Monday, October 20, 2003

As a matter of fact, much of the stuff that you and I are talking about now, is all going to be delegated over to Liz, and hope she’ll be the club advisor for next year.

[Yeah, but does she have the time?]

Well, one of her major responsibilities is _______ and those two things go hand in hand.

[Well, I’ll do anything to lighten the load. And I think that to digitize everything, to begin with, would really help. To make this all paperless would be great. And accessibility—that’s the key.

Is Jamie here?

Let’s get the attendance going around…

Did you guys all have a nice weekend?

[Did you bag any grouse?]

You can thank the MEA for this weekend, yes? Actually, we did get 3 grouse. And I shot one of them. One of my former students, who I went with, got two, and I got to work behind a Brittany Spaniel that is so well trained. Talk about training and discipline…I mean, it was unbelievable, it was really fun. Now, with my Goldens, I’ve spent more time with the breading than the training. And they’re good, and some of what they do is in their blood naturally. And, obviously, their triggers are more for water fowl, and when you shoot pheasant and they are a long way off, and they like to run, the retriever will catch it and bring it back to you. And my dog will do that pretty well. But it really is fun to watch a Brittany who’s got that incredible nose, and who has been trained to work sent lines… And when that tail gets going it’s like, Well, there’s a bird there! It’s just so fun.

Our timing was perfect. We got in the car and headed home at about noon, so we got to listen to the Vikings game… And wasn’t that fun. It was probably one of the most exciting plays in Minnesota sports history happened during that game. I still have yet to see the clip, but I know that today I will on one of the news casts.

It’s kind of funny, though, because I was amazed that Byron had such a good memory. He remembered when I took him to a Vikings game; we used to have season tickets, in the old Met Stadium, where we played Cleveland. And that was the last time that we had a play that was that exciting. And he said, “I remember that! I told friends for years…I was there; I was at that game!” And I was amazed that he remembered that. Sometimes it’s intriguing as to what sticks in your head.

Marketing

Alright, we’re going to talk about marketing next. That’s my favorite subject.

Jamie has invited a guest speaker, or will be inviting a guest speaker and we’ll be looking at two days for that. One of them is the 11^th, which is a Wednesday. The other one is on the 10^th of November, which is a Monday. I’m thinking that the 10^th will work out.

I just gave the test number 3 to my secretary to photocopy this morning. And we may alter the date for when we take that. If we can have a really good guest speaker, this person sounds like he would be good. But you’ve got time, yet. So don’t panic about test number 3, you’ve got time yet.

[Are you thinking about moving it up, or back?]

Well, I’d like to have it on the Wednesday that it’s scheduled, I really would, because I’d like to keep on schedule. But sometimes when you have a guest speaker, though, and it’s a day when you have a test scheduled…because we only meet twice a week, that’s a problem. I think next year, I’m going to have my classes meet Monday, Wednesday, and Friday, where you’ll only come for 50 minutes. I think that works better in terms of scheduling. Although, I had a full class, so this must work. I mean, you people must like this scenario. But the way that I’ve done it in the past…we’ve always been able to have Fridays designated as test days.

[November 3^rd is when it’s scheduled for now…]

Yeah…. Well, that’s if you look at the syllabus, that’s the week that it starts of. But if you look at the syllabus, it says that the tests are that week, but on a Wednesday. That, unfortunately is confusing to some people. So, it will be the 5^th.

But I’m thinking that if we can have a guest speaker on the 10^th, that would be better.

And, hopefully, on Monday, I’ll start around…hopefully, I’ll get it done today or at the latest Wednesday. But I’ll pass out the sign-up sheet for the oral presentations. And the week that that is assigned, according to the syllabus, we’ll have two days for which you can sign up. We’ll get one half of the class done on Monday and the other half done on Wednesday. And when you sign up for that day, you are locked into that timeframe, unless you notify me in advance that you aren’t going to be able to make that, and we’ll switch the date. But we have a pretty big class, and we need to get all of those speeches in on those two days. I don’t do make-ups on those oral presentations, so….

And, hopefully, you are all moving your paper projects forward and have got that under control.

Marketing

Alright, we’re going to be talking about marketing for a few of our class periods, here. And marketing is probably the most important functional area of business. And marketing happens first, it happens last, and it happens always. And out of your marketing efforts derives your profits; and it’s out of your profits that you reinvest or pay stock holders, right…and employees, and so it’s clearly easy to argue the fact that this is the most important functional area in business.

Now, in an intro to business class, we try to look at all the functional areas of business. But this one happens to be an area where I have a little extra expertise in, so we’ll spend a little more time and effort in it.

I was at a class at the U of M, and it was a graduate level class, the Carlson School students. These were people who had completed the Carlson School 4 year program, and were into the master’s MBA program, right? And they were into this stuff…they were into business and it happened to be a marketing/advertising class, and the instructor started off on the first day by asking all the students in the class, What was the most important functional area in business? And, of course, if you’re getting an MBA in accounting, you’re going to respond by saying accounting. Or, if you are specializing in finance, human resources management, or production, you’re going say what you specialize in.

So he went around the class and…I didn’t raise my hand, because I knew what the answer was…but he basically shot everyone down and made his point that marketing happens first, last, and always. And unless you have a good marketing plan, there’s no need for a personnel director, right? If you’re marketing plan isn’t working, you’re not going to be able to give any benefits for a personnel director to be in charge of, right? He made some really good points.

It’s also one of the more popular of the career choices. So if you’re doing your paper on a career topic, you’ll find that there is a lot of material on marketing careers out there. Many college students that take an intro to business class and then have to decide on a major will decide on marketing as their major.

Clearly, for many entrepreneurs, it’s the central or pivotal thing that helps them to put their small business in place. So learning how to do a marketing plan is critical, and we’ll spend a little bit of time talking about that. Now, some of you are also in my marketing class, and so this will be a little bit of a review. But it’s good to have that review.

Hopefully, when you are done with Intro to Business, if you want to take another class of mine, and you’ve liked what took place, here, in this classroom, you can then sign up for the marketing class. And I’m hoping that I’ll have two sections that will go in spring semester, where we’ll get into it in considerably more depth.

But today we’re going to look at the marketing cycle, something that a guy by the name of McCarthy came up with. And is considered to be the grandfather of modern marketing as the subject. And he wrote a book, which was published in about the 1950s. He was a U of M guy, and he was an economist. And when you look at this model, in a little bit, you’ll see this circular flow, you’ll begin to think about economics models. A few of might have had an econ class or some econ up to this point.

