Wednesday, January 23, 2013 | Edited by Daniel Moores
||New-Vehicle Shoppers Are Considering More Models These Days
Only 17% of New-Vehicle Shoppers Avoid a Model Due to its Reputation for Reliability
As perceptions of both reliability and actual vehicle dependability improve, new-vehicle shoppers are considering more models before making their purchase decision, according to the J.D. Power and Associates 2013 Avoider Study.
The study, now in its 10th year, examines the reasons consumers do not consider -- or avoid -- particular models when shopping for a new vehicle.
As vehicle reliability improves across the industry, new-vehicle shoppers now consider an average of 3.3 vehicles in 2013, compared with 3.1 in 2012 and 2.9 in 2010. Additionally, fewer shoppers (21%) in 2013 purchased their vehicle without cross-shopping other models, compared with 26 percent in 2012 and 29 percent in 2010.
The study finds that only 17 percent of new-vehicle shoppers avoid a model due to its reputation for reliability, compared with 19 percent in 2012 and 21 percent in 2009. Not only has the perception of reliability and dependability improved, but also the actual quality of vehicles has improved, as the average number of problems per 100 vehicles (PP100) after three years of ownership has decreased to 132 PP100 in 2012 from 170 PP100 in 2009.
"Improved actual and perceived reliability has leveled the playing field, allowing many manufacturers to be considered among new-vehicle shoppers that may not have been considered in the past," said Jon Osborn, research director at J.D. Power and Associates. "Factors, such as gas mileage, styling and comfort, play an important role in the decision-making process. The study findings suggest that marketing a brand image is just as important as building reliable vehicles."
The styling of the model, and the image it portrays, are among the primary reasons new-vehicle shoppers avoid particular models. One-third (33%) of shoppers avoid a model because they do not like its exterior look or design, while 19 percent of shoppers do not consider a model because they don't like its interior look or design. The study finds that the image a model portrays plays an important part in avoidance. Nearly one in five (17%) new-vehicle shoppers avoid a model because they don't like the image it portrays.
"The impact that design and brand image have on new-vehicle shoppers is substantial," said Osborn. "Shoppers are concerned about what the vehicle says about them as people and how it can express their individual tastes, just as much as it is about being reliable or holding its value throughout the tenure of ownership."
Gas mileage remains the most influential purchase reason, similar to 2012, with 15 percent of new-vehicle owners in 2013 saying it was the primary reason for purchasing their vehicle. Although young owners (under age 25) cite gas mileage as the most influential purchase reason more often than their older counterparts, owners in all age groups indicate gas mileage is the most influential purchase reason.
Alternative Powertrain Vehicles
New-vehicle shoppers avoid hybrid or electric vehicles because of cost/price (36%) and exterior styling (25%) more than any other reasons. Even when considering a hybrid or electric vehicle, 36 percent of shoppers cite price/payment as the primary reason for rejecting them as a purchase option.
Although the cost and styling of hybrid and electric vehicles detract some shoppers from considering them, among those who purchased a hybrid or electric vehicle, 95 percent say that they did so due to gas mileage, while 62 percent say that it was due to environmental impact.
"Hybrid and electric vehicle owners want to get the most out of a gallon of gas and minimize the environmental impact, even if that means spending more money to purchase the vehicle," said Osborn.
The 2013 Avoider Study is based on responses from approximately 31,000 owners who registered a new vehicle in May 2012. The study was fielded between August and October 2012.
(Source: J.D. Power and Associates, 01/16/13)
||Are Mom and Pop Heading for Wall Street?
Like the host of "The Price Is Right" TV game show, Wall Street is saying "Come on down!"
Investment professionals are anticipating an influx of income- and growth-hungry mom-and-pop "retail" investors into the stock market this year -- especially as the economy picks up and pressure grows for interest rates to start rising.
"The key is that equities have been hated for so long and the negatives are largely well known," says Barry Ritholtz director of research as New York-based financial-services firm Fusion IQ. "Positive data would be an upside surprise to the bulk of investors."
For years, individual investors have fled stocks in favor of bonds or money-market funds. And who can blame them after the financial crisis crushed share values in 2008 and early 2009?
From April 2009 through now, mutual-fund investors sold a quarter trillion dollars in stock funds, according to recent data from the Investment Company Institute.
