Midas, Inc.

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Midas, Inc.

1300 Arlington Heights Road
Itasca, Illinois 60143
USA
Telephone: (630) 438-3000
Fax: (630) 438-3880
Web site: www.midas.com

TRUST THE MIDAS TOUCH CAMPAIGN

OVERVIEW

In January 2003 a new chief executive officer, Alan Feldman, took over Midas, Inc. Though possessing a well-respected brand, the company was in disarray. For years Midas had focused on muffler manufacturing and used its franchised shops as a way to move inventory. But with the introduction of longer-lasting mufflers in the 1990s, Midas's old business model showed cracks. In addition to recasting Midas as a pure franchisor, Feldman wanted to move the company farther away from its muffler heritage to make Midas muffler shops into general car-maintenance centers. But just as better mufflers had hurt specialty shops, improved quality in cars in general during the 1990s hurt everyone in the auto-repair industry, making the field extremely competitive. Midas, however, had one significant advantage in the marketplace: its well-recognized brand. Feldman awarded the $40 million-plus Midas advertising account to the Chicago office of DDB Worldwide Communications Group Inc. to help in rebranding Midas as a general car-care center that consumers could trust. Midas brought back a slogan first developed in the early 1980s, "Trust the Midas Touch," to anchor the new marketing campaign.

Relying on humor to convey their message, the campaign's television spots, in both English and Spanish, featured the honesty of Midas technicians being questioned by customers, who were assured that Midas personnel were both knowledgeable and trustworthy. The first wave of commercials helped to establish Midas's brake business, while the second promoted the chain's other services.

The "Trust the Midas Touch" campaign played a key role in Feldman's success in turning Midas around. Franchisees were pleased with the increase in business, as was Wall Street, which bid up the price of Midas stock.

HISTORICAL CONTEXT

Midas grew out of a muffler-manufacturing company founded in Chicago in 1938 by Nate Sherman. Believing he could make more money by selling mufflers directly to the public in repair shops, he formed Midas in 1956. He soon began franchising his muffler-shop concept, and within the first year the chain had 100 stores in 40 states. By the late 1980s the number of units totaled about 2,000, and Midas had manufactured more than 100 million mufflers. Much of the growth during this period was due to a successful marketing campaign that relied on the slogan "Trust the Midas Touch," introduced in the early 1980s. The chain enjoyed tremendous brand recognition and was the undisputed leader in the muffler-repair field. In addition Midas had branched out beyond mufflers, adding to the mix shock absorbers in 1960, brakes in 1979, and alignment in 1988. Changes in the 1990s, however, jeopardized the future of the company.

Midas had always enjoyed a steady business selling mufflers that could be expected to last about two years, resulting in regular visits from customers. But in the 1990s stainless-steel exhaust systems with a life span of 10 years or more were introduced, completely altering the muffler-repair business. Moreover automobiles were better built in the 1990s and in less need of repair, putting a crimp on Midas's other business segments. To offset declining sales Midas tried to increase the inventory flow of its franchisees by building a network of strategically located distribution centers in the late 1990s. But the cost to set up the network was great and the payoff meager. Midas also tried to expand what most of its shops had to offer, adding air-conditioning services, oil changes, and other basic maintenance and repair services. Along the way the company lost the Midas touch in terms of its marketing as well. In the mid-1990s it severed its ties with the Chicago office of Wells Rich Greene, which had held the advertising account for more than 25 years and was responsible for coining the slogan "Trust the Midas Touch." TV spots by the new agency, Euro RSCG McConnaughy Tatham, were uninspiring, prompting management to seek a more dynamic, attention-getting approach. Instead Midas reached its nadir in advertising in 2002 when it approved a television spot created by its new ad agency, Cliff Freeman & Partners. In it a Midas manager told an elderly female customer about the company's lifetime guarantee on shocks and struts. "Lifetime guarantee?" she replied. "That's great. What can you do with these?" With her back to the camera the customer then opened her shirt to the befuddled manager, who looked away and said, "There are limits to what we can do." After fielding a number of complaints from customers, the company pulled the offensive commercial. Unhappy with management on any number of fronts, the franchisees were ready to revolt.