By the way, if you’re going to study business, you need to take econ coursework, don’t you. And this is a good place to do it. We have some very good economics instructors here. But if you plan to move into a business curriculum, most schools use econ as a separator class. If you can’t get through econ, you’re not going to be a business student. So it’s good to take that in our environment, where we can make it a little easer and help you along where you can have a little more time with the instructor. Fortunately for me I went to Mankato, and I liked econ, and my brother-in-law taught econ at Normandale, and I had had a high school class that had helped me get started on it, and in my first econ class, I got an A and I got an A in every other econ class since then, except for the very last one. It was very mathematical and very theoretical and the guy said I won’t be economist for the Federal Reserve, and you won’t be in our graduate program. But you’d be a really good econ teacher, so you go ahead and teach high school or college econ. I have gotten to teach it once or twice, but… But you’ll see the economics in this model in a little bit.

But McCarthy was talking about supply and demand. And obviously when we think about marketing, what is marketing, what do we think about? It’s exchanging, right? So what marketing is, is it’s an exchange process. And, obviously, we have to figure out what it is that consumers want, and then create or produce that product, and then get it out there in the market place, and hopefully they’ll buy it. Then we exchange the product for some dollars. We reinvest some of those dollars and make more of it, or make it better, or expand our product line. And so it’s this process that we go through.

Marketing has been around for a long time, so McCarthy didn’t invent or create marketing, he just made it a college level subject. Before that, it was kind of tied in with management and it didn’t have its own text book, it didn’t have its own coursework, it didn’t have its own vocabulary. So he created much of the vocabulary. We’re going to talk much about his 4 Ps in a little bit. And he was a good teacher, so he came up with ways for students to remember this. But anytime you are at a dinner table with business people, and you want to sound somewhat educated, you can talk to them about your marketing class or you can talk to them about what you’ve learned about McCarthy and they’ll probably recognize him from his 4 Ps: Product, Price, Place, and Promotion.

As an economist, he looked at supply and demand; he looked at efficiency, he looked at productivity. And what he said was that there was a lot more to this though, then what business managers are looking at, and he understood that we needed to look more at promotion; we need to include more about market research, and so he came up with this subject matter.

What is a Market?

What is a market? Can anyone tell me what they think a market is?

[Demographics, it could be regional, or I mean geographical…]

Yeah, ok, it’s a place. And one of the four Ps that we’ll look at in a little bit is, and this is what marketing managers have to make decisions on, is this marketing mix, ok? The place component: where are you going to sell your product.

Well, in the early days, the market was a central place that you came to. How many of you have visited the Farmers Market in downtown St. Paul or in Minneapolis? Well, in the old days of Europe, before people came to America, that’s where people went to exchange goods, right? Now, it’s very different, isn’t it. We exchange goods on the Internet, we communicate via phone or magazines… you place an order, and we ship things via UPS. We still go to a place, however. We go to a shopping centers, and we go to convenience stores in our neighborhoods, and gas stations, and we go to the Mall of America. And, so over time it has just gotten more sophisticated. And so the books have gotten thicker and more expensive and include more terms, but when you think about what is a market, it’s a place where we exchange those goods.

When I was in Chitsenitsa, which is down in the Yucatan in Central America, I got to go to a pyramid that was created way before Christ. And I asked what where those pillars for over there, right to the left of the pyramid? And they said that’s where the market was held. And people used to get up and work in their fields in the morning, but then when it would get really hot during the midday, they would then go into town and do their shopping. And you would shop everyday for what you needed for that day. And you’d have coffee and you’d socialize, and then in the afternoon, you’d work a few more hours, and then it would be time for bed. So people worked, if you will, those hours and play. Well, people came to the market and people still do that. Today, when we think of the Mall of America, we’ve included the word fun in what we do there. But you must think about those old markets, which was actually an enjoyable experience, where they sat and drank coffee, and shared stories, and talked. So this has been going on for a long time.

Back during the days of the Roman Empire, when we started to see very specialized labor, and we started to see increases in production, now we had an excess of products, didn’t we. And so some people started specializing in selling products where there was excess. And we began to see marketing change. And we had criers, and hawkers, and informers. Then with the invention of paper, we were able to reproduce a communication to say that if you needed something, you could come to a certain place. And we then began to have people specializing in trades, didn’t we. So if you had a locksmith ability where you could make locks, you’d open up a shop, and you’d put a sign out in the front. And when people would walk by, now that there is where to go if they needed a lock. But you’d also pass out brochures and essentially a calling card, right? And people would know that this is your place of business. And word-of-mouth would spread, and it’s like, “Oh, where did you get those nice boots, or that nice hat, or that shield?” “Well, so and so makes these and he’s really good.” So peoples reputations would spread and their businesses would spread. And then they would hire employees, right? And their businesses would grow. And that’s how this process of marketing has evolved over time.

Well, McCarthy wanted to put it into the context of an economic model. And he said that the first thing we have to do is to ask questions. We have to find out what it is that consumers want. By the way, he also came up with the marketing concept or the marketing, or the marketing philosophy, where he came up with the thought that consumers are king. Everything that we do in a business, every decision you make, every employee lives for that customer. How many of you have had a boss say that to you? What we do here revolves around the customer—the customer is king, right? That was his…it hadn’t been written or put down on paper anywhere up to that point. I mean, people have talked about and business owners knew that, but he was kind of able to make that his thing.

And so the customer is king, and we find out what their wants are. We also find out what their needs are, but also we find out their desires, hopes and dream, their aspirations, etc. And whether you are selling a product or service, that’s critical, isn’t it. To find out what it is that triggers these purchase behaviors. So as marketing as evolved as a discipline, over time, has it gotten a lot more sophisticated and a lot more psychological? Do we do consumer profiles? Yeah. And we look at a number of things, demographics, psychographics, and we’ll talk about those in more detail. So what this is, this first stage, is market research. And what we’re doing is gathering marketing info, or data. And, clearly, business people need data. That’s a critical thing. Marketers need data. And this is one of the things that you learn in a college environment, isn’t it. You learn not just the technical part of data management, how to get good stuff in and good stuff out, but how to make decisions from that.

So as we work through this process, we’re going to have to make decisions about product, the quality of the product, what that product should look like, smell like, what color it should be, how it should be packaged, and what people want and what they need.

Place…and those are the logistics, where do we get that product into the hands of the customer. Coke-Cola, as they studied their marketing concept, and they studied how they were going to come up with a marketing plan, realized that they couldn’t just sell their product in grocery stores, they had to sell it in multiple locations. Now, actually, Coke-Cola was originally available in drug stores, wasn’t it. It was only available at a soda fountain. And they had realized how this limited their sales, and people are thirsty where?

