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"Genesis Does What Nintendon't":

Chinese Scooters - FUD Marketing

The invasion of Chinese scooters into the United States has been creating a lot of stir. The idea of getting a 50cc motor scooter for less than a $1000 will certainly catch people’s attention, but what is also catching people’s attention is the response from the rest of the scooter industry that these Chinese scooters are junk. What is a person to believe?

This isn’t the first time that consumers have been spun around by good and bad so much that it’s impossible to make a decision in a dizzy state. In fact, such a result is the entire intent of FUD Marketing tactics.

What is FUD Marketing?

FUD is an acronym for the words “Fear”, “Uncertainty”, and “Doubt”. FUD Marketing is the practice of influencing public opinion by spreading negative and usually vague information, in order to play upon consumer's fear, uncertainty, and doubt regarding a competitor's product. A classic example of FUD marketing in a company’s marketing materials was a SEGA marketing campaign that said “Genesis does what Nintendon't” (see video to the right).

But usually FUD marketing is done subtly, as to not be as obvious as the SEGA marketing materials were. The most effective FUD marketing is by word of mouth. A popular cable show called Myth Busters has sometimes debunked certain urban myths that were nothing but word of mouth FUD marketing gone awry.

One good example of subtle FUD marketing occurred when Dell became the first computer vendor to aggressively market their computers via internet sales. The retail computer stores responded to Dell's offerings with FUD marketing tactics. Potential buyers were put in a whirlwind of FUD when on one hand they saw just how much cheaper they could buy a computer online, but on the other hand heard many rumors of just how bad support, warranty and parts are for customers who buy computers online. While some early adopters of Dell's internet sales did experience troubles, the weight of the rumors being spread far outweighed the actual occurrences of those instances. The weight of the rumors were a direct result of FUD marketing tactics by retail computer establishments who did not want to lose market share to the online computer retailer.

Similarly a few years later we began to see what were called “sub-$1000” computers hitting the shelves of retailers such as Best Buy. Once again the other computer retailers responded with FUD (proving they didn’t learn their lesson the first time). Potential computer buyers were wide eyed at the possibility of getting a computer for less than a grand, but the fear, uncertainty and doubt flames were being fanned by the other retailers who would respond with questions like “do you really want to trust your work to a computer that costs less than $1000?”
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Does FUD Marketing Work?

What businesses that engage in FUD don’t realize is that capitalistic forces are far more powerful than fear, uncertainty or doubt. If you are building sales, and ultimately a business, on the hope that consumers will continue to fear the competition ad infinitum, then the competition is on the verge of putting you out of business, and likely sometime soon. Which is exactly what happened to some computer superstore chains, like CompUSA. The capitalistic force at play here is the fact that if a price is good enough, people will find a way to make it work. This is what we saw happen to online computer sales, and similarly what happened to sub $1000 computers. People found a way to make them work, and the annual revenue for those products sky rocketed.

The usual response to the competition's cheaper price is to say "if it sounds too good to be true, then it probably is", which by definition is a FUD marketing statement. Granted there are instances where something is too good to be true. "Snake oil salesmen" come and go, and "fly by night" operations will always keep the consumer on "buyer beware" status. The best way to determine if an opportunity is too good to be true is to let time play it out. Let time prove if the snake oil is real, or whether the sales opportunity is here today but gone tomorrow. Capitalistic forces take time to play out and show what is real and what is not.

In the tactic of FUD marketing, it will usually fail unless it's proven that the competition is too good to be true. Computer stores like CompUSA failed to prove that in regards to online computer sales and sub-$1000 PCs. Failure to prove it resulted in a devastating future for the company. More times than not this is the result of FUD marketing tactics.
Zongshen - Chinese Scooters:

Chinese Scooters and FUD Marketing

So how does this apply to Chinese scooters? Well, we see the exact same FUD marketing tactics from the established retail scooter stores when it comes to Chinese scooters. Statements like “support, warranty, and parts are non-existent for Chinese scooters”, and questions like “do you really feel safe riding on the road on something that cost less than $1000?” are frequently uttered in scooter shops to customers considering a china scooter.

But we also see capitalistic forces at work. Yes, it’s true that when the Chinese scooters began penetrating the US market back in 2004, parts availability in the US was non-existent. But only a few years later capitalism is filling the need. Numerous Chinese scooter part internet sites (like PartsForScooters.com) are popping up every month, that provide Chinese scooter parts to US consumers. And we see more and more local scooter shops offering to service Chinese scooters.

And yes, it’s also true that some people have been 100 miles into their Chinese scooter purchase and had something randomly fall off, or the engine just quit. But again, capitalism is filling the need here as well. People are finding ways to make these scooters work, because the cost is right for them. Scooter enthusiasts having been sharing via the internet their recommendations for a “Post Delivery Inspection” (PDI), which when done properly on a new Chinese scooter catches and avoids 99% of the problems that people have experienced with their new Chinese scooters.

And yes, it's also true that Chinese scooters are relatively new to the US. However, Chinese scooters are not new to the world scooter industry. US scooter sales have always paled in comparison to the rest of the world, because American's love their cars. But as gas hit $4 a gallon, Americans began loving scooters, especially the ones that could be purchased cheap as the whole motivation for getting a scooter is to save some money. China has been building motor scooters for many decades and selling them in Asian countries where cheap scooters have always been popular. In fact, 50% of all scooters in the world in use today were built in China. Time has already proven that Chinese scooters are not snake oil, or fly by night operations. And the fact that we're now 4 to 5 years into US sales of Chinese scooters proves this point as well.

The Future of Chinese Scooters

This puts the established scooter retail locations in a situation where they need to make a choice. Are they going to continue with the Chinese scooter FUD marketing in the hopes of maintaining their business based on consumers continuing to fear Chinese scooters? If they do so, will they fall from their current heights just as hard as CompUSA did? Or are they going to find a way to be a value add to consumers who decide to buy Chinese scooters? The value add opportunities are everywhere. From doing PDI’s on new Chinese scooters, to stocking parts, to selling and providing extended warranties, etc, etc…

Some established scooter retailers will see the light and change with the times. This of course doesn’t mean that quality scooter manufactures like Honda and Vespa are being replaced. There will always be demand for high quality products. But there is a huge value add opportunity for the low cost scooter market.

Or the established scooter retailers can just continue with the FUD. If you're a scooter retailer choosing to continue with the FUD, good luck with that. You may be trying to withstand the force of an ocean wave with nothing more than a surfboard. We suggest that instead of trying to fight the force that you find away to get on board and enjoy the ride.

Because it appears that due to $4 a gallon gas some Americans are beginning to drop their love of cars and pick up a love of scooters. In fact, if just 1 out of every 100 Americans decides to buy a scooter due to the cost of gas, the American scooter market would triple (do the math: 300 million Americans, and only 1 million of them owned a scooter in 2007). If those consumers are looking to save money due to $4 gas, how does spending $4-5K on a scooter save them money when it would take nearly 40,000 miles of driving it before the gas savings would pay for the scooter? The cost of the Chinese scooters makes much more sense for these new American scooter buyers. For more information on scooter costs, read our article "Scooter Cost – How much does a motor scooter cost?" You'll likely be surprised by the numbers.

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