On the brink of bankruptcy Midas in January 2003 brought in a new CEO, one well familiar with forging strong relationships with franchisees: Alan Feldman, former president and chief operating officer of McDonald's Americas. He quickly moved to exit the distribution business, which he outsourced to auto-parts retailer AutoZone, and began to convert Midas into a pure franchising operation. The plan was to retain only a handful of company-owned stores, where new prototypes and procedures could enjoy a dry run before being rolled out to the franchisees. Feldman also wasted little time in dumping Cliff Freeman and turning over the advertising to the Chicago office of DDB, with whom he had enjoyed a good working relationship during his days at McDonald's. The agency's task was nothing less than rebranding Midas, to play up the brake business rather than mufflers and to position Midas as more of a general repair shop than just a specialist.

TARGET MARKET

As Midas broadened its auto-maintenance offerings, it in turn expanded its target market. In 1993 the average age of a car in the United States was 6.5 years, but by 2003 that number had increased to 8.6 years, due to higher quality cars. With so many more cars on the road operating beyond their warranties, Midas eyed an increasing amount of potential business. In fact it was estimated that drivers neglected some $60 billion worth of car maintenance each year. Midas hoped to capture a significant share of that business and regular maintenance. Its greatest advantage in entering other areas of automobile repair was its brand, which enjoyed a 90 percent awareness. In addition an estimated 40 percent of Americans had visited a Midas shop in their lifetimes. Perhaps the greatest strength of the brand, aside from sheer recognition, was its association with the word "trust." Given that the automotive-repair industry had been long tied in the minds of consumers with dishonesty and the belief that drivers with little mechanical knowledge were taken advantage of, trust would be a key element in selling Midas. The target market consisted of average drivers, especially women, who did not maintain their own cars and who, after years of feeling cheated by disreputable mechanics, would prefer a national chain that staked its reputation on honesty. Another part of the Midas target market would be the Latino community, not because they were any more vulnerable to deceitful auto-repair shops than the average person but as a testament to their growing numbers in the United States.

WHAT'S IN A NAME?

"Midas" was an acronym for the Muffler Installation Dealers' Association, formed in 1956 by Chicago muffler manufacturer Nate Sherman to create a chain of franchised muffler shops. In that same year the first Midas franchise opened in Macon, Georgia.

COMPETITION

The aftermarket repair industry was huge, valued at about $110 billion. Midas, one of only a handful of national players, was well positioned in the marketplace. The closest comparable competitors were Meineke Discount Mufflers (which in January 2003 changed its name to Meineke Car Care Center), operating about 900 stores in Canada and the Americas, and Monro Muffler and Brake, with about 600 stores in the United States. Midas had 1,700 domestic units. But Midas also had to contend with local competition, the mom-and-pop repair shops, as well as a different set of national players. For example, there were auto-parts retailers, including Pep Boys nationally and Strauss Discount Auto in the Northeast, that were opening supercenter formats to offer auto-repair services in very much the same way that Sears had been doing for years.

Automobile dealers' service centers, a key profit center, were also adversely impacted by improved quality in vehicles. Most of their work had been related to warranty repairs, but as they diminished in the 1990s, dealers found themselves in a difficult spot. Diminished repair sales limited the amount of money dealers were able to invest in mechanic training and service facilities. Potentially this situation could lead to a downward spiral: poor service quality leading to poor reputation, resulting in an even further erosion of sales. General Motors responded by requiring all of its 7,400 dealerships to participate in the Mr. Goodwrench program, which was revamped in 2003. A well-financed marketing campaign was then launched to drum up nonwarranty repair work. Ford Motor Co.'s Quality Care service centers provided Midas with competition from this quarter as well.

MARKETING STRATEGY

Although Midas had long been associated with mufflers, DDB and the Midas marketers elected to use the chain's brake services (which accounted for 42 percent of sales) as a wedge to expand its business into other areas of auto repair. After winning the account in July 2003, DDB put together an interim campaign while it developed a more comprehensive approach to rebranding Midas. The television spots that ran in the fall of 2003 featured everyday people completing the sentence "I brake for…" The team agreed that in the first quarter of 2004 Midas would center its advertising on a promotional price point of $89.99 for brake work. DDB was tasked with both ensuring the success of this promotion and building the Midas brand through 15-second and 30-second TV spots (60 percent of which were of the shorter variety).