{Everywhere}

Everywhere, yeah! So the guy who started Wall Drug made a fortune, because he realized that people traveling across to the presidents at Mount Rushmore were hot in their cars, because it’s like desert out there in the Dakotas, and they could come during the summer during their vacation times, and he would put up signs that said “Free Ice Water.” And people came, because they were thirsty. Well, you’re in your car, you’re thirsty, so Coke-Cola had to design a vending machine. And that first vending machine that they created had a little rack for the bottles… But first they had to invent the bottling process, because it’s not prepared for you and in front of you in a glass anymore, so they had to pre-make it and then they franchised bottling plants all over the country so the product was consistent and uniform all over the nation, and ultimately the world. But you would slide product down, you’d put your money in, and then it would release, then you would pop the top off, and you could have your need met, you could have your thirst quenched much like Maslow’s hierarchy of needs.

So they created a number of ways, then, that you could sell product. And today, they sell Coke at convenience stores, and grocery stores. They have route drivers that work for the bottlers, and those route drivers, it’s their job to get as many accounts in their territory as possible, right? And they always plan ahead, so it’s like Labor Day and Memorial Day, they always have outdoor displays and extra displays at the gas stations, because people are stocking up, right? And, so if you look at how Coke-Cola sets this up, it’s pretty amazing, it’s a pretty amazing marketing plan. And it’s made them a lot of money. And those original investors in the Coke idea made them a lot of money.

So this place thing is critical. And today, the Internet has changed all of it, hasn’t it? Because now, you could be dealing with a very small niche who would never come to Minnesota to find me and buy my product. But, now, I can communicate with them anywhere in the world, and I can ship the product to them. So it’s kind of amazing how, over time, technology has changed us. Moreover, the stores and shopping malls have changed it as well. It’s not just the logistics of how we physically get the product in their hands, but the environment and the atmosphere of that.

We also have to look at price. And they need to be able to make decisions on how much people will pay… Well, unless you do your research, you won’t know how much people are willing to pay for a product, right? What’s the maximum that they would pay? You would want to find that out.

And then last of all, we have promotion. And we have to have a way to communicate with those folks. And part of our price, we’re going to build into part of the price, is a dollar amount, so we have money to buy media, right? Every time, you buy a McDonald’s franchise, we learned that they get money from their franchisees to pay for more advertising, right? So a certain percentage of the price of that product includes their promotion budget. And so as long as you are buying a McDonald’s product, they are building a big war chest, aren’t they? And so we’ll always see their promotions and adds. And whether you do that via TV or newspaper, or radio, your media mix is up to you and what you think is effective. It may be mainly a personal sell.

[Liz Evensen pops in to say hello]

Well, hello…I was just talking about marketing.

{Yes, I had heard that from out in the hall. }

This is Liz from our foundation office and the Alumni Association.

{Hi…I’m also from the scholarship program. The next scholarship program deadline is November 14^th, and almost all of you could probably use money. So if you are interested in finding out about the scholarships that we have here, the deadline is one month. And I very much encourage you to apply. In many cases, there’s a fifty-fifty chance that you’ll get a scholarship, if you just get out of that chair and come over and apply. }

{really…}

{Yes, really.}

She’s on the second floor of the College Center building.

{Rusty can tell you where to find me.}

Yeah, it’s right next to the financial aid office, and down on the other end of the hall from the nurses office. And, I would definitely do that.

{Ok, I quickly came by to ask you if you had talked to the President’s Breakfast Meeting thing.}

Not anymore. That promotion is done, so I’m lined up with…

{Ok, we’re still doing those….}

But it sounded to me, from Gail, that we were booked up for this week…

{For this Wednesday…}

She’s also very involved with the Networking Club…

{Very involved, which all of you should be very involved too. It’s a great way to connect with other alums, we’ve got a calling campaign coming up this spring, because of the other events we’re doing this fall.}

So another way to earn extra credit if you are in one of my classes this spring is to make some calls to some of the alumni.

Alright, we were talking about promotion and the promotion mix, where you’ll buy media, and you’ll communicate that to consumers. Well, all of those things, what they pay attention to? What works? The folks at Pepsi, who bottle Mountain Dew know a lot about you people, right? You’re their target market. And we will look at who those clients are in terms of that target market concept, and we focus in on that.

For Inver Hills, our target market is traditional students. And those are eighteen or nineteen year olds just coming out of high school. And we need those full-loads, don’t we to make our numbers work. We also have what we call, the niche, or the secondary market that’s returning adult students, where we do work in the work place. We actually have corporate training sights. That’s another niche for us, and it’s a pretty profitable niche for as well. But in terms of where the big numbers are, that’s the traditional students.

So you will focus in on a target. By the way, does this sound familiar to a Dayton-Hudson plan? They named their stores after concepts from McCarthy’s book, didn’t they. We’ll call the store Target. And who is their audience?

{Everybody}

No! It is not everyone. For Target it is not everyone. You look at their marketing plan and it’s very clear and very specific. Yeah, there’s stuff in their store that everyone could buy, but that’s not who they are aiming for. All of their decisions are based on who is there…. Well, where are most of their stores? In the suburbs, aren’t they. There are a few stores in the inner city. And in Minnesota, we’re kind of a test market for them, and for community purposes, they put a store on Lake Street, they put a store on University Avenue. But those don’t meet their target. Those stores are in the suburbs. And by the way, that formula has been duplicated all over the country, now, hasn’t it…and very successfully. And their age range, the demographics and the psychographics that they go after…it is very clear that they go after young married couples who are just starting families, aren’t they. Because that’s when you need to buy a lot of stuff, right. So as soon as you get married, you are a part of their key target group that they focus in on.

Now, do they keep older people from the store? Do they keep kids from the store? No, and they have ways of addressing each of those groups. But if you look at their marketing plan… And by the way, they have what are called plan-a-grams, everything is planned out. Nothing in Target ever happens by chance. It’s all part of a meticulous plan. And most of how that whole corporation is set-up and structured is based on stuff that was put in Mr. McCarthy’s first book that he produced at the U of M. And they’ve moved that forward.

