Re: alfa-digest V7 #936

[Pottree@domain.elided]

In a message dated 8/4/99 10:18:00 AM Pacific Daylight Time, 
owner-alfa-digest@domain.elided writes:

<< Did it again with the
 164 -- at introduction, a base model was about 20K -- by the time they
 withdrew, gizmos abounded and the minimum price was 30K or over -- of
 course they were not selling.) >>

Like the Milano before it, the 164 sold best in its initial year in the US.  
Simply put, enthusiasts who could afford a new Alfa rushed to the dealer and 
snapped them up (relatively speaking) as soon as they became available.  IN 
the following years, sale trailed off mostly because the market (those 
interested in buying) was used up. The market was too small, and our friends 
at Alfa couldn't, or wouldn't, or just plain didn't do anything to stimulate 
demand, American style.  E.g: marketing.  You can't make a business selling 
complicated products like cars only to those already presold when their 
universe is so small, it is uneconomic.  You need to push through a lot of 
units.  What did Alfa do to do this?  The next best thing to nothing, 
sometimes going over the edge to less than nothing (enhancing negative 
image).  FIAT, already a disaster in the US, was no help when they took over. 
 There is a minimum critical mass of units that need to be sold and dealers 
that need to be humming prosperously along for the chain to continue, and 
Alfa wasn't able to do this in the US.  They had a miserable, small dealer 
network and the cars were too often treated like the ugly step sisters to 
whatever was keeping the dealerships open.  Now, with things like OBD II and 
III, there is a critical mass of fleet size needed, as I get it, to just 
cover the overhead of the network of diagnostic computers that's required.  
The thing that eventually made it all fall apart is perhaps just the same 
thing that draws many of us to the marque: Alfa is the impossible Holy Grail, 
everyman's exotic, style and performance at a modest price.  I guess 
something had to give, especially in our US market where the little-known 
brand got no help at all.  Even today, how many of us meet people who are 
horrified we drive Alfas?  Aren't they VERY expensive to maintain?  Aren't 
they VERY fragile?  Isn't it VERY hard to get parts?  No degree of quality in 
the product is enough to overcome such a bad rap in the marketplace.  That 
has to be done by Marketing, and her handmaiden, Advertising.  It's the 
Amuricun way!  Just having a good (or superior) product is not enough; you 
have to sell the hell out of it in a crowded and competitive market like the 
US.  Alfa, in true engineer fashion, apparently thought what was obvious to 
them about the nifty aspects of the product would in itself cause buyers to 
want the product, but that is not a realistic view of the behavior of the 
American consumer.  With unit volumes in the low 5 figures, Alfa could not 
have EVER made enough gross profit in the US top afford to mount even a 
marginally effective advertising and marketing program.  Nissan, which I 
worked with years ago and which has also been on a disaster track in the US, 
was spending about US $53 million a year in media advertising against sales 
of about US $400 million.  What margin they made on operations I don't know, 
but on the surface it appears they were spending about 1/8 of gross, or 
probably close to 1/2 of net, in support of 1006 "stores."  Alfa could never 
even come close, either in the critical mass of volume or in the realization 
that you have to spend a big % of earnings to establish a market for your 
brand, especially when you have to work to counter mountains of unearned bad 
press.

Charlie
LA, CA, USA

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