Sunday, April 19, 2009
Dealers sell security
If the fear of getting laid off is keeping you from shelling out money on big purchases like cars and houses, you're not alone.
Businesses on the Grand Strand and across the nation, knowing that consumers are saddled with financial worries, are trying to ease those concerns and jump-start consumer spending by offering a safety net.
Car dealerships, home builders, stores and travel companies say they'll make payments or buy back products for people who get laid off - a marketing strategy that has quickly grown in popularity this year in light of the tough job market.
Consumer anxiety has risen with unemployment rates, which have soared on the Grand Strand in recent months. The unemployment rate in Horry and Georgetown counties in March was 12.8 percent, according to the latest information from the S.C. Employment Security Commission. That's lower than in February, but higher than in March 2008.
"It's on everyone's minds right now with the economy," said Shannon Williams, director of strategic marketing with home builder Lennar Corp.'s Coastal Carolinas division. "This gives them that peace of mind and that security that we can help them through that time."
Lennar's loan protection program costs home buyers $495.
People who participate get two years of coverage during which, if they lose their jobs, their monthly mortgage payment up to $1,800 is covered for up to six months.
Hyundai was the first company to unveil such a program this year for new car purchasers, announcing in January that buyers could return the car for a year after the purchase date if the owner gets laid off, becomes physically disabled, is self-employed and files for personal bankruptcy or faces other hardships.
In February, it expanded that free program, called Assurance, to include 90 days of payment relief.
Robert Wingate, general manager of Myrtle Beach Hyundai, said he doesn't think anyone has bought a car solely because of the program, but it helps.
"This just gives you a shot to hang on to your credit if something happens that changes your life," rather than allowing the car to be repossessed, Wingate said.
Many companies have followed suit: JetBlue airlines says it will refund customers' fare or vacation package if they lose their jobs; developer Goldberg Cos. lets laid-off tenants live rent-free for 60 days and then cancel the lease if they still can't find a job; and men's clothing retailer Jos. A. Bank recently ran a promotion where jobless customers could be refunded up to $199 for a suit without even having to return the outfit.
GM, Ford and The Ryland Group Inc. also have rolled out payment protection programs for people who get laid off.
The initiative has generated traffic for many businesses, and in some cases it has boosted sales.
At Myrtle Beach Hyundai, sales are up about 5.1 percent year-over-year, Wingate said, which he attributes in large part to the Assurance program.
It's generating "a lot of buzz" for Lennar, Williams said. "I think those people who have been on the fence and unsure about it because of the economy, it's definitely given them a reason to pick up the phone."
The move is smart marketing, said Bill Daddi, president of New York-based public relations and marketing firm Daddi Brand Communications.
It's "demonstrating a unique understanding and empathy of what a consumer is going through right now," which helps build relationships and customer loyalty, Daddi said.
Shoppers on the Grand Strand said they like the idea.
"I think that's great," said Kelly Strange of Syracuse, N.Y., who was in Myrtle Beach this week on vacation. She said those types of incentives wouldn't make her buy something she didn't need, but she would feel safer buying from those companies if she was in the market for their product.
"With the economy right now, the way it is, people need to be protected," Strange said.
Other people, such as Karen West of Myrtle Beach, said that such promotions don't make a difference in where she spends. She wouldn't make a big purchase like a car or a home if she were concerned about being unemployed.
"I plan to keep my job, and if I don't keep my job, I don't need a new car," West said. "I need a bicycle."
People should do their research and read the fine print before signing up, experts said.
Some of the programs are free with purchase, but others cost money, and they each have different rules about how to cash in.
"Consumers should always take time to read the full details of an offer," Daddi said, but also added that it wouldn't benefit a company to make it too difficult for a customer to take advantage of such a program.
"A company that utilizes an approach such as layoff protection should be doing so with the intent of, we want to help our consumers," he said. "If it's just being utilized as marketing platform and they want to make it difficult to take advantage of that, it's going to have the opposite effect, and they may as well not do it."
It's unclear how many consumers actually cash in, and for many businesses it's too soon to tell.
"I would say it's a reasonable percentage" of people who return cars or take the payment relief, said Jeff Beaver, senior vice president of marketing and product management for EFG Cos., which owns Walkaway USA, a company that since 2006 has teamed with car and motorcycle dealerships to provide the coverage. He declined to give specific numbers.
"The relief of consumers who have had to return the car is pretty dramatic," Beaver said, "even if they've turned around and bought a less expensive car from the same dealer."