Ok, once we’ve asked these questions, now we can start to make decisions as to what comes back to producers, which is what I call market intell, market intelligence. And it’s data. And it’s a continuing and ongoing cycle, because we don’t just do research and then make the product and sell it to them. We look at where the product was sold, when it was sold, what did it sell for. We have you fill out a warranty card. By the way, those warranty cards really don’t mean anything do they. If you have a receipt and you can prove that you purchased the product and they’ve stated any sort of warranty, they have to follow that, right? Why do they have you fill out your name, your address, and your phone number, and all of that? Because they want to get back to you; they want to ask you more questions, they want to know what magazine or how else you found out about them, and how you came to buy that product. That’s really what it’s all about isn’t it.

So it’s an ongoing and constant drive to gather information and data and to learn as much as you can about your customer. And if do that process intelligently, these producers will be able to make good decisions. And if you make good decisions, and put together a good marketing plan, and do your product, place, price, and promotion correctly, you should sell product. And, obviously, if you are selling product, you’re going to expand. You might have started a thing in Minneapolis and it sold in the metro area, and pretty soon you’re selling it around all over the state. And then you’re in five states, and then you’re in every state in America, and then you’re doing it global. So you can take a good concept, a good marketing plan and grow your business by just going out and finding more consumers. And once you’ve sold everyone your product, if you’re smart you’ve saved some money and you’re coming up with new products aren’t you, and new improvements on the old product. That’s why computers always get new additions, don’t they. And that’s why software is always coming up with new additions. That’s how that process works.

Ok, so what this next line is is the distribution, it’s the place component. And when we did our research, what we found out was that they will buy the product at the Farmer’s Market, all we have to do is get people lined up to take and receive our product, go and set up a booth, and sell our product on consignment. So after they’ve sold it, then they pay us for it. Well, that’s cool. They are actually going out there and doing the work. Well, they have to have a margin in order to do that, don’t they. They have to get a discount from the sales price, and you have to figure that in, in terms of your pricing, right? How much are my distributors going to get. But here’s where are those distributors are.

Now, when I launch my Signs For Sale business, I can only make a few bucks sailing myself, right? That’s not going to make much money. What’s going to make me money, if this thing flies… and I hope that it will, it might and it might not. That’s the risk in entrepreneurship, though, because you spend some money, you put this thing together, and you see if it flies. But if it makes money, it will be because I can train people, and I’ll sell franchises. And they will grow and they will get their own local accounts, and then I’ll bring them national accounts. So if I bring in Coke-Cola or Ford Motor Company, or Champion Spark Plugs, if I bring in some national accounts like McDonald’s, they’ll want to be a part of my organization, right? And that’s how that works. 

So figuring out this distribution network, this logistical thing, how you get the product into the hands of consumers is really critical. By the way, did Gateway beat-up on Big Blue IBM? How do you compete against the biggest and best computer company in the world? Gateway did it, didn’t they. They just came up with a very simple plan. And they said we’re not going to figure out what consumers want their computer to look like, and what they want it to do in advance. We’re going to build each one custom for them. They are going to tell us exactly what they want in it. And they won’t have too many choices, but they’ll have some choices in terms of size and style. Why make all of these products, then put them out into the retail store only to hope that they sell. That takes a lot of money, that takes a lot of overhead, and we don’t have that kind of overhead. So by doing something smarter, they did something really genius, didn’t they. And then UPS delivers them. By the way, does UPS love Gateway? Oh, yeah. And Gateway did some good promotions in newspapers and magazines and on TV, they give you an 800 number to call. But they also did some good promotion in terms of having unique packaging. The box is a cow pattern. Well, where do they make them? They make them out in the middle of nowhere, don’t they. They’re not paying big rent somewhere in the big city, with an expensive labor force. So they’ve done a pretty smart job in terms of putting that together.

Ok, if you do a good job there, what comes back? Well, hopefully, profit, right? You put the product out in front of the consumer, and if you’ve done a good job, and they say yes, and you’re pretty sure they are going to say yes, it’s just many, right? And hopefully they are going to repeat the purchase, and the cycle continues, and dollars come back.

From those dollars, a certain amount is going to go into R and D, and a certain amount is going to go for promo, a percentage. Your promotion budget, you want to be a percentage of your projected sales, not existing sales, because if sales go down, that means you’re going to spend less on advertising for the next quarter, right? And then, indeed, because you didn’t tell as many people, sales will go down even more, won’t they. And then pretty soon you’ll be out of business. You want it to be from what your projection is. Well, projections are always optimistic, they are always better numbers, aren’t they. We might not actually get those numbers, but that’s our goal. Just like my goal for the foundation is $20,000. I might not be able to get that, but I don’t want to make my goal too low, do I? I want to make that a little higher.

Well, if I spend 10 percent of that projected gross sales dollars on my advertising, and I choose reasonably effective adds, I should be able to do that. And the more you sell, the more your budget grows. Now, we’re on an upward spiral, aren’t we. That’s a good thing. So a certain percentage will always go into promo.

R and D…research and development. How many times has Tide been new and improved in its existence? Actually, it’s like 1.2 times per year. So almost every year they’ve come out with some new improvement. So if you look at the packages of Tide, for all those years, it almost always says that it’s new and improved. And legally it is. You can only say that for a certain period of time, right? It’s pretty amazing. By the way, what are the improvements that they’ve given us? Odor control, being able to wash colors and get them brighter, having fabrics last longer. It’s amazing, it’s truly amazing.

By the way, Proctor & Gamble is the world’s larges marketing firm. They are the world’s largest producer of consumer products. And they started with Ivory soap, a product that was actually a mistake. They guy left the mixing machine on overnight; he was supposed to turn it off, but he had left it on all night, and it was all full of air bubbles. Well, he made the bars of soap anyway, because he didn’t want to throw it out, and what he discovered was that it would float.

Well, back then, people used to wash every Saturday night. The whole family would wash in one load of bath water. So the fact that the soap floated was really good, because it’s hard to find that soap when the water is all dirty. A lot of people, back then, used to bath outdoors. Well, if you take the soap to the lake, and if you drop it, it’s gone. Or, if you wash in the river, it’s gone, but the soap floated.

Well, that was a product advantage, a comparative advantage to other products, and so people liked the product. So they started selling even more of it. They sold it all over the country, then all over the world, and now we have a bunch of different Ivory products, right? Dishwashing, hair products…and Proctor and Gamble has went on to create many many new products along the way. They’ve done a pretty good job. So research and development becomes a part of that.

By the way, the R & D people and the production people work hand in hand, don’t they. But everyone interfaces with marketing. Every department in the business interfaces with marketing at one point or another. If I sell product, now I have to collect from those retailers, don’t I. So accounting has to get involved. And I have to have finance borrow more money, so we can build more plants, and expand our business, right? So they all interact and interconnect with marketing and the marketing cycle.

