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Why Johnny Can't Speed


"There is nothing wrong with lending subprime. What is wrong is doing it recklessly." — Wilbur Ross of New York private equity firm WL Ross, which specializes in distressed businesses, on the opportunities in the current mortgage-lending environment, as reported by The Financial Times

The football season is gearing up, and that means tailgating parties. Once as simple as throwing a six-pack in the backseat on the way to the game, tailgating is fast becoming an industry, with major manufacturers eager to tap into a passionate--and relatively affluent--demographic.

For a glimpse of what marketers see, look no further than the "tailgater of the year" contest held each pro football season at the final home game of the Houston Texans. Fans try to outdo one another with everything from catered meals and professional cigar rollers to live bands and ice sculptures.

Somewhat less elaborate parking-lot extravaganzas can be found at almost any stadium even, including college games. The number of tailgaters has doubled in the past eight years, according to a 2006 NPD Group/National Eating Trends survey. The American Tailgaters Assn. estimates that 50 million tailgaters spent from $7 billion to $15 billion in 2006 on food and equipment. The pastime is even getting its own magazine, Tailgater, in September, courtesy of the ATA.

For marketers, the folks throwing these parties are pretty attractive. According to the ATA, some 57% of tailgaters make $75,000-plus annually. Some 82% are homeowners. "[Tailgaters] spend money like crazy," says DirecTV (DTV) Executive Vice-President Eric Shanks. "You park by the same person every week, and you have to have something to show off."

Says H.J. Heinz (HNZ) spokesperson Tracey Parsons: "It's a no-brainer. We need to be there." Heinz has been increasingly targeting the group since it dropped $57 million (a nod to the company's trademark 57 varieties) in 2001 on naming rights for Pittsburgh's football stadium, where it gives out free samples in the parking lot. At Sam's Club and other warehouse clubs this fall, Heinz will sell its "picnic pack" (ketchup, mustard, relish) via a cardboard display designed to look like the back of a pickup.

DirecTV is newer to the scene. In May it launched a $1,499 portable satellite TV, perfect for the 35% of tailgaters who never set foot inside the stadium. It includes adapters so the TV can be plugged into a car's electrical outlet--which some automakers thoughtfully place in the trunk of their hatchback models (the 2007 Mitsubishi Outlander, for instance). Other carmakers want in on the moveable feast, too. Last year, (DAI) Chrysler began offering a nifty option, for about $500, in its Dodge Caliber, Jeep Patriot, and Jeep Compass models: speakers in the trunk liftgate. With the door up, the speakers can swivel to point out of the car.

Tailgating has also inspired some grassroots enterprise. Daniel Morris of Taylor, S.C., developed the Tailgate Cargo Box. Mounted on the back of the car, it unfolds into two tables when the party starts. Last fall, Coca-Cola offered 101 of them in its MyCoke Rewards program. Then there's the propane-fueled Freedom Grill, which attaches to a car for transport and swings away from it for use. You can find its creators in their office parking lot at lunch. "My truck's here, the grill's on the back. We swing it out and fire it up," says Scott Salter, one of the inventors. "We practice what we preach."

It can mean high anxiety for parents, handing the car keys to their youngsters. In 2005, nearly 3,500 teenagers died in U.S. car accidents, the No. 1 cause of teen deaths, according to the National Highway Traffic Safety Administration. About 30% of those fatal crashes were related to speeding, says the NHTSA. And the economic impact of all teen-related car crashes amounted to $40 billion.

Now a few auto insurers are offering parents a way to monitor their kids' cruising speeds. In late June, Seattle's Safeco (SAF) introduced Teensurance, a $14.99-a-month service that, with the help of a GPS-based device installed under the dashboard, alerts parents by e-mail or mobile phone if their kids exceed an agreed-upon speed limit. American International Group (AIG) offers a similar service. Other insurers are testing monitoring devices of their own.

"Parents were asking for help in getting through a big life event," says Jim Havens, vice-president for consumer solutions at Safeco, which uses a device made by Seaguard Electronics of Irvine, Calif. So far, he says, there's no plan to offer subscribers any discounts on insurance premiums.

In Orlando, the parents of Pat Williams, 18, installed a speed monitor much like the one Safeco offers in the teenager's Acura (HMC) TSX after he was pulled over last December for doing 92 mph in a 45-mph zone. "My first thought was to find a way to trick it," Williams says, "but I couldn't."

There must be a million joints that sell tacos in Mexico. Soon, there will be one more: In late September, Taco Bell will open a restaurant in the northeastern city of Monterrey. De verdad.

Although Glen Bell's original taco stand was just a two-hour drive from the Mexican border, in San Bernardino, Calif, Taco Bell grew into the biggest Mexican-food chain largely by selling chalupas and gorditos to twentysomething Anglos. Lately, however, the restaurants have been slipping in their home market, with second-quarter same-store sales down 7%. This has prompted the management at its parent, Yum! Brands, (YUM) to look outside the U.S. for higher numbers.

Graham Allan, president of Yum Brands International, says two years of market research have convinced him that Taco Bell will succeed south of the Rio Grande. American brands have cachet among Mexico's middle class, he says, adding that the chain's "Mexican-inspired" food is not attempting to pass itself off as local. "We're not trying to replicate the options consumers already have," he says.

Yum has traveled this road before. In China, besides its 1,940 KFC locations, it has eight East Dawning outlets. Their cuisine? Chinese.

