Destroying Tiffany Lamps Won't Be Enough

It was a $2.39 Diet Coke (the price for which I could not find on the menu) that got me whipped up.

I was very close to an indignant diatribe on rapidly escalating (and cleverly mysterious) drink prices compensating for shrinking main entree margins. Ruby Tuesday was my intended target.

But then I thought better of it. Wisely, I think.

If you consider the situation restaurants like Ruby Tuesday are in, you could forgive a bit of creative pricing.

Applebee’s has the “neighborhood bar and grill” image going for it. Their strategy is part celebrity chef, part cheap drinks, and part real estate saturation. It works for them.

TGI Friday’s is “fun.” Though not as ubiquitous as the apple, they are a bit livelier. Seems to be working.

Bennigan’s tried for a bit more upscale. It didn’t work. Houlihan’s is trying the same thing. It’s working. For now.

Red Robin does burgers. And free fries. Okay, I can see that (the parking lot in Shoreview, Minnesota is always full).

And I will bet you could name a half dozen other restaurants—just like these—that fill the “casual drinking/dining” segment.

Even as a schooled segmenting analyst, this market leaves me a bit confuddled. I think it would take a Ginsu knife to slice this tomato any thinner. And that’s precisely Ruby Tuesday’s issue. What segment can you possibly, realistically, believably, own in the hearts and minds of the dining-out public? Their answer to this point has proved pretty weak: Slightly upscale, yet still casual, American cuisine.

As their new ads profess, gone are the “flared” uniforms (remember “Office Space” and Jennifer Aniston?—very funny). In their place are simple black T’s. Gone are the fill-your-face, 10-for-a-dollar appetizer specials. In their place are better tasting selections, slightly smaller portions, and reasonable—but not rock-bottom—prices. They kept the salad bar. They ditched the gaudy Tiffany Lamps. (In fact, the commercials feature what appears to be a drunken interior decorator unleashing pent up anti-1980s angst.)

But in the end, do you believe it? Is it different enough to make you want to change your plans?

Perhaps the bigger question is: Does it have to?

Industry data shows this segment as the fastest growing dining-out category. That beats all categories of fast food, even as new sandwich shops spring up like weeds to dethrone Subway. This segment is an analyst’s dream: You get to tease apart race and ethnicity data, time of day analysis, menu combination testing (who orders what with what), taste trends, snacking patterns, and even facial recognition and real-time customer profiling—every piece of data becomes gold when branding at the macro level fails to produce tangible results. That’s why these chains tweak their menus as often as they do; throwing more money into broad-based advertising won’t cut it. Those days have passed. They bank on number crunchers.

All that said, I remember the proliferation of casual steak places in the 1990s and early 2000s. They did all that stuff too. Name three that remain today.

Needless to say, none of that helped me dissect this situation.

To get some perspective, I called Mike Anderson, the owner of Green Mill in Eden Prairie. I asked his advice for a pretty simple reason: He doesn’t have a staff of analysts, nor can he rely on an eight-figure advertising budget. Despite all that, Green Mill has a solid brand and a loyal, consistent clientele.

At first, he explained Green Mill’s differentiators: solid food, a great bar, lots of activity in the restaurant (live television is key)—and unique to Green Mill—pizza delivery. To his customers, Green Mill is the better alternative to a cheap Pizza Hut/Papa John’s/Domino’s pizza. If you could get Green Mill pizza delivered right to your door, would you pay a bit more? Sure you would.

All well and good, but that was not the real secret.

Here it is: A great restaurant is only as good as the personal attention of its owner. An involved owner is the key to building the one-on-one relationships that keep people coming back week after week, and year after year. And the better your regular customer base, the less you rely on big-budget advertising.

Could it really be that simple?

Could it be that when branding delivers diminishing returns, and the number crunchers are out of answers, that it comes down to good old-fashioned customer service?

I think Mike is right. And he didn’t have to defile a single lamp to do it.

A Vista by Any Other Name...

If a child acted this way, we might call it a cry for help.

But this is no little kid. And it is no little company. For Microsoft’s much-maligned Vista operating system, the company’s advertising seems to indicate an angry inner child bent on lashing out.

The latest series of television and internet spots from Microsoft feature “Project Mojave.” Using the hidden camera technique—yes, that old 1980s-era newsroom staple—unsuspecting people are shown what they believe to be Window’s “upcoming” operating system. And just like the can of Folgers Crystals in the classic coffee ad campaign, the duped subjects are shocked to discover this wonderful product already exists!  It was really Windows Vista all along!