What else comes back here when you sell product? That’s why we have bar codes. Electronically, the manufacturer finds out where it was sold, when it was sold. So more data comes back, and in some instances, we know exactly who they are. In some instances we only know that it was sold in primarily rural areas and in primarily in the Fall. There are some products that are seasonal. Well, when we begin to analyze our data from our previous set of sales, we begin to see when and where is the cycle for that, and what is going on. And then we can do more research and fine tune it even better.

As a classic example of not doing it right, when I first started in the add business, the first year or two I would see kids flying kites, and the wind would be blowing, and I’d be thinking of kites—advertising kites. And we had some neat kites you could sell with adds. And so I went out and try to sell people advertising kites. Well, they didn’t want to talk to me. What was I saying when I would call on them in the fall? I have a big sign on my forehead that says idiot! They buy those six months in advance, don’t they for delivery even before the kite season happens. So if you’re out of the timing cycle…well, once I began to understand that, I said, “Dad, can I go back and look at the sales journal?” Yeah, here was the dates when we sell calendars, here’s the dates when we sell Christmas gifts, here’s the dates when we sell kites, and here’s the dates when we sell summer gifts and picnic items.

So, all of a sudden, now I’ve got it and I’ve figured it out. So there’s a lot of value in those business records. That’s why you want to keep business records.

Ok, hopefully, money comes back and we can grow, add a product line, and we’ll expand our product line…

Ford Motor started out with only one car, the Model A. And Ford’s genius was that he could make it at a good price, right? So almost anyone could afford it. And they painted them, by the way, all in black, because black paint dried the fastest. And they could crank them out. But, also, you had no choice about color. So they got a good deal; they maximized their economy of scale and production, right? And the more cars they made, they could actually lower their price, because they were buying more materials at better prices. And they specialized and, wow, they’ve got cars out there and all over the place. Well, pretty soon, they realized that people wanted different models to choose from and different colors.

Now, today you look at General Motors and how they are set up, they have the Chevrolet division, which has basically been truck and work utility vehicles, and then the car for the common man. Now, today they have their Corvette and they have their little fun car, because dealers wanted that, right? They wanted a fun car. They had some sports cars like the Camero and the Malabo, and whatnot. But if you look at the majority of those, they are pretty basic 4-door sedans, aren’t they. And then they had Pontiac, which was a step up. But they also had Buick and Oldsmobile. They bought those smaller firms that had kind of specialty niches. Well, in the old days, if you wanted to move up from a Chevrolet, you would buy an Oldsmobile. And then the next step would be a Pontiac or a Buick.

….and were able to meet sub-segments within the marketplace. So back to his answer about Target, and their target market…Yeah, Target sells to a lot of people, don’t they. A lot of people like the store and they like the environment, and it’s a convenient location, and it’s close, and there’s a certain ambiance that they have. So when you look at their adds, they are pulling in a lot of different segments, aren’t they. They pull in singles, and college students, and they researched the location for where they are going to put those stores pretty carefully. By the way, will there be other downtown Target stores, like the one in Minneapolis?

{Probably not}

Nope, it was an experiment, and they were testing the waters. And they wanted to see if office workers would come to… But most of the stuff you buy at Target is kind of big and bulky, isn’t it. You don’t want to bring that back to the office. But they had the space, and at some point in time, that space might become converted, because they will have grown by opening more stores in other countries, and they’ll need more marketing managers.

By the way, marketing, can it be automated? Well, there are vending machines and order processes, but for the most part, the people who plan and organize, and sell, and communicate, and plan the brochures, and whatnot, those are real people jobs, aren’t they? You can’t have a computer program do that. You need a thinking human being who goes out and assesses and finds what’s available in the market and those buyers. So these are real people jobs, and that’s why I’ll always have a job teaching won’t I. There will always be marketing instructors. That’s one of the reasons why it has become one of the more popular subject areas.

But if you do this right, the money comes back, you grow and expand. What’s the last thing that we put on our list, here? That’s the promotion. If we’ve done our research and we have a product that meets people’s needs, and they like our quality decisions that we have made….

By the way, you can choose to make Cross pens that are really quality and expensive, right? Or, you can choose to make Bic pens. Is cross going to make throw-away pens? Never. There positioning, and positioning is critical as a marketer, is that they are in the quality pen business. As a matter of fact, when I started to sell Cross pens, they said to forget everything you know about selling pens. We’re going to train you and teach you how to sell our product. We’re not in the writing instrument business, we sell jewelry, which has the functionality of a writing instrument. We’re in the jewelry business; we’re in the prestige business; we’re in the awards and incentive performance business. It just happens that we use a product that has utilitarian value as a writing instrument. Whereas, Bic, they are all about being in convenience stores, and mass distribution everywhere, right? And it’s a throw-away product. If you write a line with either product, it looks exactly the same, you can’t tell. Was it signed by a Bic pen or a Cross pen? How the person may have felt when they signed it might have been different, right? Oh, yeah, I’m cool; I got this pen from graduation. This is a $250 pen. By the way, do people go crazy if they lose their Cross pens? Yeah, if they lose their Bic pens, it’s no big deal. So if you made good decisions along the way and you’ve positioned yourself well, and you can promote your concept, you can make money and you can expand on that. Cross pens are sold all over the world.

By the way, my dad fought for 27 years to become a Cross pen distributor. For 27 years, every year he would put in two or three written applications just to become a distributor.

And for many of those years they responded, “Sorry, Frank, we know you’re a good quality house and we know you have a good reputation, but we already have a distributor in that area. And we think he’s doing a fine job and we think he’s getting about as much of the business as possible.” And he would always write back to tell them, “Yeah, but he’s not getting this account and he’s not getting this account. These are my accounts.” And ultimately they looked at that body of information overtime and said maybe that Frank’s business has expanded, his son is in the business now. We need to bring him on. And we think the territory has grown; there’s enough firms in the area, and new startup firms, like medical research firms, so they decided to have another distributor. Now, I think there’s about 3 distributors.

Alright, that’s the marketing cycle. Is that good stuff? Yeah, once you learn how to do this, can you make money? Guaranteed…yeah. Now, does that mean that your product launch will be a success? No, there’s some luck involved, right? There’s some timing involved, there. If you do good planning, though and you have a good marketing plan, and you run that by a few people and you might have hired a marketing consultant to look at it, and evaluate it, and if you’ve done some good research, if everything looks good, you’ve got a go.

