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AUGUST 1998
On a morning when the entire nation was talking about its commander-in-chief, so was AutoNation's marketer-in-chief, Bob Thomas.



The country, that day, was just about jaundiced with journalism reporting the U.S. president's alleged mystery dance with a young intern. But Robert J. Thomas, a former U.S. president himself (of Nissan Motor Corporation) was none too eager to jump on that train.

"Shoot," he said softly, in a disarmingly folksy tone. "I was in a business that had a lot of exposure. It's amazing how that exposure can be used in ways you wouldn't think would be important to anybody. In negative ways. "As I translate that to people in high positions who are running our country, I really feel sorry for them. They're so distracted by things that the bulk of people don't care about. I just feel sorry for Bill Clinton right now."

Bob quickly added that he's a Republican, albeit one who was appointed by Mr. Clinton as the sole business representative on a prestigious 7-person commission, "One America in the 21st Century: The President's Initiative on Race."

Does that mean Bob Thomas knows Bill Clinton? "Can't say I know him. I've met him and talked with him and spent some time with him. He's an incredibly impressive person to be around as you would hope a President would be."

Another person Bob finds impressive is that person known collectively as "the consumer." In fact, it was a relatively recent revelation about "the consumer" that led him directly to his current captaincy of the marketing strategy that's propelling Wayne Huizenga's much-publicized venture into the auto retailing business. "I realized consumers had changed," Bob explains, "Or at least that they were different than I thought they were."



How so?

Well, Nissan had, for a long time, as with virtually all car companies, primarily just promoted the vehicle brands . Model line brands. It was a features-benefits communication. We would also support retailer efforts to intercept buyers while they were shopping to support the deal. A number of things converged. I began to look at how consumers felt about things. I looked at the top twenty TV shows and realized I had never seen a single one of them, and maybe had only heard of one or two of them. I realized I didn't know what the American public was watching, what entertains them. It just woke me up.

All the things that I read about change had passed me by somehow. And yet once I opened the door it was just so obvious, and then it as tough to deal with those who didn't see it. Now you're talking a totally different language from a totally different perspective and it can get pretty uncomfortable if you're having to conduct business with somebody who doesn't see things the same way.

What did you do with this new insight?

We did some research and found out some other things that were kind of obvious. Most people only listen to what they're interested in. So if you're giving a features-benefit type message exclusively, it only appeals to that small percentage of people who are in the market at that time. Everybody else who's watching TV is in kind of a respite mode. They only want to be entertained. If you don't entertain them they tune out.

Then we started looking at other campaigns in the marketplace, some of them created for not very much money. Many of them were done by our own agency, Chiat/Day -- most notably for Energizer Batteries and Jack-in-the-Box fast food stores. These were very small budget campaigns, but very memorable, impactful, and high in brand imagery.

We just put all those things together and said, you know, we ought to step back and start from scratch. What's our brand promise? How can we best get our brand's message out to consumers? How do we make our dollars work more efficiently so we speak to the 80% who aren't listening to us when we're on TV? That is what stimulated the startof re-visiting what we were doing at Nissan.

You mentioned that consumers want to be entertained. Is there an element of that in the shopping experience at AutoNation?

I'm not sure it would be fair to say entertainment would be a high priority. Basically we want you to feel that when you walk in, you're welcome, and it's our job to help you at whatever stage you're at, or whatever path you want to take.

If you're just there for information, or just looking, then we want you to feel welcome to do that. If at any time you need assistance, then we assist you. And if at any time you change gears and want to begin to select something and want more help, then we help you do that. So when you walk in, you're greeted by somebody who would attempt to determine what your needs are. Depending on that, you might be provided with some guidance about how to look around the inside of the store, or outside.

You might be guided to the kiosk which would give you information, comparative product information, or tell you what products we have in inventory. Some people come in and are price oriented. Some might come in and are manufacturer brand oriented. Others may be category oriented, like sport utility. So, depending on that, we would help you narrow in on the selections, the choices, we have.

Will buying a car ever become as easy as buying, say, a toaster oven?

Oh, I'm one of those few people who say absolutely yes. I think the quality and reliability is already there. The assurances are there in most cases. The assurances and warrantees. The ability to provide the necessary financing and delivery is there.

What we would like to do is provide you with a better environment to buy your car, if we can gain your trust and confidence. We won't harm your trust in us by the way we act while you're there. I think that's a real part of our model, because we realize that a lot of people just avoid car dealerships as an industry and we'd like to change that.



Michael Eisner came in and re-captured the magic of the Disney aura. They had it and they kind of lost their way. he kind of found it again for them.

We'd like to give you a fair price and for our people to be more helpful than just selling you something. We do ultimately hope a deal is consummated, but on your decision-making schedule, not ours.

Will the way AutoNation sells cars ultimately change the way auto makers go to market?

Auto makers would be very happy if their new car operations went to something like a one-price world. It would cut down on very expensive, intra-brand competition. And it would be less stressful and harmful to customer satisfaction. In that sense, yes, I think we will help influence a change. As to how they manufacture vehicles and the like, I don't know. It depends on what sort of research information we can provide to manufacturers that might be of use to them.