Absolutely cringe-inducing.

For the company who controls better than 90 percent of the desktop software market, it’s downright embarrassing. And for someone, like me, who is more familiar with the rugged SQL Server and MOSS (Microsoft Office SharePoint Services) business platforms, it’s downright befuddling.

But more on that in a moment. I can understand where the company is coming from. Let’s explore the recent past and our rightly and wrongly accused friends at Microsoft.

To say Microsoft has struggled with its public brand image over the last few years would be an understatement.

It is somewhat inevitable Microsoft bears the brunt of the working world’s frustration, and that’s what you get when you dominate the market: the hated paperclip guy, the endless torrent of viruses, the complicated operating systems. To be fair, these examples are one part truth and one part perception. But whether Microsoft’s fault (or the fault of the user) is immaterial. Microsoft gets the rap.

Put simply, when you’re the king of the mountain, competitors attack from all sides. And attack they have.

Google is playing hardball with Microsoft online. Stymied in its efforts to acquire the also-ran Yahoo!, Microsoft does not seem to be able to crack Google’s stranglehold on the online search and the quickly-exploding online application market. It’s hard to charge money for software (Microsoft’s core consumer business model), when Google gives it away for free.

And if that wasn’t enough, IBM and Linux have carved out a powerful niche for themselves as thorny-problem-solver-solution-providers at the mega-enterprise level, effectively thwarting Microsoft’s move “up-market” from the mid-level business solution market.

And if that wasn’t enough, Oracle remains a doggedly tough competitor in the enterprise database market.

And if that wasn’t enough, the (some would say superior) Zune music player has failed to gain traction.

And if that wasn’t enough, Nintendo’s runaway success with the Wii game console has forced Microsoft to drop the price of the Xbox 360 hardware ahead of this year’s holiday season.

Ugh.

But Microsoft seemed to be taking it all in stride, at least from a brand perspective. That is, until Apple crafted its ubiquitous “Mac and PC” ad campaign.

Long frustrated by what it feels as Microsoft’s undeserved numerical advantage in the desktop operating system market, Apple got aggressive.

The simple series of ads personify the “Mac” and the “PC” as stereotypical people. The “Mac” is a hip, young, smart trendsetter, and the “PC” is a stodgy, middle-aged, frustrated worker-bee.

While the ads are pretty gentle by “political” standards, they repeatedly and cleverly jab their finger in Microsoft’s eye. The ads are so successful, they have run largely unchanged for the better part of two years. Combine that with the millions of people walking into Apple stores to buy iPods and iPhones, and Apple has begun to chink away at Microsoft’s market share armor.

It just seems like something inside Microsoft snapped.

They tried using an unfunny combination of Jerry Seinfeld and Bill Gates. The confusing ads were poorly received and quickly dropped.

We’ve already mentioned Project Mojave. I feel embarrassed just to write about it.

But their worst attempt yet seems to be the “I am a PC, and I have been made into a stereotype” campaign. In it, unique people from all walks of life talk about how they are also a “PC,” apparently in an effort to debunk the myth that all PC users have boring, mundane jobs and lead boring, mundane lives. Of course, PC users do lead varied and rich lives, but that’s not the point.

This is a classic example of an ad campaign “the client will love”; a campaign that makes your client pump his fist in righteous indignation and say, “Yeah! We’ll show those guys!” The problem is, you’ve admitted weakness. You’ve admitted they got to you. And worst yet, by mentioning another company’s ad in your ad, you’ve given them free airtime.

Instead of giving viewers a clever way to remember Vista’s many clear benefits, Microsoft is spending time and money reminding them of Apple.

Microsoft is a big kid. They’ve played in the advertising sandbox a long time. They should know better.

How to Slay the (Geico) Caveman

Why do real estate agents still exist?

Online Multiple Listing Service (MLS) searches, price/neighborhood comparisons, virtual tours, and a cacophony of similarly powerful web-enabled tools have made finding your next home faster and easier than ever before. In fact, ten years ago, more than a few very smart analysts predicted the end of the real estate agent as a career. There would be nowhere left to add meaningful value.

But that’s not the way it turned out, is it?

Yes, online tools could provide more and better information to the average homebuyer, but they could never substitute for human agents—and their expertise—to help navigate a complex financial transaction.