And that’s really what marketing plans are. When it’s all done, you’ve written this thing, and it’s a go or a no-go decision, right? So in my marketing class, students have to create a marketing plan for a product or a service. It could be real or it could be fictitious. It could be a business or a product that they’ve always wanted to start or a product that a friend of theirs think could be a real product. But you go through and put this marketing plan together and when you’re done, you should know enough at that point, that you can say that it is a go or a no-go. Or, it’s a go if these things are in place or happen. Or, it’s a go if we can get the price to here. It’s not a go if we have to sell it at this price. Because based on what our market survey said, this is what people will pay.

My Signs For Sail business…yeah, people will pay $25 or up to $45 dollars. Will they pay $150 dollars per hour of sailing? Not at this point, not until I can prove that my cost per thousand efficiency and effectiveness. So if you’re selling advertising, and that’s a promotion tool, you’ve got to be able to be able to prove that what they are getting is a good value for their dollar, right? If they are getting a good media reach in the right environment, and they are getting positive results…now, supply and demand says, well, gee, there’s only so many guys out there that have a sailing network like this. Supply and demand says that will force the price up. And the price will always be the right and the fair price, based on the laws of supply and demand. On another day we might cover a little more about supply and demand. We’ll see how our timing goes.

Ok…market intell, dollars come back, ask questions, we do the distribution, we do the promotion. I think we got pretty much everything on there.

By the way, in most of the textbooks, today, you don’t see this early version of the model. I like it because it’s simple. It’s kind of like my economics model, it’s simple. You can wrap your head around it in a 50 minute class period. But it’s not necessarily there, but it was in the original books, that’s why I got a hold of it.

Ok, give me an example of…we have to look at success stories and failure stories. Give me an example of a product or a company that has successfully gone through this process.

{Wall-mart}

Wall-mart—very good. And they don’t make any products, do they. They simply buy products, sot they are in the distribution channel, right. They simply buy products and make them available. Why is Wall-Mart successful? It’s because they know we want a good deal, don’t we. People want a good price. I personally hate Wall-Mart stores. I don’t think they’re good at all. They’re cluttered, there’s too much merchandise packed into too small a space. But do they crank out a whole lot of dollars per square foot? And in the whole world of retail, it’s all about dollars per square foot. Or, dollar per square foot per overhead, or however many employees you have. Target stores are laid out very differently, aren’t they. Wall-Mart is focused, their target is focused on which segment of the population?

Who has been the backbone of Wall-Mart’s success? The middle class, rural… That’s why they’re building one down here. They’re not building in Bloomington…although they do have a store in Bloomington. They have changed over the years, because pretty soon you run out of rural locations. But Wall-Mart was…. Sam made his money in small towns. By the way, I think he had a Ben Franklin hardware…or

[Dime store]

Dime store, yeah. And he had bought a franchise. And he had got into all kinds of trouble with management, because they had come in and complained that he wasn’t following the franchise policies. And he said, your franchise program is dumb! And they said, well, we’re going to take it away from you. And he said, go ahead; I can buy this stuff on my own. I don’t need you, I’ll just get it from other distributors; there’s lots of distributors out there.

They gave him a hard time, because his isles were crowded and he’d put stuff outside. They said that he couldn’t put stuff outside, because that would affects the image of the store. By the way, you’ll never see stuff outside of a Target in front, will you? No, but Wall-Mart does.

{I work for Sam’s Club, so I know the whole story. The reason why the first store that he opened, the guys were on his back, because he was doing so good that he wanted to strike out on his own.}

Oh, yeah. And it did do well. And he didn’t want them bugging him. And he’s saw how much money that could be made and, now, he’s got an amazing system put together.

By the way, do they own their own trucks? Do they own their own warehouses? They don’t pay a whole lot out to other firms. They wouldn’t hire someone like my daughter, who is a model. She has worked for Target, but they use their own employees in their commercials. They have their own production facility for commercials. He was a fanatical guy about managing costs, and he said, how do I get the best prices to the consumer? If I always have a great price and a good location, they will come. Well, he came up with a good system—it was brilliant! Target has done something very different, and that’s not to say that one is right and one is wrong. Sam’s Club…at first, I said this isn’t going to fly. Who’s going to buy a membership. My wife and I have had a membership, now, for quite some time. And if you know what you’re doing, you can get some pretty good values. I never buy my soda there, though. I always buy my soda at Cub Foods. Cub is a bigger buyer and they can give you a better price.

By the way, if you buy soda, don’t be loyal to a brand, because they rotate who’s being promoted in any given month. So Pepsi and Coke, who dominate the market, share the promotion, flipping back and forth. So either the Pepsi is on sale this month or the Coke is on sale. It’s absolutely true. So, if you only drink Coke, overtime you are going to pay more for that product.

Ok, Wall-Mart was a good example. We talked about Gateway, which was an incredible success story. By the way, has IBM addressed the reshift and refocus based on how the competitors react to it? So the marketing cycle is in a constant state of change and flux, isn’t it. The marketing plan isn’t something that you create and then walk away from. It’s constantly being revised and reworked, and it’s a never ending process. Gateway found out that they had a number of people who were going to play their same game. But by that point, did they have a critical mass built up, a certain reputation? Yeah, they did.

Alright, let’s talk about a couple of failures.

{New Coke}

New Coke…actually, that wasn’t a failure. That was a planned strategy on their part to compete Pepsi who was taking market shares. And marketing professors love to argue about that. And we can’t prove this one way or the other, because they say it was a mistake, but in reality, when you look at the results of that, what did they end up with? More shelf space and more product line, and Coke regained their lead. Pepsi was starting to take over with their Pepsi challenge and they were losing market share, and Coke was able to turn it around. But they panicked a lot of people when they said they were going to get rid of the old taste. Now they launched the new tasting Coke, and came up with Classic Coke… My feeling is that they did that for the free PR. And that they had every intent to do this. Partly because it takes years to get all of this lined up, and they had new product in place too quickly. They worked four and a half years to launch the first Diet Coke, there commercial with everyone and everything in it… That took four and a half years. You don’t just turn around and get new cans made and all of that stuff as quickly as it appeared, so…. I don’t think it was a mistake on their part. It could have been. But did they get a lot of free publicity because of that? I mean, we’re still talking about it aren’t we!

{How about K-Mart?}

K-Mart…as an example of?

