest Banks that were the wrong color… I wanted to sell those in my garage sale. He made take them and not sell them. Actually, now that he’s passed away, I just stashed them in my attic. Maybe I will sell them in my garage sales… but Norwest has long and since gone, and nobody cares about an old logo, but, essentially, you have to take care of your channels of distribution and how you make your money.

And I think they have made a mistake. Just like Gateway, who made a mistake when they started having retail stores. I saw that and I said, they are going to regret that. And they have regretted it. So having a good ability to look ahead in marketing is critical.

Anyway, back to the promo thing… if you do that right, and you tell these people what your features are, what your advantages are, what the benefits are, and where to find the product, how to get a hold of the product… They will buy the product, and more dollars come back through, right. And then you know, gee, the promotion work went well… You could use certain code numbers; you could use colors on coupons… there’s a number of ways to track what promotion was more effective than other promotions. And as this cycle continues round and round, you get tighter and better. Does Target know that that supplement, in the Sunday newspaper, works? Oh yeah. They know just how well that works. And there will never be a Sunday, where you won’t get that. Unless, for some reason or another, the factory goes on strike, where they might have a back-up plan for another vendor in the event that should happen.

If the promotion thing goes well, the dollars come back, the cycle goes on and you get repeat clients. If customers are happy, and you’ve exceeded expectations, they will tell other customers and they buy the product. And this whole cycle grows outward, doesn’t it, and your volume grows. So this is a non-ending cycle if you do it what?

It grinds to a halt, it comes completely to an end, exactly. And it can come to an end pretty quickly. If it’s a fad item, and people are only going to have the want, the need, the desire… just once or for a short timeframe, your product’s life-cycle will look like this, it will climb really fast, but then it’s going to dye just as fast, right. Wheaties is still selling, right? Wheaties has a wave-like product life cycle. And they pump some more promo into it, and they revive the product and make it new and improved, and it goes on and on.

So R & D is a big part of this, the research and development. A certain percentage of the dollars that come back are going to go into growing your product line, improving your product line. G.E. didn’t have to come out with any new washers and dryers, they had a pretty good share of the market. They were competing with Maytag and Whirlpool, but they wanted a better share, and they wanted to expand their product line. Now, they have three new products since that last one.

By the way, my friend, Mike, who was in the beanbag chair business, got me into that, and after the beanbag chair thing fell apart, and he sold beanbags to Target Stores, and when I first learned about Target. And then he went onto sell tape, competing against 3M with their wrapping tape, and packaging, and saran stuff that goes around packages and holds stuff together. And from that company, the buyer from one of the RCA plants like him so well, and was so impressed with him, he hired him. So he quite that and then went to RCA, then moved to G.E. And, now, he competes against G.E. selling service plans and warranties. So when I was first getting going on my teaching career, he was calling on Dick Schultz and Brad Anderson at Best Buy and try to convince them to buy warranty packages for all the G.E. products. And he did a very good job of that. And now that’s one of the biggest profit centers in all of Best Buy. They make a lot of money selling warranties. You’ve all probably assumed that, because they lean on you pretty hard to get them.

I learned a lot about costs and how things worked through him. Part of the money….let’s say 3 percent or 5 percent is going to go into R & D. And each company is going to have to make a decision about how they want to do that. What do you think 3M thinks it should be? More than ten or less than ten? Oh, more than ten. Sometimes it’s twenty, sometimes it’s thirty percent. And 3M funds an incredible science lab over there, don’t they. And they’re doing science for science’s sake. Whether it means a product or not. [maybe because much of their successes came from the accidents of their science. ]

…promo, all right. And it might be 1 percent, it might be 3 percent, if your competitors are doing 5 percent, and you’re starting out, and you want to beat up on them, you might need to do 7 or 8 percent. You may need to borrow some money to kick start this thing. Because, remember, in order to get the “place thing” going, to get retailers to take your product, you have to tell them what advertising is in the pipeline, right.

So that’s where the risk comes from. The risk comes from the fact that you have to make the product first, and then you have to promote it. So you have to borrow the funds to do that. Then you have to hope the customers are going to buy it, and hope that your projections are right. If you have done a good job, then that will happen.

When County Seat got started, it was kick-started with about $100,000 in promotion money. Super Value took a big risk, didn’t they. Playing around with a $100,000 bill….your going to set it on the table and is it going burn up and disappear, or is it going duplicate itself. In the case of County Seat, what did it do? It replicated itself many many times. So they did things right by bringing in good people and hiring the right ad agencies from the beginning, and they did their testing, and they followed the McCarthy formula, concept and pattern to a t.

Oh, absolutely… As a matter of fact, Bill Bailey said to me, “This can’t loose unless we really screw up.” It’s kind of like what I said about Inver Hills, “We will grow…” I mean, given our population and the demographics, of this southeast community, we have to grow—we will grow. I mean, we would really have to screw up.

[And your talking about this particular quadrant, right here, in the Twin Cities…this quadrant right here…]

Yeah, yeah… So do I want to have a classroom full of people…yeah. Is the business department promoting like it used to, or are we going out, or are we promoting outside the campus? Do we have people out promoting in the high schools and the high school teachers? No. We should be. The program could be bigger and stronger if we were. But as long as we do a reasonably good job in the classroom, we’ll hold our own. I’m hoping we’ll get some leadership develop money into the college to fund some of those things that we used to do that we haven’t done for a while.

{Remember that billboard thing that we were talking about? Why don’t they do that? Every other college is doing that…}

I know, and…if any of you could ever get me a picture of that, it would help me in my argument. But there are people on this campus who are afraid that that would have a negative public image.

It’s because it’s advertising and marketing. There are people who do think bad about marketing and advertising. And they see that as pollution…they see that as visual pollution. And they see that as coping out. You know, Dave Burger and I…how many of you have had a sociology class with Dave Burger. Dave and I could go round and round and we could talk about a number of things. But there are people who think that marketers do bad things in the community. And I don’t buy that; I think that marketers pretty much reflect human nature. But there are people who think that Signs For Sail shouldn’t be, because you’re polluting the lake, the beech, the water environment with an ad message. Oh, I’m sorry, but if I don’t do it somebody else will. So that doesn’t really have a play with me.

So that’s part of the problem; but it’s more that there are faculty on this campus that would complaint than there are students or the community in general. There are faculty who think that the property facing the freeway should reflect the natural view from the highway, and that there shouldn’t be a billboard there. And I’m saying, hey, we could get a lot of free billboard space on other billboards if we allow them to put 3 or 4 billboards on that space. We could actually reduce students’ technology fees and other expenses with the revenue that comes in.

Well, that’s just it. A lot of people don’t know who we are, because we are kind of hidden. When they built the new building, I wanted to have banners on the back of that building. I mean, that’s a beautiful…if you look from the highway, you can see that structure. But, oh no, Rusty, we can’t do that. I almost got my hand slapped for being a bad marketing boy.