That anecdote should be of some comfort to the old-line, retail insurance industry, but it isn’t.

This time again, it is powerful online tools that are transforming the way many people buy auto insurance. The numbers make a strong case for concern: From 2004 to 2006, industry data showed buyers requested over 70 million online auto insurance quotes. To the average agent, that’s worrisome. What’s more, starting is 2007, consumers started actually buying those policies. Apparently, many of us got over our fear of buying what was traditionally a person-to-person sell over the internet. That’s the part that keeps agents up at night.

Like the real estate industry, this transition has been cost-driven, pushing the prices people are willing to pay for comparable insurance products (or “common knowledge” expertise) significantly lower.

It was Progressive who really started the trend. Its ground-breaking website was among the first—and best—at providing “apples to apples” comparisons from different underwriters. It exposed price disparity the same way Orbitz does for airline travel. Price is a similar key value proposition for Geico (and its ubiquitous “Fifteen minutes could save you 15 percent or more on auto insurance” ads). Add to that the new Esurance model, targeting twenty-somethings, bringing anime style to the insurance buying process.

It’s tough for your average insurance agent to be as cool as the caveman, as smooth as an accented gecko, or as hot as a black-leather-clad animated special agent gal.

But when I caught up with my agent—American Family’s Dan Flynn out of Eau Claire, Wisconsin—he was a bit more sanguine about the whole thing.

Yes, he said, the slick ads drain some business, but it’s the business he would prefer not to have anyway. They are the type who don’t really value insurance past the lowest price they can pay, and will jump ship after six months for a few dollars in savings.

Also, Dan reminded me that the newer underwriters are not offering broad coverage in several insurance product categories; these new companies focus only on the most profitable slices of the insurance pie (namely, auto). They can’t (or won’t) touch more complex policies, and if they do, they are not competitive.

That insight brought the market issue into focus: These upstart companies are content to gain market share quickly by focusing on the easiest (and most profitable) business—leaving old-line firms to clean up the rest. This is much akin to what discount airlines (Southwest and JetBlue) and discount healthcare (Target/Wal-Mart in-store clinics and Minute Clinic) are doing to their industries.

I can see why: Industry estimates show 80 percent of all auto policies are spread between 25 different underwriters. Allstate and State Farm lead the list with about 30 percent between them, but they are by no means dominant. Because new auto registrations are holding steady, and therefore the market is not growing significantly, new growth must be cannibalistic. Therein lies the opportunity for heavy advertising.

But there’s a problem.

The money Geico, Progressive, and Esurance are spending on advertising (compared to their size) is not sustainable. Overall category growth in ad spending exceeded 33 percent for the last three years, making insurance ad spending a $1.7 billion expense. That just won’t fly long term. Insurer balance sheets are closely watched by their underwriters. It won’t be long before the pool of “easy market share” has been attained, and the big budgets begin to fail to bring the same results.

By the point of diminishing returns, these companies are hoping to be large enough to (a) compete, or (b) be bought. Or else. We’ll see what happens.

To prepare for that day (and smartly realizing that price alone will never sustain as a competitive wedge), insurers are driving creative policy writing. Allstate runs a cash-back program for safe drivers (my business partner loves this one). Progressive has started to offer pet injury coverage as part of its auto package. Esurance and Progressive feature carbon footprint reduction programs.

All well and good, but product innovation is a tangential differentiator.

Here’s the real buyer behavior insight, and what should give agents the key to their own survival: Buyers picking cheap insurance are far more likely to be those who view insurance is something the government makes you have (auto) or your employer just pays for and you never see (health). At that (usually) younger age, they haven’t had the life experience (statistically) to see the consequences of being underinsured. In other words, they don’t know better. They don’t understand insurance. So they don’t care. Yes, there is a risk in ignoring this cohort: That they will remain brand loyal as it ages, and that the new line companies will adapt to their needs. But I wouldn’t be too concerned.

It is the same reason real estate agents still exist. When it comes down to it, home buying (like insurance) is a complex financial transaction. The decision you make can mean the difference between financial security and financial ruin.

And when the worst happens (and it will), no secret agent will come to the rescue. No caveman will tow your car. And no gecko will pump out a flooded basement.

I think Dan Flynn is right. You’ll always need a real human being who understands how to help. If I were an agent, that’s what I would worry about.

FTTH: The World is officially spinning a bit faster

Back in 1997, we called it the “Last Mile” problem.

