Marketing Executives Council August 19, 2008

Marketing Executives Council August 19, 2008 Mission Statement To advance the automotive aftermarket supplier industry through collaborative marketing and communication solutions. Purpose Forum for aftermarket supplier marketing executives to collaborate in helping improve the state and image of the North American manufacturer base. The Council will serve a major role in helping AASA communicate to key audiences and develop communication strategies and action items.

Marketing Executives Council August 19, 2008 Today’s Agenda  Welcome and Introductions (Tarnacki)  Review of Anti-trust guidelines (Bruno)  Review Supplier Image Initiative (Cameron) Background / Progress to Date Review of Options  Lunch / Networking / Telephone Break  Wrap-up Supplier Image Discussion (Cameron) Final Discussion and Decision Next Steps  Market Research (Cameron) Currently Available Needed – Survey Results  What Are Your Products Doing Online? (Bruno)  Free-Cat (Brent Berman)  Council Updates (Cameron)  Wrap-up & Adjourn (Tarnacki)

Marketing Executives Council August 19, 2008 Anti-Trust Guidelines It is the unqualified policy of the Motor & Equipment Manufacturers Association to conduct its operations in strict compliance with the antitrust laws of the United States. MEMA's antitrust policy prohibits any discussions which constitute or imply an agreement or understanding concerning: 1) prices, discounts, or terms or conditions of sale; 2) profits or profit margins or cost data; 3) market shares, sales territories or markets; 4) allocation of customers or territories; 5) selection, rejection or termination of customers or suppliers; 6) restricting the territory or markets in which a company may resell products; 7) restricting the customers to whom a company may sell; or 8) any matter which is inconsistent with the proposition that each manufacturer, wholesaler and distributor must exercise its independent business judgment in pricing its services or products, dealing with its customers and suppliers and choosing markets in which it will compete.

Marketing Executives Council August 19, 2008 Supplier Image Initiative  Since its inception, the MEC has continued to advance the idea of a Standard of Excellence to distinguish value-added suppliers from all others.  Progress has been impeded by… Some members including board members concern over AASA’s role in a certification program. Business case development and presentation to gain buy-in from the AASA board. (Nov ‘07, Feb ‘08, May ’08)  Brings us to today… Draft of AASA Seal of Supplier Excellence Proposal The NEED to review other options

Marketing Executives Council August 19, 2008 AASA Seal of Supplier Excellence  The Current State of the North American Automotive Aftermarket Supplier Image (Option A) Heightens the awareness of the value-added services and provides AASA membership value down stream through the development and licensing of a “Seal” Similar to “Good Housekeeping Seal of Approval” Incorporates many elements: – Standards of Excellence – Code of Ethics – License Agreement – 3 rd Party Administrator – Governance and Oversight Review Committee Arbitration Process

Marketing Executives Council August 19, 2008 AASA Seal of Supplier Excellence Option A  Standards of Excellence Ten clearly defined standards – page 9 Request Form – page 14 – Signed “Code of Ethics” – Required answers / description by requestor – Required proof of performance / documentation – Non-refundable application fee inclusive of first year license fee Establishment of 3 rd Party Administrator – Collects and stores all documentation – Verifies completeness not accuracy Establishment of Review Committee (2 staff, 5 members) – Approves / disapproves all requests – Reviews and Rules in all arbitration

Marketing Executives Council August 19, 2008  License Agreement Signed Agreement – page 17 Fees structure – Application fee $1500 inclusive of first year license – Annual renewal fee of $1000 Use of fees obtained – A portion, not to exceed 25%, may be needed for administration – Balance of annual fees funds association marketing of program Potential Issues – Amount of fees – Non-refundable feature – Annual collections AASA Seal of Supplier Excellence Option A

Marketing Executives Council August 19, 2008 AASA Supplier Image Campaign  The Current State of the North American Automotive Aftermarket Supplier Image (Option B) Heightens the awareness of the value-added services and provides AASA membership value down stream through an industry message marketing campaign Similar to “Got Milk?” Incorporates elements of: – Standards of Excellence as a Best Practice – Creation of an Annual Supplier Excellence Award – Employment of a professional marketing firm

Marketing Executives Council August 19, 2008  Standards of Excellence Ten clearly defined Best Practices – page 9 Annual Supplier Excellence Award – Nomination form – page 13 – Nominated by and voted on by customers (all channels) Establishment of an Award Committee – Solicits nominations – Reviews and tallies votes AASA Supplier Image Campaign Option B