Ironically, that selloff coincided with a period of stellar performance in stocks -- when the Dow Jones Industrial Average jumped more than 60%.
And the party keeps going. In the first full week of January, investors plowed close to $15 billion back into stock mutual funds. The Dow rose again last week; it's up 4.2% since Jan. 1. The Standard & Poor's 500-stock index is up 4.2%, and the Nasdaq Composite has risen 3.8%.
Bonds and money markets rarely can match performances like that. "Fixed income is yielding rates (of about 2%) that will not get it done," says Stephen Wood, chief market strategist at Russell Investments.
The stock market's upward trajectory seems likely to continue. The economy is on the mend. Jobs are more plentiful and housing prices (a key to the wealth of many households) are firmer. As the general economy improves, pressure on interest rates will increase, and as rates rise, bond values will plummet.
"Many investors do not understand what happens to a bond fund when rates rise," says Leo Grohowski, chief investment officer at BNY Mellon Wealth Management.
Many people may be now willing to take on the risks that the stock market presents as they seek better returns.
But buyers, beware: Stocks are not risk free, and small investors are notoriously bad at timing the market. Small investors retreated as stocks rose, and often when small investors start coming back into the market, it can be seen as a bad sign -- a market top.
So if you are tempted to boost your stock exposure, remember: Buy low, sell high. The market has a lot of catching up to do. Even at today's loftier levels, the Dow remains below its 2007 peak, while the Nasdaq stands 38% below its all-time high of 13 years ago.
"We've bled so much money out of equities that we have a very long way to go before we get to the point where everyone who is going to buy stocks has done so," says Bill Stone, chief investment strategist at PNC Wealth Management.
However, anyone jumping back into the market needs to understand that it won't be clear sailing. Here's what you need to watch out for:
The Good -- Housing
After half a decade in the doldrums, housing could be on its way back.
This could actually form part of a virtuous circle. Housing had for many years made up the bulk of household wealth in the U.S. As prices improve, homeowners will feel wealthier once again, leading them to spend more money -- creating more jobs and more spending.
Here are some housing facts to warm your heart.
Nationally, prices of previously owned homes jumped 10% in the year through November 2012, according to data from the National Association of Realtors. And they are likely to continue to do well because inventories of properties for sale are low.
The recovery in the sector will go beyond making home builders extra cash, says Neil Hennessy, chief investment officer at Novato, Calif.-based Hennessy Funds.
"In the housing market, there has been a lot of deferred maintenance," Mr. Hennessy says, adding that as housing prices have started to lift homeowners see an incentive to spruce up the place with a coat of paint on the walls or some new carpet.
With that trend in mind, he points to home-improvement retailers Lowe's and Home Depot, which would likely benefit. Other companies that could do well are appliance company Whirlpool and carpet maker Mohawk Industries.
The Bad -- Europe
"I think we are going to see some economic road blocks coming from Europe," says Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
Germany, Europe's biggest economy, saw an economic contraction in the fourth quarter of 2012. If that continues into the first quarter of this year, the country would officially be in a recession.
So what? That could really hurt American industry. As the European economy weakens, you can expect the value of the euro to weaken against the dollar -- making U.S.-made products more expensive and less competitive.
If that happens, avoid U.S.-based manufacturing companies, but look to European stocks because their goods and services will be cheaper for the rest of the world to buy. The trick is to find an investment vehicle that allows you to benefit from surging stocks but that isn't offset by the falling value of the currency.
Mr. Ablin points to the WisdomTree Europe Hedged Equity exchange-traded fund, which invests in a basket of European stocks.
The Ugly -- the Government
The really ugly stock-market scenario could be one birthed by our elected representatives.
"In modern history this could be the first congressionally induced recession," says Mr. Wood of Russell Investments.
What he means is that if Congress can't come to an agreement about how to avoid automatic spending cuts (known as "sequestration"), government spending will drop, and the economy will contract.
If that happens, stocks will certainly suffer in the short term.
To deal with that, take a deep breath and don't sell when you see stocks falling. In all likelihood, a deal will get done and those temporarily lower stock prices will look pretty good.
(Source: The Wall Street Journal, 01/20/13)
||Tide Turning for U.S. Boating Industry
The U.S. recreational boating industry began to see the tide turn for new power boat sales with an estimated 10 percent increase in 2012, according to the National Marine Manufacturers Association.