It related specifically to FTTH—“Fiber to the Home.” At that time, I worked as a fiber optic wonk at a local telecommunications firm. And to understand the market implications of the decisions Qwest, Verizon, and AT&T are making regarding FTTH—and how it will affect you—you’ll need to understand the Last Mile.

The Last Mile was a euphemism for the logistical problems inherent in bringing high-speed communication lines (in this case, fiber optic cables) closer and closer to your home.

In the most basic sense, fiber optics works by using laser-generated pulses and wavelengths of light to transmit data over long distances. Fiber optics is superior to copper or metal-based transmission lines in many respects, but the primary reason is comparatively low signal loss. Lower attention means fewer (expensive) “repeater stations” along the way.

But 20 years ago, even with those advantages, exceedingly high electronics costs (the cost of the lasers and other transmission equipment) precluded deploying fiber optic cables in anything other than long-haul transmission lines. The result was a spider-like network of optical fiber spanning coast to coast, stopping only to intersect major metropolitan areas. Beyond that, copper-based networks sufficed.

Predictably, as the cost of electronics dropped, fiber optic lines began to ring large cities, linking major government, financial, and military institutions. Over the next ten years, fiber optic lines spread prodigiously into business campus backbone networks.

That is as far as fiber got. It simply never made sense to get fiber optics any closer to your home.

In the late 1990s and early 2000s, the potential for fiber optics’ increased speed was not justified by the needs of home customers. In other words: No one needed the extra speed, and hence, no one would pay extra for it. If you think about it, that makes sense; laying fiber optic cable to a business campus nets you several large customers (and/or many small ones) with one installation. What’s more: They had the need. Doing the same even in a dense suburb is pure economic madness, to say nothing about outlying suburbs and rural areas.

For telecommunication companies of all kinds (now including the telephone, satellite, and cable television conglomerates), bringing this fast pipe as close as possible to your home means they can offer a wider and wider array of services. Whoever got there first would get first-mover advantage—perhaps a killer advantage. But without home customers demanding these speeds, and willing to pay the additional cost in sufficient numbers, that dream lay tantalizingly out of reach.

That is the Last Mile problem.

And it is the resulting network home consumers have been living with for the last ten years. Sure, the electronics’ prices have come down, and connection speeds have increased, but the bulk of the fiber network has remained largely unchanged, unneeded, and untapped.

In our region, Qwest is working to change that.

They think people are beginning to demand faster services that only fiber realistically can provide: Streaming HD video, video calling, multi-channel music, live video social networking.

So Qwest (and Verizon on the national stage) is gearing up to bring fiber closer to your home than ever before. It is not really FTTH—it’s more like “FTTC” (Fiber to the Curb)—but it’s a huge leap. They are betting that the increased demand for speed is months away, not years away, and that better copper technology will not be able to keep up with demand any longer.

It’s a risky move. Telecommunications companies overbuilt long-haul fiber networks in the 1990s (with similar grandiose expectations), and it nearly ruined them. Now they are at it again, with an even bigger gamble: That the average home customer will see the need to trade up for faster internet service.

But I think it’s a good bet. To help me elaborate, I called on local network infrastructure guru Jamie Roux from DataStrait Networks. His company works with business, educational, and government entities on network planning and deployment.

Jamie said the needs of the home network have always been driven by the business network. Think of it this way: If you can get lightning fast internet at work—and your workforce is becoming more mobile (read: working at home)—employees won’t put up with deficient technology in their home network for long.

It’s sort of like a chicken and the egg problem, but in this case, you have a good beat on the answer. Business networks are now making the transition from Gigabit Ethernet to 10 Gigabit Ethernet, Jamie explained. They are preparing for 40 Gigabit. The change is coming from immense data transfer and storage needs spurred on by streaming video, video conferencing, advanced video surveillance, online training, web application use (e.g. Google Office), and the efficient storage of all that data. With a new mobile workforce, much of that will need to come home as well.

Speaking of the home specifically (the part not connected to the office), many entertainment devices are beginning to sport network connections (HDTVs and DVRs to name a couple). Not far behind are smart appliances (refrigerators that can monitor food usage and status and automatically add items to your grocery list on your mobile PDA device). Put simply: With all of these drivers, the next stage of home network evolution is on its way. Fast.

Be that as it may, I think the real challenge Qwest faces with FTTH in the short term is not technological, nor is it economic. The real challenge is emotional. Irrational buyer behavior seems to be the key to taking advantage of this market opportunity.

