In case you haven't heard, I launched a new blog, strategyupdate.com, focusing on stock and global economic markets. If you are an investor, you should be aware that GPS devices are among the hottest selling items, this past holiday shopping weekend. Garmin, the leader in GPS devices, has seen it's stock surge this week with the news.
However, competitors like Nokia and others will be making a big splash in this market, too. So will Garmin maintain it's big gains, and should it still be a "buy" through the holiday season...or has it already seen all it's gains on the good PR?
StrategyUpdate.com contacted Marketing Strategist, Al Ries, for some insight. Al is co-author of "Marketing Warfare", "The 22 Immutable Laws of Marketing", and "Bottom-Up Marketing'; and author of "Focus" and "The Origin of Brands". (If you haven't read these books, I would read them all this holiday season.) ries.com)
WILL GARMIN BECOME THE "GARMIN" OF GPS DEVICES
The future of Garmin: Can they maintain the GPS leadership position? (No pun)
Many of you are familiar with Marketing Strategy legend, Al Ries. (If not, read more about him at strategyupdate.com.)
With GPS devices being the big break-out this holiday season, it was time to contact Al, to see if Garmin is the stock to go with, in the GPS category, or will Nokia and others who plan on launching their own GPS products, overtake Garmin's early leadership position in the market. Garmin is kinda the company who comes to mind in this booming category.
I even saw a Garming TV commercial today, for the first time. (And I monitor these things, so they must have just hit today!)
Strategy Update: Garmin stock has skyrocketed over the past two trading days, since news that GPS devices were all the rage this Black Friday shopping weekend, and the most popular ones are sold out, everywhere. (Although there are plenty of devices still on the shelves.)
HERE'S THE QUESTION:
I don't know how you feel about Jim Cramer, but he is cautious of Garmin's recent stock rise, because other big companies like Nokia and others will soon be entering the market (with far bigger marketing campaigns, I'm sure);
Best Buy is making their own generic GPS for their stores -- and Cramer feels they are going to merely be a commodity. So, Garmin may be a nice trade to take advantage of in the short-run, through the holidays...but after that...get out of the Garmin game.
HOWEVER, to those in the know, Garmin is "first" in the category (in my mind, at least). To bad they don't say, "Get a Garmin for the holidays." (You know the old "turn your name into the generic term routine.)
However, is it still too early to tell who is actually first in the mind of the consumer? (In other words, the GPS market position is still up in the air?)
Are these GPS devices UNLIKE MP3 players, where you MUST have an iPod, or be the biggest outcast on the planet. Or are they like commodities, as Cramer states.
So the short version of the question would be: Do you think Garmin has what it takes to be the leader in the minds of the GPS buyers, or will the 800 lb gorilla (Nokia, Best Buy and/or other competitors) stomp on them?
Al Ries: We feel that Garmin will continue to do relatively well because of two facts: (1) GPS devices are definitely a new category and will continue to sell as separate devices in spite of the fact that Nokia and others have incorporated similar functions into their smartphones. (2) Garmin is the leader.
However, the category itself is probably never going to to be a blockbuster in the sense that MP3 players and cellphones were.
As far as whether the stock is a good deal or not, that depends on a lot of issues outside of marketing ones.
A good example is Google. The stock is going through the roof because Google has announced expansion plans into a raft of new categories. All of these moves, in our opinion, are bad marketing moves, but good for the stock.
Bad marketing often drives up the price of a stock and makes it a good buy in the short term.
The biggest tip I can give you is to please read more about Al Ries at strategyupdate.com for summaries. And visit ries.com. Al Ries has an Atlanta based firm with his partner and daughter Laura Ries who you may have seen on CNN and CNBC.
strategyupdate.com: investor resource site
Al's books and audio books are available at Amazon's link at TheChristmasNetwork.com.