It sounds like AutoNation might be moving toward something not that different from the way packaged goods are distributed. Category management, in particular, ultimately winnows out under-performing brands. If AutoNation becomes the dominant distribution mode, should the auto companies still make so many different cars?

There are two separate issues. On the used car side, one the attractiveness of any used car lot is that you can get a wide variety of different brands. But we don't think, nor do we want, to get in the way of manufacturer branded outlets, or manufacturer branded outlets that have used car operations on them. Because there are still, and we think far into the future, will be a number of people who go out to look at used cars who want to look only at Fords. If that's the case, then it's not a bad thought to then say, okay, I'm going to go to a Ford store to look at used cars.

On the new car side, the new car stores that we own, we're committed to promoting their brands and to keeping them separate. So I don't see that blending happening on the new car side due to us. Now having said that, I think there will be all sorts of consolidations that will take place -- almost rationalizations more than consolidations -- that will take place over time. It's happening already. Just as manufacturers don't now build ten different steering wheels for every different model, they will rationalize their model offerings as well, and continue to make their manufacturing operations more and more efficient.

Do you see a scenario where I might walk into an AutoNation new car store and be able choose from among the top five sellers --regardless of manufacturer -- in each vehicle category?

I did think that that's where this thing was headed and I was always surprised that I couldn't get any confirmation of that. AutoNation has a business equation that has worked for them -- the Blockbuster solution -- where they worked with studios, which is the same thing as manufacturers. - Basically, they found they had the best results by working to promote the manufacturers' brands and not trying to do somethingthat would hurt those brands.

Steve Berrard and Wayne Huizenga -- and everybody else here -- are very manufacturer brand oriented. I was surprised, frankly, to see the extent of that. There's just nobody here who sees a scenario that doesn't encompass a manufacturer brand orientation.

Are you using any particularly interesting or innovative marketing strategies to build awareness and drive consumers to your stores?



Bill Gates talks about how Microsoft restructures and reorganizes every six months because if you don't you're dead in that business.

Not yet. We're certainly looking at ways that we can establish the synergies of all the companies we've got and the added values that we bring to the equation. Right now, we're trying to get the business models to work efficiently and get the basics down. At the same time, we're certainly looking at ways to express to the consumer, and demonstrate to the consumer, some added value.

What is the applicability of what you arrived at while at Nissan to what you're trying to accomplish now at AutoNation USA?

I think my understanding of the retailing changes that are going on, and my willingness to embrace them and not fight them, is important. My understanding of manufacturer needs and expectations is part of it. My background in manufacturing is important.

As AutoNation goes from nothing to something, they will be interested in their own brand and how to think about that, and how to develop something that connects with the consumer. I know how to do that and am capable of doing that. So that's part of it. And then, just, doing something that's never been done before is the type of mentality that AutoNation was looking for. I also had a relationship with Steve and Wayne just because they were doing business with us. I knew them and they knew me.

What's it like working for Wayne Huizenga?

The company that I work for, on a daily basis, is really run by Steve Berrard, with heavy involvement by Wayne. But they're co-CEO's and they really perform that way. They have an incredible relationship and they act as one and yet act as two. It's an incredible situation. I would not have believed that something like that would be possible.

To work for a founder, for somebody with the personality that Wayne's got, is very exciting. Both he and Steve, through having done these things very successfully, cut to the chase. They encourage a lot of experimentation and yet at the same time they have a very simple set of filters to apply to everything that ever gets done. So, they're just incredibly focused. They're very exciting people to work for.

What was it like going from a place like Nissan, where you were for many years, to AutoNation?

Well, there are differences and similarities. The company that I was associated with at Nissan had about 2,500 employees. In all of Nissan North American there's probably about 10,000 employees. At this company, they now have over 50,000 employees. It's interesting. At Nissan, we worked with dealers. Here, we are dealers.

So we're on the retailing side of the business, and as such, we're just incredibly focused on the results. You can't take as long a term of view things here as you can or perhaps you do at manufacturers. You really have to have things that serve two purposes -- long and short term at the same time. So, there are a lot of similarities between the businesses we're in. We work for the manufacturers now, rather than before, where the dealers worked for us.



If I had the talent I'd just love to be in entertainment. I'd have to have the talent.

Is that a difficult transition?

It's not. I actually had worked at retail at one time prior in my life. So I knew the difference. You can become just consumed with that next sale and what happens in a given month.

So it actually was to my benefit having worked with a manufacturer and seen that there are some long-term brand issues that you have to take care of, too. It's actually been good for me to have been on both sides of it. But I knew pretty much what I was getting into here.

With this being a public company, you're very driven by the margins, the earnings per share and the stock price. You know that on an ongoing basis, and you just have to keep focusing the business to return value to the shareholders.

I am excited about being able to now see the changes that are going on out there and be part of it. I always wanted to work for an industry leader who knew they were an industry leader and wanted to be an industry leader and wanted to do something with that. It's exciting to be here at Republic to be a part of all of that, to take part in the changes from an industry leader standpoint.


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