 

A simple question, really: How do you sell people something they may (will?) need later, but certainly do not need today? And assuming a typical service adoption cycle (early adopters, early majority, as so on), how do you convince enough people to sign on soon enough to justify the tremendous investment?

As you might guess, I have a suggestion.

You can try to sell faster service the old-fashioned way: Provide concrete examples of how many six-minute simultaneous HD downloads you could perform, or some other brazenly outlandish statistic that most people couldn’t begin to dissect, nor care about. They aren’t doing it now, and will likely have trouble envisioning what it would be like. Not so smart.

You can try to sell faster service by looking ahead: Provide Jetson’s-style examples of real-time video Facebook, or some other fantastic new technology. Again, that’s cool, but is that worth extra money for most of us? I am not so sure.

You can try to package it as a work-at-home necessity: Attempt to convince high-powered business types that they will be unable to collaborate with their peers. I think that’s especially bad, and likely to backfire. The work-at-home concept still rankles a lot of people.

To contrast, I have a novel—and simple—idea: Just sell “fiber optics.” Let me explain.

Make it sexy. Make it “light speed.” Make it the thing you just have to have. Play to pride. Yes, it’s a pure emotional sell, and not based on anything concrete. In this case, however, Qwest needs to get people more excited about the idea itself, and get the creative in place to make people want it. Once they do, then back it up with all of the wondrous things you’ll be able to do—now, and in the future. As it stands now, Qwest is in the process of selling fiber optics the same way they have sold faster DSL lines. Boring. It needs to be more than that, or I doubt enough customers will bite on the increased cost to make it worth it. They need to retool their stodgy 1990s-era ad campaign right now.

Of course, it might seem as though given current economic conditions, people wouldn’t shell out extra money for what they perceive as an unnecessary expense. But I know better. We’ll buy it because it’s faster. Because it’s cool. And because it’s a status symbol.

It won’t be long until we all wondered how we lived without fiber optics in our home.

Reverse Mortgage: Hero or Villain?

Perhaps it is just poor timing.

Just as the word 'sub-prime' became part of the everyday vernacular, just as mortgage industry giants fell, and just as the Federal Reserve wrested new authority over the market, we have a new mortgage product on the scene.

It is called a 'reverse mortgage,' and it is not really that new.

In the days of heady profits and rapidly escalating home values, no one saw much value in selling them. No wonder, really. Reverse mortgages are reasonably complicated financial instruments. By statute, they apply only to a narrow segment of the population. They were simply too much trouble. But that has changed.

For a primer, I tapped Tony Weick, the resident expert on reverse mortgage products at Bell Mortgage.

Tony reminded me reverse mortgages are not, in and of themselves, 'good' or 'bad' products. Just like FHA, Jumbo, VA, and sub-prime, reverse products fit certain buyers under certain circumstances.

In short, a reverse mortgage is exactly what it sounds like. Instead of you making payments to the bank to earn back the equity it owns, the bank pays you each month to earn the equity you own.

A few caveats (aren't there always?): Reverse mortgages are only available to homeowners aged 62 and over who own - or mostly own - their own property. Also, homeowners cannot 'buy into' a reverse mortgage; it must be a refinance (although just-signed legislation may ease some of that burden). Finally, buyers must complete HUD-authorized coaching session before they are allowed to begin the process. On the surface, smart precautions.

On the plus side, reverse mortgages allows homeowners to stay in their home and access its equity without selling the home outright. Another major bonus, reverse mortgages are non-recourse annuities. Essentially, you and the bank enter into a sort of grim game of chicken. Based on your age, the bank determines your life expectancy, and uses that number to set a maximum dollar payout and monthly payment. If you live past your life expectancy, you win. The bank must continue paying you each month, even if the amount they pay goes beyond the value of the home itself. In the end, they are left holding the bag. But if you expire early, you also "win" (or more specifically, your estate "wins"). The bank has only the lien on your property for the amount it paid out to that point. In other words, the game is loaded in your favor.

Not bad.

So what does the bank get?

For one, the up-front fees are a bit heftier than 'forward mortgages' (Tony's word, not mine). Yes, you never make a payment, but that means the interest and fees capitalize, essentially limiting the total amount you could access. In other words, you (or your estate) could feasibly get more money out of your home if you waited it out (read: you died) or sold it early (read: move into another home/assisted living arrangement/etc.). Of course, all this depends on your tax situation.