In January 2004 DDB made a creative presentation to Midas, first offering a brand-positioning statement out of which everything flowed: "Your neighborhood Midas owner is restoring trust to auto service by providing expertise, responsiveness, and the best value to every customer, every time." Storyboards for possible spots were then presented on three themes: "Popular Mechanics," "See You Down the Road," and the venerable "Trust the Midas Touch." After the meeting the themes were tested on focus groups, and after the first round of testing it was obvious that "Trust the Midas Touch," albeit long in the tooth, retained a great deal of power. According to a DDB memo reporting on the findings, "The other two themes did not play well to the test group."

In March 2004 the first commercial in the new "Trust the Midas Touch" campaign broke. (Auto-repair sales typically spiked around April in the Northeast and Midwest.) As with the other spots to follow, it emphasized brakes and portrayed Midas as trustworthy. In it a Midas repairman was hooked up to a polygraph machine and being questioned by a customer, who asked, "Will you sell me something I don't need?" "Do you do more brake jobs than anyone else?" and "Are your brake pads and shoes really guaranteed for as long as I own my car?" The first wave of these humorous spots ran for a month on prime-time and late-night television, including such sporting events as the NCAA basketball tournament.

A WOMAN'S TOUCH

The slogan "Trust the Midas Touch" was coined in the early 1980s by the ad agency Wells Rich Greene, which was founded in 1966 by advertising pioneer Mary Wells. After her boss at Jack Tinker & Partners offered to pay her as president of the firm but refused to give her the title, Wells quit and, joining forces with two colleagues, became president of her own firm, Wells Rich and Greene. The agency went on to create a number of memorable catchphrases in addition to "Trust the Midas Touch," including "At Ford, Quality Is Job 1," "I Can't Believe I Ate the Whole Thing," "Try It, You'll Like It," "Flick My Bic," "Raise Your Hand if You're Sure," "The Citi Never Sleeps," and "Friends Don't Let Friends Drive Drunk."

Midas was pleased with the results of the initial thrust of the "Trust the Midas Touch" campaign. In March 2005 it launched a second phase, which continued to emphasize trust while building on the company's success with brakes to include other maintenance services. The monthlong advertising effort promoted the $29.95 "Midas Touch" maintenance package, which included an oil change, tire rotation, and a check of battery, tires, belts, hoses, fluid levels, coolant, and air filter, as well as a visual brake check. Once more taking a humorous tack, the commercials featured customers grilling mechanics with questions about the services Midas had to offer and about the chain's trustworthiness. In the spot titled "Polygraph Backrub," a mechanic was tricked into saying "yes" when asked if Midas did back rubs. The spot closed with the mechanic alternately working on a car and massaging the customer's back. In "Young Voyagers," a mechanic proved he was "one of us" to a group of Boy Scout-like Young Voyagers. In "Sworn In," Midas personnel, with hands placed on a thick parts manual, testified about the Midas lifetime guarantee of its brake work. The spots again played during the NCAA basketball tournament as well as other network and cable programming.

In addition this second phase of commercials included the first that Midas made for the Latino community. These spots aired on Univision, Telemundo, Galavision, and Telefutura. The "Trust the Midas Touch" promotion was also supported by point-of-purchase materials produced in both English and Spanish. At the same time, the Midas website (also available in Spanish) was beefed up and relaunched to support the campaign.

OUTCOME

The "Trust the Midas Touch" campaign was a key element in Feldman's effort to turn around the fortunes of Midas and shift its focus from distribution to growing the franchise system. Even as the company's commercials were selling trust to customers, Feldman and his management team were rebuilding trust with the franchisees. Due in large part to the marketing campaign, consumers responded positively to Midas shops selling tires and adding other maintenance services. The result was increasing business for franchisees and renewed confidence from Wall Street. When Feldman took over in January 2003, Midas stock was priced below $7, but during the summer of 2005 it approached $25. Although there remained more work to be done, Midas, supported by the strength of the "Trust the Midas Touch" campaign, was clearly on the right track.