{As an example of a failure; they filed for chapter 11.}

They filed chapter 11, that’s bankruptcy; that’s a failure story, isn’t it. And basically, it’s Wall-Mart’s and Target’s success that pretty much drove them out of business. And they were doing pretty good. I hate K-Mart; I’ve always hated K-Marts, it’s the only place that I’ve ever been thrown out of a store, because I was obnoxious. I was so mad, because they wouldn’t take their product back. I brought it to Target and said that I bought this at K-Mart, and I’m mad as heck, and they took it back for me. But Target has changed their return policy a little bit since then. And did a lot of people make jokes about their blue light specials, and…

{I used to work at the K-Mart in West St. Paul, and it was the worst K-Mart in the world. I worked there when they were going through this bankruptcy thing, and I’ve actually been threatened by some of the customers.}

One of the problems of when a business starts going bad…then, you have the ripple effect. Instead of positive word of mouth, now you have negative word of mouth, right? And it just keeps getting worse and worse and worse. Hardies…they’re trying to stay alive, but they’ve made too many mistakes. They didn’t have the right price, they didn’t have the right product. Was it a chicken joint or a burger joint? They didn’t know, and neither one was any good. The colors were bad, their logos were bad, their service was bad. It was like if you look at a marketing plan and then you look at the execution of that plan, they did so many things wrong…it’s amazing that that there’s any of them left at all.

{There still big down south…}

There still big down south, and fortunately they had some critical mass, and fortunately they brought in some new management and some new adds, and they have tried to make some changes. The one in Two Harbors is still there. And that’s there, because the guy paid for it years ago. And he has made so much money that he’s doing fine, but…

One of the stories that I like to talk about here is Chrysler, when you talk about failure. Now, Chrysler is doing well today, aren’t they. But what happened in the 70s with the Chrysler Corporation? Let’s see if you guys know any of this somewhat recent modern history. What happened to Chrysler in the 70s?

{They were bought out…}

Well, recently, they were bought out by Daimler.

[But that was real recent. Back then, they were on the verge of bankruptcy.]

They were on the verge of bankruptcy. And the United States Government said this is critical to America. We cannot let this company go down the tubes. So they did a very rare thing. The government saved a business. And it was a good thing that they did that. It saved a lot of jobs and helped our economy. Then they put Lee Iacoca in charge and Lee Iacoca built it up and he gave us the minivan, the K-cars, cab forward design, and a lot of good things, right…some pretty cool sports stuff and Lee Iacoca turned that around.

By the way, Lee Iacoca gave us the Mustang. Did you know that? When he worked at Ford, that was his original project. And he got into a fight with Ford management, because he believed in McCarthy’s concept that the customer was king. The Ford family and the Ford management said, no, we have planned obsolescence. Our dealers make money from repair work. They don’t make money from selling new cars. They make money on the rebates and on the parts and accessories, but it’s service. And he didn’t believe in that. And they fired him—they fired the man! Well, fortunately, for Chrysler, they were able to pick him up. And he had a lot of experience and he turned that company around. It’s an absolutely amazing story.

And then later on, they were sold to Daimler, which has struggled trying to get the two cultures together, right. Because they are very different cultures. And sometimes in mergers that’s a problem.

{Did Daimler make Mercedes Benz _____________.}

Yeah, they have looked at production in America, and whether they will ultimately do that I don’t know. But last I heard, and my mom has a neighbor who’s a VP of General Motors, so I get to hear some of this car stuff right from him first hand. Last I heard was that the decision was the decision was solid that they were going to continue to make Mercedes…. By the way, do you know where that name Mercedes came from? I love this story. It was the daughter of his best client. The man made cars, and he made one at a time; and only back then were rich people buying his cars, because they were custom made, right? So he named the company after the daughter of his best customer. Did he continue to buy a lot of products; was that a nice thing to do? And then the name stuck. And the quality image was clearly there, so the reputation of the product itself sold the product, didn’t it.

{Who was Benz?}

Well, Benz…it was Daimler and Benz that were the partners.

{So Daimler had always been the partner of Mercedes Benz? He just bought it out?}

I don’t know when they formed the partnership; I don’t have a clue. But there was a partnership between Daimler and the Benz family I believe.

Anyway, the point is that that was a guy who had his eye on the customer, right? It’s like, I’m going to take care of this person.

Well, back in the 70s, Chrysler made some mistakes; well, what did they do? They did all the marketing steps, they had been doing it for a long time. Well, they hired a market research company, and the market research company went out and surveyed a lot of people. They had hired the best company that there was. And they went out and researched. And they asked customers what they wanted, what they need in a car, what kind of cars should we make. And what did people tell them? We want powerful motors, and we want big cars with long hoods, with an emblem on the front that looks like a Mercedes. They like Mercedes emblem. And if you’ve ever noticed that Mercedes emblem and the Chrysler’s emblem look kind of similar, didn’t they. Chrysler had indeed copied that. And later on, it ended up being a nice purchase for the Mercedes folks, because there was a certain amount of stuff that had come together there.

Well, in the 70s, what did they neglect to ask? What did they neglect to find out?

{______________}

Well, they found out how much they were willing to pay, and their cars were expensive. But what about the price of gas? What will you for a car if it consumes this amount of gas if the price is such and such. They didn’t do that piece. So is it kind of complicated? Do you have to figure out a lot of stuff? Well, Ford, during that time period, they had an economy line; they had a couple of economy models. Chevy had a couple of economy models, and they had been reading U.S. News and World Report. By the way, that’s the most respected source of current publications. Is the Reader’s Digest a quotable college source? Not really…I mean, most professors would laugh at you if you turned that in as a source. I won’t because there’s some interesting stuff in there, and marketers get their information from a lot of places, don’t they. But U.S. News and World Report was predicting that there would be an oil crisis. But Chryslers was, hey, we hired a market research firm, we’re building these cars, so they were out there playing golf, and not paying attention. And they didn’t make the change quickly enough.

{For that article for extra credit, does it matter where we get the article from? }

Nope, you can get from anywhere, as long as it is of value to the class.

{There’s a good article in Playboy about Wall-Mart, have you seen it?}

Actually, no I haven’t But in the world of marketing…yeah, Playboy is a valid place, because Playboy talks to a certain group of people, right…men, young men. And all over the world, actually. It is now printed in how many languages…Seven or twelve? I remember when it was a big deal when it was printed in 3 languages. It’s a pretty amazing source.

But anyway, back to the Chrysler story. Here’s Chrysler with all of these big vehicles, and they had power seats and power windows, and automatic transmissions, and all kinds of bells and whistles, because that’s what people said they were looking for from the surveys. They wanted huge trunks…and they were monstrous. Well, when they didn’t sell, what happened? The dealers said, get them out of here; we don’t want them.