Tracking so far?

If not, I don't blame you.

Tony and I spent 45 minutes on the phone working through the details. Any errors or omissions in the above description are mine, not his. And believe me, there are a lot more details.

And therein lies the issue.

To get good at reverse mortgages - from a professional's perspective - takes time, patience, and training. Bell takes it pretty seriously. As do many other organizations. But can you envision a scenario in which loan officers looking to survive in today's market will cut corners to open up this potentially lucrative market? I can.

The image of a few bad apples in the market, however, is nothing compared to risk when you begin to market to seniors.

That game is fraught with peril.

First, you need to spend considerable energy building trust. That takes time and money. And while there may be many more seniors in the coming years given demographic changes, they also are savvier about money than at any point in history. Add to the mix involved and financially adept adult children, along with the emotionally charged inheritance/family issues they bring, and you have an unrivaled marketing challenge.

More vexing, however, is the risk the industry takes the more it promotes this product. Coming off the heals of the sub-prime mess, mortgage players always could claim, "we should not have lent to unqualified buyers, but hey, they lied on their applications too."

Not so when marketing a financial product to seniors.

You have what I call the "swampland in the Sunshine state" image problem. Whether the industry likes it or not, consumers have a long memory of real estate scams targeting seniors throughout the 1970s and '80s. Fair or not, as a financial product for seniors, reverse mortgages have been greeted with more than a healthy dose of skepticism.

Senior Lending Network (as seen on TV), among many others as of late, is running up against this problem. Heavily promoting reverse mortgage products, it places its entire industry at risk if word gets around that seniors are getting the short end of the stick.

This time, there would be no shared blame. The public would consider itself fooled twice, and would likely not take kindly to the charge of "bilking grandma out of her home."

Talk about an emotional pressure cooker.

Mortgage types had best tread very carefully here.

Chrysler’s $2.99 Gas Guarantee: A Look Inside the All-American Gimmick

You can't blame Chrysler for trying.

Arguably the sickest of the American big three automakers, and the one least well-positioned to compete in a fuel-efficient vehicle future, executives have whipped out the old-fashioned sales promotion to pull attention away from the unpleasant truth.

The deal is pretty simple.

If you buy a new Chrysler vehicle, you will receive a debit card of sorts to use when you fill up your tank.  By using it, you essentially "lock" your gas price at $2.99 per gallon for the next three years.

Of course, there are a few caveats (aren't there always).  The deal applies only to the first 12,000 miles each year.  And you can't go buying regular gas when your vehicle needs diesel (and try to game their system).  And it doesn't apply to every vehicle (sorry, Viper buyers).

If your suspicious bone is tingling, it should be.

Let's do some math.

First, we will need to make a few assumptions.  First, we will assume gas remains above $2.99 per gallon for the foreseeable future; we'll use $4.00 per gallon as our average.  Next, let's assume you are not trying to game the system, and you are simply filling up the new vehicle you just bought.  Finally, let's assume your new Chrysler gets 20 miles to the gallon, on average, over the three-year plan.

Subtracting $3.00 from $4.00 (basically), you save $1.00 per gallon.  Dividing your 12,000 per year annual allotment by 20 miles per gallon, you get 600 gallons.  The math gets easy here: You save $600 per year, or $1800 over the life of the plan.  If your vehicle gets 10 miles per gallon (I feel bad for you, Dodge Ram owners), you'll save $3600.  Twice as much.

Not bad.

Now let's change the assumptions.

What if gas does not remain at $4.00 per gallon.  Many analysts believe the price of oil is exhibiting "bubble market" properties, and could very well crash.  But let's say it stabilities a bit downward.  Say, $3.50 per gallon at the pump.

At that rate, you have saved $900 over the course of three years.

Still not bad, you say.  That's still $900 you did not have before you bought your new Chrysler. Or lots more if you bought a gas-guzzling Ram pickup. You can plug in your own variables and do your own math.

But here's the rub.  You could have had the money.  Up front.  If you had simply asked for it.  Most dealers get loads of money in bonus cash and incentives.  The numbers you are "saving" in gas are easily gotten in the negotiation process.  And the time value of money tells us that we would rather have those dollars now rather than an annuity over time all things being equal.  (We will not explore any of the other factors involved in the auto purchase process.  You get the idea by now.)

That's logic.

But that is not buyer behavior.

I will bet Chrysler does reasonably well for themselves with this promotion in the short term, for a few reasons.