If the fear of getting laid off is keeping you from shelling out money on big purchases like cars and houses, you're not alone.
Businesses on the Grand Strand and across the nation, knowing that consumers are saddled with financial worries, are trying to ease those concerns and jump-start consumer spending by offering a safety net.
Car dealerships, home builders, stores and travel companies say they'll make payments or buy back products for people who get laid off - a marketing strategy that has quickly grown in popularity this year in light of the tough job market.
Consumer anxiety has risen with unemployment rates, which have soared on the Grand Strand in recent months. The unemployment rate in Horry and Georgetown counties in March was 12.8 percent, according to the latest information from the S.C. Employment Security Commission. That's lower than in February, but higher than in March 2008.
"It's on everyone's minds right now with the economy," said Shannon Williams, director of strategic marketing with home builder Lennar Corp.'s Coastal Carolinas division. "This gives them that peace of mind and that security that we can help them through that time."
Lennar's loan protection program costs home buyers $495.
People who participate get two years of coverage during which, if they lose their jobs, their monthly mortgage payment up to $1,800 is covered for up to six months.
Hyundai was the first company to unveil such a program this year for new car purchasers, announcing in January that buyers could return the car for a year after the purchase date if the owner gets laid off, becomes physically disabled, is self-employed and files for personal bankruptcy or faces other hardships.
In February, it expanded that free program, called Assurance, to include 90 days of payment relief.
Robert Wingate, general manager of Myrtle Beach Hyundai, said he doesn't think anyone has bought a car solely because of the program, but it helps.
"This just gives you a shot to hang on to your credit if something happens that changes your life," rather than allowing the car to be repossessed, Wingate said.
Many companies have followed suit: JetBlue airlines says it will refund customers' fare or vacation package if they lose their jobs; developer Goldberg Cos. lets laid-off tenants live rent-free for 60 days and then cancel the lease if they still can't find a job; and men's clothing retailer Jos. A. Bank recently ran a promotion where jobless customers could be refunded up to $199 for a suit without even having to return the outfit.
GM, Ford and The Ryland Group Inc. also have rolled out payment protection programs for people who get laid off.
The initiative has generated traffic for many businesses, and in some cases it has boosted sales.
At Myrtle Beach Hyundai, sales are up about 5.1 percent year-over-year, Wingate said, which he attributes in large part to the Assurance program.
It's generating "a lot of buzz" for Lennar, Williams said. "I think those people who have been on the fence and unsure about it because of the economy, it's definitely given them a reason to pick up the phone."
The move is smart marketing, said Bill Daddi, president of New York-based public relations and marketing firm Daddi Brand Communications.
It's "demonstrating a unique understanding and empathy of what a consumer is going through right now," which helps build relationships and customer loyalty, Daddi said.
Shoppers on the Grand Strand said they like the idea.
"I think that's great," said Kelly Strange of Syracuse, N.Y., who was in Myrtle Beach this week on vacation. She said those types of incentives wouldn't make her buy something she didn't need, but she would feel safer buying from those companies if she was in the market for their product.
"With the economy right now, the way it is, people need to be protected," Strange said.
Other people, such as Karen West of Myrtle Beach, said that such promotions don't make a difference in where she spends. She wouldn't make a big purchase like a car or a home if she were concerned about being unemployed.
"I plan to keep my job, and if I don't keep my job, I don't need a new car," West said. "I need a bicycle."
People should do their research and read the fine print before signing up, experts said.
Some of the programs are free with purchase, but others cost money, and they each have different rules about how to cash in.
"Consumers should always take time to read the full details of an offer," Daddi said, but also added that it wouldn't benefit a company to make it too difficult for a customer to take advantage of such a program.
"A company that utilizes an approach such as layoff protection should be doing so with the intent of, we want to help our consumers," he said. "If it's just being utilized as marketing platform and they want to make it difficult to take advantage of that, it's going to have the opposite effect, and they may as well not do it."
It's unclear how many consumers actually cash in, and for many businesses it's too soon to tell.
"I would say it's a reasonable percentage" of people who return cars or take the payment relief, said Jeff Beaver, senior vice president of marketing and product management for EFG Cos., which owns Walkaway USA, a company that since 2006 has teamed with car and motorcycle dealerships to provide the coverage. He declined to give specific numbers.
"The relief of consumers who have had to return the car is pretty dramatic," Beaver said, "even if they've turned around and bought a less expensive car from the same dealer."