By the way, do dealers have all the money to pay for all of those cars in advance? No, it’s called floor planning. Chrysler finances that, and Chryslers says, we’ll ship these cars to you and you pay us this amount now and this amount, and when you sell it, you pay the balance of it. So the dealers have financing programs. But when the dealers can’t sell the product, they call the manufacturer back and say, get it out of here. Well, now, Chrysler had paid all the factory employees to make those cars, they paid for all the materials. They paid to ship the cars all over the country, and now their not selling. Now, they have to pay to ship them back! So what did they do? Well, they dropped the price. Well, now you can’t even make any profit on the sale of a car. But still, because they didn’t pay attention to needs, wants, and desires, and what was happening in the economic environment, they were in serious trouble. And down the tubes they went. And it was amazing how quickly that happened.

And, fortunately the government came in and loaned some money, they bailed them out, and turned things around. By the way, Lee Iacoca scored on the Mustang with me; I had a 1965 Mustang. It was priced right, it was a sports car, it had a little six cylinder and a 3-speed, so it wasn’t a big powerful machine, but it sure was cute: poppy-red with a black leather interior and a black roof…it looked pretty cute. Later on he scored with me on the minivan. And I remember telling my dad, “I will never own a minivan. You’re not going to catch me in a minivan!” And he said, “But, they’re great cars, Rusty, I’ve been reading all about them.” Well, why did I buy a minivan?

[Because you had a family.]

I had a family! I had needs. It’s not that I wanted to be seen driving a minivan… by the way, if you drive a minivan, you get a lot less tickets.

{No, minivan drivers are crazy.}

If you drive a minivan you do not attract the attention of as many people that are likely to give you a ticket when compared to Corvette or a Mustang. I just test drove a Corvette. And I said to the guy, if I buy this car, am I going to get tickets? And he goes, no! And I’m thinking to myself, you liar, I can’t trust this guy for one minute. We hadn’t left the dealer’s garage for more than 15 minutes and there was a highway patrol already behind me. And I even had a heads-up display mounted above the steering wheel, so I knew that I was not going over the speed limit. I pulled over, and the cop said, “Sorry to bother you, sir, but you don’t have any plates on the car.” And I said, “Well, I’m test driving the car, that’s his problem. If he didn’t put the dealer plates on, that’s not my problem.” And he says, “I know, I’m talking to him.” And he went on, “And you were going the speed limit, sir, so you don’t need to worry, but that car caught my attention, and we’ve been told to pull over any… Because the dealers call the State of Minnesota…the highway department and say that if we see any Corvettes out there without plates on, you pull them over, because it’s a stolen car.”

Are Corvettes stolen off the lots all the time? Is that a big problem for dealers? Absolutely. So the guy is saying to me, “Well, gee, that’s never happened before.” And I said, “Yeah, well, you should have put the dealer plates on before we left. And you told me that this car wouldn’t attract any attention.” Well, I knew that wasn’t true. By the way, if a companies sales people lie consistently, what happens to their credibility? It goes down the toilet, then nobody believes them anymore. Then another company sucks them up and that company is gone.

{___________ has any respect for a car salesman anyway.}

Unfortunately, because they don’t do the kind of training that they should, that’s happened. So if you really want to be in sales, I would not suggest that as a first place to start. There’s a lot of sales jobs out there. It takes a real professional to be really good at sales. You can make a lot of money. But that’s probably not where I would start.

But back to the Chrysler thing…they made mistakes and they paid for them. And when they turned that around and they delivered what was correct and proper to the market place, then they did well. By the way, what was the product during the 70s that Dodge had? There really was only one.

{The K-car?}

No, that was afterwards. They had the Dodge Colt. It was a crappy little tinny little piece of crap. If you’re ever out there and somebody tries to sell you a Dodge Colt from that time frame—even if it’s been restored and in mint condition—it’s probably worth a lot because most of them rusted out and fell apart… But Chrysler found itself without what the economy was looking for.

Who scored big during that time period? Volkswagen, Toyota, Honda. Honda had previously only made motorcycles. They started to sell cars… Well, had they looked at the big picture, the overall picture, the competitive environment, the economic environment? Yeah, they had looked at all of it. And they did really well.

So, this marketing, is this kind of a cerebral and kind of cool stuff? Is it a neat game? And that’s what it is isn’t it? It’s a game.

{Did you hear of that ship that went down that was full of Daimler Chrysler vehicles?}

I think I did remember hearing or seeing something about that in one of my SCUBA magazine or one of my SCUBA buddies or something.

{I heard that it’s ____________}

That’s probably an urban legend and probably not true. You probably can’t just pull them out, because there are maritime laws that effect shipwrecks and shipwreck property. As a matter of fact, I just learned about that when I was in Fort Myers. Many of the houses in Key West and Fort Myers in places along the coast, have these little peaks on the top, where one could look from all sides. Well, they would look, and if a ship went down, they would go to that ship, and the first person there, would get the salvaging rights. And so many millionaires were made based on those salvage rights and from what they got. And then…. But there’s a whole body of maritime law, and I would kind of doubt that would be true.

Although, one of the reasons that they went down to find the Titanic was because there were some very valuable cars in the hold of the Titanic as well as passenger’s possessions and some other things that they were interested in. So how do you finance stuff like that? Well, if you can identify where the ship is and the person who found the Titanic discovered that it was in such deep water, that it was a big challenge to retrieve anything, and they ended up getting some parts and pieces. I saw some of this stuff in a museum, and I paid some pretty good bucks to go and see it. They made some bucks from that, but….

My best car story, though, in terms of how guys made a profit from cars… They had for a number of years, they had the tariff, and a tariff is a tax on imports, right? And it’s to protect our American manufacturers. Buy they had a tariff on light-duty trucks. So Toyota was selling trucks over here as well as several of the other brands, but they would pay a tariff. Well, this friend of my sister’s…his dad, figured out that if he shipped the cars into St. Croix, which is a U.S. territory, he could take them off the ship, put them into a holding lot for 30 days, and then send them back and sell them in America without the tariff. So he found a loop in the law, as it were. And he became a multi millionaire by doing that. They shipped lots and lots and lots of those vehicles. Ultimately, what happens to a thing like that is the government is going to what? They are going to shut-up the loophole and shut it down.

{Did anyone ________________}

Oh, I’m sure that there might have been some other places where people that might have done it, but in terms of U.S. territory, there aren’t many locations to do that from.