First, they have kept the deal short.  You don't have much time to take advantage of it, which reduces the chances you will hear a better argument from some crazy marketing analyst.  From a financial perspective, it limits the exposure the company has in case gas prices really shoot through the roof.  On the cost downside, if prices for gas begin to fall, the promotion would fall flat as well.  The promotion was too short to see that happen.

Second, they are tapping into an emotional connection - a fear - that people have over the rapidly escalating price of gasoline, and what that is doing to the family budget.  Chrysler is selling predictability, which is worth more in the minds of many consumers than the time value of an up-front cash payment.

Third, it gives Chrysler a needed PR boost.  The American automakers have been awash in bad news lately, and that does not help the buying mood of its customers (who have been flocking to Toyota and Honda showrooms in search of better fuel efficiency).

The core problem however, that no sales gimmick can address, is Chrysler's lack of planning when it comes to fuel-efficient vehicles.  GM and Ford, albeit late, have drunk the high-mileage Kool-Aid.  Chrysler, through institutional blindness, corporate boardroom distraction in the recent spin-off, or simply bad planning, is left with few models in its portfolio that satisfy what consumers are looking for right now: Good car and good mileage.

If after all that, you still find yourself interested in "$2.99 gas," and you are willing to limit your selection to the Chrysler lineup, you are out of luck.  The plan officially expired June 2.

Madonna redefines herself and—more importantly—what it means to turn 50.

It seems a bit beyond belief, doesn't it?

On the eve of her 50th birthday this summer, the Material Girl, the author of Sex, and the perpetrator of countless minor social scandals, Madonna, released her eleventh studio album—"Hard Candy"—which hits store and online shelves April 29.

Hardly needed, but a bit of perspective seems in order. Madonna launched her professional pop career in 1983 with a self-titled album, over-the-top sensuality, and a dynamic stage presence. An interesting case study to say the least, but hers was hardly a unique story at the time.

While many of her contemporaries have faded from the scene, Madonna remains. The reason is pretty simple, really. The Madonna of 1983 is not the Madonna of 1987. Or the Madonna of 1994. Or the Madonna of 2000. Or the Madonna of 2008. Whereas other artists have stayed relevant by not dramatically changing (thus guaranteeing a stable audience), the pop world is a different beast entirely.  Madonna understands that world—and like her (or her new album) or not—she remains as successful and as relevant as ever.

But all of this would be nothing but an interesting bit of MTV trivia would it not be for what Madonna has come to represent. On August 16, Madonna will turn 50 years old. And at 50, she retains an enviable balance of hip, emotional maturity, and rooted confidence most of her modern contemporaries sorely lack.

Again, interesting, but not in and of itself unique.

What truly makes Madonna important, from a marketer's perspective, is not her onstage kisses, her wild outfits, or her young child. It is that she has come to symbolize a fundamentally changing demographic truth. Madonna is a powerful image of the new 50.

It was only a generation ago that turning 50 meant the beginning of the end. The end of a career. The end of physical attractiveness. And the end of personal relevance. We jokingly celebrated turning 50 with black balloons and the tacit acknowledgment that the birthday recipient was heading toward the twilight of life.

And it was hard to blame partygoers. Average life expectancy in the United States at the turn of the 20th century was just under 50 years old. By 1950, the number had climbed to just over 67. Today, we are fast approaching 80. In fact, one of the fastest growing populations of Americans is centagenarians - people living up to and past the age of 100.

Our public perception is only beginning to catch up.

Instead of asking at age 50, "How do I wind down my life?" people are beginning to ask, "What do I want for the second half of my life!" Today, 50 means "midlife" in the true sense of the word. Fifty is a new beginning.

And again, like her or not, Madonna is a symbol for what 50 can be. And that symbol is forcing a whole new set of questions. Better questions. What does it mean to be vibrant and active? What does it mean to be sexual? What does it mean to be a parent?

And it scares most marketers to death.

Oh sure, if you ask them, most marketers claim to have seen it coming. They even spout the same statistics regarding activity levels and life expectancy. Then in the same breath they write commercials such as the intolerable piece of garbage for Colonial Penn Life Insurance. (You have likely seen it: A man in his 50s wakes up in the middle of the night worrying about his life insurance. He and his wife calmly review the rational benefits of such a policy, and decide in the end to get the "peace of mind" only Colonial Penn's policy can bring. This commercial would have been modestly appropriate in 1980. It is exceeding out of touch today.)