To commemorate the 15th anniversary of the ThinkPad and to burnish its brand, Lenovo Group, the Chinese-American PC maker, is introducing the ThinkPad Reserve Edition notebook--covered in French leather hand-tooled by Japanese saddlemakers. "It's the first computer that smells good," says Craig Merrigan, Lenovo's vice-president for strategy and market intelligence. Lenovo has produced just 5,000 units, which come with premium services like no-wait 24/7 tech support. The price: $5,000, about twice the cost of a regular high-end ThinkPad. Early sales were by invitation only. But now the luxe laptops are available at thinkpadreserve.com, and at a few fancy shops, including RCS Experience in Manhattan and Colette in Paris.

Given concerns about flaming laptops, Lenovo says, it made sure that the leather wrap doesn't trap heat: Plastic ducting that sits between the computer and the binding vents hot air out the sides.

Some 2,500 car geeks weighed in last month when Hagerty Insurance Agency, which specializes in covering collector cars, asked its policyholders to name the worst car designs of all time.

McKeel Hagerty, the insurer's CEO, ordered up the survey after noticing that the American Motors Pacer--a notorious dud--and several other "nerd cars," as he calls them, were rising in value. The Pacer made first place in the poor-design poll. But "if anyone thinks I'm picking on Pacer owners, guess what, I am one," says Hagerty, who bought himself a 1976 model three years ago for $2,300.

Here are the top five worst-design picks, with some voter comments. A Japanese pop group called GReeeeN, an anonymous quartet of dental students signed to Universal Music Japan, has recorded the first song ever to rack up 1 million downloads to cell phones over mobile networks.

Part of the credit for GReeeeN's success with Aiuta (Love Song) goes to Japan's mobile carriers, which spent billions building high-speed 3G networks capable of downloading entire songs at high speeds.

In Japan about 90% of all music downloads travel over mobile networks. It can take as little as 15 to 20 seconds to capture a song using the highest speed system, HSDPA, or High-Speed Downlink Packet Access. As early as 2004, Japanese carriers began offering full-song downloads--a more recent development in the U.S. (where to download music, Apple (AAPL) iPhone users must still connect the phone to a PC much the same way they do with an iPod).

Downloads of Aiuta cost about $2.70 each. Add to that sales from ringtones and ring video, and Universal has sold more than 3 million copies digitally--and about 250,000 CD singles. Kazuhiko Koike, COO of Universal's Japan unit, says that the company was confident about Aiuta's universal appeal "the moment we first heard it." The sentimental song, released in May, is the third single by GReeeeN, whose members say they won't reveal their identities until they pass their exams next year.

Hillary Clinton wears them. So does Sarah Jessica Parker. Ballet-style flat shoes "have become a basic staple in every chic girl's wardrobe," says Sally Ross, a vice-president at New York's Bergdorf Goodman.

The ubiquitous flats have also helped a venerable Paris shoemaker, Repetto, get back on its feet. Established in 1947, Repetto, the No. 1 supplier of pointe shoes to French ballerinas, has for years been a purveyor of quality women's shoes. But after founder Rose Repetto died in 1984, the company stumbled, with a series of owners failing to revive it.

Choreographing its comeback today is Jean-Marc Gaucher, a former head of Reebok's French operations who bought Repetto in 1999, when it was selling comfortable shoes popular with seniors. A few years later, guiding Repetto through bankruptcy proceedings, Gaucher looked in a trendier direction, eventually clicking with a fashion turn toward leggings and skinny jeans in 2004--and with the ballet flats accompanying them on the runway. He asked designers like Issey Miyake and Yohji Yamamoto to create dozens of styles, focusing sales on stores like Bergdorf's and London's Harvey Nichols, where Repetto flats go for $180 to $400 a pair. The goal, he says: to take what Repetto knewthe imagery of danceand "introduce it into the luxury sector."

By 2005, Repetto's revenues had grown to $13.7 million. Last year they were $23.4 million, with half coming from sales of ballerina flats. (The company doesn't release profit figures.) Gaucher's jump into ballet flats was key to the "huge growth," says Marshal Cohen, chief industrial analyst at NPD Group, which put the 2006 market for ballerina flats in the U.S. alone at $59 million.

Now, as Cohen and others predict that the trend may slow this fall, Repetto is adding products like handbags. And it still makes professional ballet shoes. At $70 to $100 a pair, they aren't moneymakers. But "we want to have a strong brand for dancers," says Gaucher. "That is what our image is built upon."

Where do ideas come from? To find out, Japanese high-tech conglomerate NEC began snooping on researchers in July at its new Computers & Communications Innovation Research Lab, near the city of Nara. The aim: to track how innovations occur.

The lab is wired with microphones, cameras, and location sensors that track researchers' chip-embedded ID badges. The potential innovators are recorded as they look at books, draw on whiteboards, and talk with colleagues. Their online searches are tracked, and if they have a stray thought in the hall and want to share it, they can speak into wall panels that record on command. NEC says privacy is protected, as only senior lab officials have access to all these data.

Lab chief Keiji Yamada says he wants to bring "scientists from a range of specialties" to Nara. To lure talent, NEC is discussing collaboration with 20 companies, universities, and think tanks. NEC won't say how much it invested in the facility, and it hasn't announced concrete projects. But the lab's mission is to spend 30 years focusing on innovations in computer networking technologies. Will NEC's approach pay off? Only if it creates an ecosystem of partnerships, says Joel West, associate professor of organization and management at San Jose State College of Business--something many Japanese companies haven't been willing to do.


Coke's Big Fat Problem
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