Businesses of all types roll out Cash for Clunkers-type trade-in deals

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It sounds surreal, but it’s true: Private industry is rushing to adopt the marketing strategy of the federal government.

Companies of all stripes nationwide are now putting their own spin on the government’s Cash for Clunkers program, offering trade-in deals on furniture, computers, appliances, hearing aids and just about every other item that can be sold.

Their motivation is simple — the possibility of big sales in short order. Cash for Clunkers generated about 700,000 new car sales during its run from July 27 to Aug. 24.

Page through any newspaper, and you can’t miss the theme — replicated in ad after ad. The promotions pepper the Web as well.

Lathrop, Calif.,-based Service Star Heating & Air Conditioning this week urged consumers to “turn your old clunker furnace and air conditioner into cash.” The ad played up a federal government tax rebate of up to $1,500 to encourage homeowners to replace old heating and air units.

Another ad in The Sacramento Bee touted a Cash for Clunkers-style trade-in program for hearing aids. McDonald Hearing Aid Centers are offering $250 to $1,000 for trading in a “clunker” hearing device toward “a new 2009 model.”

A Google search of “cash for” possibilities turned up scores of similar clunker promotions being offered by businesses from coast to coast.

The clunker mimics included: Cash for Computers, Cash for Teakettles, Cash for Couches and Cash for Refrigerators (joined by two appliance cousins, Funds for Freezers and Dough for Dishwashers).

Philadelphia-based LED Saving Solutions, a national company that finds ways to reduce energy costs for its clients, is launching its Cash for Clunkers Lighting Savings Initiative, offering $10 per light bulb for U.S. companies that want to retrofit to more-efficient light-emitting diode bulbs. During the last quarter of this year and through 2010, LED Saving Solutions plans to issue $150 million in rebates.

“We see this initiative as a way to take the momentum created by the federal government to a new level and make a dramatic impact in our collective goal to make America more energy independent,” said Charlie Szoradi, president of the company.

Jumping on the Cash for Clunkers bandwagon is a smart move, according to some analysts.

“It’s a cool new marketing strategy, and Cash for Clunkers worked. … This is a great strategy for getting people’s attention,” said Mike Gatti, executive director of the Washington-based Retail Advertising and Marketing Association, a division of the National Retail Federation.

Gatti said the enormous publicity generated by Cash for Clunkers works to the advantage of firms offering clunker-like programs.

“Cash for Clunkers got a great deal of press and play, so you don’t have to explain it to people. They know what it is,” Gatti said. “It’s like sales tax holidays, which are very popular. Shoppers might be saving only a few percentage points instead of 50 percent, but they know what (a sales tax holiday) is and what it means.

“The same is true for Cash for Clunkers.”

Other analysts, however, warn that clunker programs can prompt short-term sales gains followed by a painful hangover when the programs end.

That downside was illustrated by Thursday’s release of U.S. new-car sales figures for September.

General Motors sales fell a whopping 45 percent compared with September last year. GM quickly pointed to a post-Cash for Clunkers hangover.

“As expected, the market returned to pre-Cash for Clunkers levels in September,” said Mark LaNeve, GM’s vice president of U.S. sales.

“That’s part of the problem with the clunker deals. … They get people off the couch and into the stores to buy, but things can get real quiet when the party ends, and you might have decimated your inventory, too,” said Walter King, a New York-based retail/marketing consultant.

“Some (retail) businesses do OK with that kind of feast-and-famine cycle. Others don’t.”

King also warned that retailers need to tread carefully with the holiday shopping season approaching.

“Many stores place their orders well in advance of the holiday shopping season,” he explained. “So, the last thing you want to do is hold a clunker sale right before the holiday and have a bare cupboard when the holiday rush arrives.”

Private businesses aren’t the only ones trying to replicate the success of Cash for Clunkers.

The federal government is preparing to roll out Cash For Appliances, a $300 million program offering rebates to buyers of more energy efficient appliances and other products with the Energy Star label.

Just like Cash for Clunkers, the more-modest Cash for Appliances program is designed to boost the U.S. economy through consumer spending and take less energy-efficient products out of circulation.

The appliance-sale stimulus requires individual states to submit plans to run their programs. The deadline for submissions is Oct. 15.

(c) 2009, Sacramento Bee. Source: McClatchy-Tribune Information Services.