Early projections indicate the industry will see additional increases in 2013 by as much as 5-10 percent.
This level of growth in 2013 will depend on a number of factors including continued improvement in economic conditions that impact recreational boating -- namely consumer confidence and the housing market -- and sustained increases in Americans' participation in outdoor recreation.
"Improving economic conditions and what seems to be a resurgence in Americans' love for the outdoors, helped fuel steady growth in new power boat sales in 2012," noted Thom Dammrich, president of NMMA. "A 10 percent boost at retail in 2012 is significant as this is the first time since the recession we saw healthy growth across the powerboat market, which will create momentum in 2013."
Another factor, and new trend, that's contributing to new boat sales is the creation of innovative, more versatile and accessible boats that appeal to a variety of interests and budgets and fall within the 15-26 foot range.
It's these smaller boats, those less than 27 feet, which make up 96 percent of the 12.4 million registered boats in the U.S. and are leading the industry out of the recession. Boats that fall into this category include aluminum all-purpose boats and pontoons, fiberglass bowriders, fish and ski boats, and jet boats.
"One of the most significant trends we're seeing in boat manufacturing is the versatile boat -- one that can pull tubers or wakeboarders, and can be used for fishing outings, relaxing with family or entertaining friends," said Dammrich. "After a decade of decline, Americans are participating in outdoor recreation in growing numbers, and as they look for ways to spend time outdoors, boat manufacturers are taking cue, producing innovative boats that offer an all-encompassing entry to the boating lifestyle at a variety of price points."
In 2011, boating participation increased 10 percent to 83 million -- the largest proportion of adults (34.8 percent) who went boating since 1997(35.8 percent).
It's not just boating participation that is growing. The Outdoor Industry Association reports that more than 140 million Americans make outdoor recreation a priority in their daily lives -- and they prove it with their wallets. The outdoor recreation economy generates $646 billion in direct consumer spending annually. What's more, a recent study by the U.S. Fish & Wildlife Service reports that participation in fishing is up 11 percent in the past five years, and hunting participation is up 9 percent in the past five years.
To further attract this growing number of outdoor recreation enthusiasts and showcase what the boating lifestyle has to offer, the recreational boating industry will unveil its latest innovations at annual boat shows across the country in January and February. Boat shows, which attract more than one million people annually, are where manufacturers launch new boats and marine gear for purchase, unlike auto shows which are for viewing. The shows are a primary sales venue for the industry and barometer for things to come for recreational boating, as they provide a glimpse of buyer sentiment and sales for the year ahead.
(Source: Boating Industry, 01/03/13)
Daily Sales Tip: Thinking Strategically
All successful sales professionals are strategic thinkers. By strategic thinking, I mean that they are always looking for new ways to penetrate their accounts and prospects, they are always looking for new ways to grow and develop their relationships, and they are always looking for new ways to make their customers more successful.
Recently, I read a story about a sales professional who lost a major account. He was obviously upset over the loss and tried very hard to regain the business, but his efforts were without success. The salesperson was trying to penetrate the account using old ideas. He went back to the same people he had always worked with and presented them with the same ideas. They saw no reason to change back to him.
Finally, he started working with a person that he had never worked with before, a manager assigned with the task of moving the company into a new marketplace. They had no experience in the new market and the salesperson saw the manager struggling over his decisions. When the salesperson began to question the new manager, he learned that the manager was moving into a market that the salesperson had worked in, on a prior job.
While the salesperson had no opportunity to make a sale, he was able to help the manger with some of his decisions. To me, successful salespeople differentiate themselves on the quality of their ideas, and our salesperson had done just that. He went on to describe how the company began to view him differently, on the basis of the quality of his ideas.
The company began to request other information of the salesperson, all in areas where he had no opportunity to make a sale. Yet he helped anyway. Eventually, the company started to buy again. In fact, the salesperson was not only able to regain the account, he was able to grow it as well.
The key learning point of this story is that there are always a number of ways to approach an account. If you think strategically, you will use your creative imagination to develop new and innovative approaches in developing your customer relationships. If you think in a linear manner, you will only see one way to approach and develop a relationship.
Source: Sales trainer/author Paul S. Goldner