But wait, you say. We have seen an explosion in marketing to "older" Americans. Massive marketing campaigns for all manner of pharmaceuticals. Record-breaking numbers of 50-somethings traveling.  The democratization of cosmetic surgery.

True. And with few exceptions, searingly boring ad work. Campaigns for Baby Boomers rarely strike with the same creative energy that "youth" campaigns exude.

What I don't think our collective marketing department has figured out just yet is how to handle the "new 50." How to handle people who have reached a stage of maturity and financial wealth that finally allows them to live the life they could not fully understand, nor afford, in their 20s and 30s. This is a group that will likely become more active, more physical, and more daring as they age. Not less.

That means sightseeing bus tours are out. Adventure hikes are in. Water aerobics is out. Taekwondo is in. Woodcarving is out. Wii is in.

It is the paradox of mature and wild living in the same body.

It is the Madonna paradox. And we had better get used to it.

A Plum Worth More Than Gold

There was a time when having a Gold card meant something.

To obtain one (a Gold VISA or Gold MasterCard) meant you had achieved a certain point in life.  A certain level of income.  A certain net worth. The Gold card symbolized elite status in a world where not everyone had a credit card, and there were not that many ways to get one.

Then sometime in early 1990s, the Gold card started to lose its luster (we never really had a "silver" or a "bronze" phase; I am not sure they would have taken off anyway). When even entry-level employees (and, sadly, too many college students) had credit cards, and mid-level managers had Gold cards, the financial elite needed something more to emotionally separate themselves from the rest of us.

Enter the Platinum card.

Never mind the actual value of platinum on the world market. That didn't matter. It just sounded better.  (As an interesting aside, the rise of the "Platinum" card has marked an increase in popularity of everything Platinum. There was a very limited market for platinum jewelry in the 1980s. Not so today.)

But, of course, you know how the story ends. Platinum hasn't seemed good enough either. Now we have "Diamond" cards. They are even better, one supposes. But any child can see the logical end quickly approaching. A "Moon Rock" card seems pretty nonsensical, but then again, I have been surprised before.

What really has developed is a market full of a dizzying array of options—each trying to paint an emotional or financial wedge. Airline miles. Cash rewards. Hotel bonuses. Cheaper gas. Big box retailers. Your favorite mall store. Your local grocer. And those are just some of the common ones; other options focus solely on affinity; nearly all major colleges offer credit cards, as do many charities. You can even get a card with your favorite zoo animal.

Into this crazy, mixed-up market, American Express has launched the "Plum" card.

A tongue in check reference to a "plum" deal, the company has scheduled only 10,000 cards in its initial release (seemingly a large number, but it has nonetheless inspired a certain amount of scarcity marketing jealously—very nice). Of course, the card is "plum" colored, somewhat unique among credit cards on the market today.

The color, in and of itself, is not what makes the idea work. Colors are a limited and quickly exhausted source of ideas (who wants a "Brown" card?).

Also comparatively unimportant are the unique terms: Deferred payment and early pay discounts. These are easily copied.

More to the point, however, is how American Express is working to prove the Plum card's unique value proposition. Company advertising focuses not on the card itself, but on the companies receiving them, of course focusing on the unique businesses that play well in television and internet advertising campaigns. 

As credit card options have become increasing difficult to understand, many people simply have given up. They assume most credit card offers and terms are essentially the same. That any rewards offered will prove largely phantom. That the penalties will be brutal.

American Express takes advantage of our collective skepticism of specifics, calling attention instead to the people and companies getting the card and what they are doing with it.  It makes for more interesting television ("What's in your wallet?" ads were entertaining only the first couple of times) and creates a stronger emotional connection.

What's more, the strategy falls neatly in line with American Express strategy since the 1980s: Membership has its privileges. Back in the day where the iconic green American Express card meant no pre-set spending limit (along with a hefty annual fee), cardholders felt a real emotional attachment to it. And although that card still exists, American Express got sucked into revolving debt credit cards and affinity gimmicks like all the others, with the effect of diminishing their brand position and relegating their former "elite brand" to also-ran status, well behind top-players Citi and Bank of America.

In other words, American Express went back to well for some of their old positioning genius. They managed to make everyone else seem generic by comparison by focusing on an emotional connection—the people with the card— and not the card itself.

For their sake, I hope we are not all too jaded by credit card junk mail to be impressed.