Marketing Executives Council August 19, 2008  Professional Marketing Firm Bid process – page 10 – Minimum of 3 firms invited to bid – Firm given 60 days to develop and submit proposal – Firms present programs at November MEC meeting Scope – page 10 – Overall theme and tagline creation – Marketing of annual award – Communications/advertising/media plan with costs – Creative ways to involve sponsors to defray costs Selection – page 10 – Must be or become an affiliate member of AASA if selected – Judged on overall merit, creativity and perceived effectiveness not lowest cost AASA Supplier Image Campaign Option B

Marketing Executives Council August 19, 2008 Supplier Image Initiative Option Next Steps  Option A: the “Seal” Legal scrubbing – Assurance of legal precedent – Creation of official documents Decision / consensus on: – Fees – Role of Administrator – Role of Review Committee – Arbitration Process Sell, Sell, Sell – AASA Board of Governors – Members – Channel Partners / Customers / Industry

Marketing Executives Council August 19, 2008 Supplier Image Initiative Option Next Steps  Option B: the “Campaign” Scope and Bid Criteria Potential Marketing Firms / Bidders Funding Sell, Sell, Sell – AASA Board of Governors – Members – Channel Partners / Customers / Industry

Marketing Executives Council August 19, 2008 Supplier Image Initiative Recommendation  Option B: the “Campaign” Less controversial Easier buy-in / approval Potentially less start-up cost Quicker ramp-up More marketing focused Far less complicated Non-confrontational Maintains control within MEC Eliminates maintenance costs – admin, collections, etc

Marketing Executives Council August 19, 2008 Lunch

Marketing Executives Council August 19, 2008 Supplier Image Initiative Decision  Option A or B?  Option C???  Next Steps: See previous slide Committee selection Update to Board on September 5

Marketing Executives Council August 19, 2008 Market Research  AASA Automotive Aftermarket Status Report (published) US & Global Motor Vehicle Parts Market Automotive Industry Data Vehicle Sales Data Vehicle Demographics Maintenance & Repair by Sub-sectors Global Overview including major emerging markets  AASA Other Supplier Barometer (participants only, e-format) Replacement Rates (member only, downloadable PDF) HANDOUT World Motor Vehicle Markets Report (OAC published ) Market Analysis (members only, e-format) Industry & Economic Trends (Member-only web site) Product Line Reporting (member/subscriber only)

Marketing Executives Council August 19, 2008 Unique Market Research  “How’s Business” – Sales and Profits Net Sales Net Income Aggregate total and trend line  “State of the Aftermarket” – Key Performance Indicators Published price increase Cost of goods sold – raw materials Returns – Warranty, Obsolescence, total Segmented – Co. Size, Market, Product  Benefits Allows benchmarking Spots trends among top companies Strategic planning tool Used to describe industry dynamics AASA membership value & differentiation

Marketing Executives Council August 19, 2008 Market Research Survey  MEC Market Research Survey 30 MEC members / 24 companies 5 responses  Market Research / Data Difficult to Obtain Import Specialist Market Global especially by product category size and share Engine Parts Data Product Market Share Service Shop Repairs Performed  Rank of Ideas – NOW! Please rank in importance as to how it might help Please indicate your company’s willingness to share data Please give your ideas on additional topics

Marketing Executives Council August 19, 2008 State of the Aftermarket Mock-up Key Performance Indicators by Customer Segment NOTE: Expressed in Percent of Net Sales

Marketing Executives Council August 19, 2008 State of the Aftermarket Mock-up Key Performance Indicators by Supplier Size NOTE: Expressed in Percent of Net Sales

Marketing Executives Council August 19, 2008 State of the Aftermarket Mock-up Key Performance Indicators by Product Category NOTE: Expressed in Percent of Net Sales

Marketing Executives Council August 19, 2008 AASA and NAM 2008 Benchmarking Source: Manufacturing Performance Institute Scrap and rework rate (as % of sales) Cost of goods sold (COGS) Warranty cost (as % of sales) Return on invested capital (ROIC) Customer reject rate (parts per million) Training hours and investment Customer retention rate Operating Equipment Efficiency (OEE) Overseas sales (% of total dollar volume) Machine availability Cycle times Market focus Imported material and components from China (% of dollar volume purchased from China) On-time delivery rates Imported material and components (% of dollar volume purchased outside the U.S.) Improvement approaches (i.e., Lean, Six Sigma, etc.)

Marketing Executives Council August 19, 2008 What Are Your Products Doing Online? Sarah Bruno Arent Fox

Marketing Executives Council August 19, 2008 Break – 15 minutes

Marketing Executives Council August 19, 2008 Free-Cat Brent Berman Federal Mogul

Marketing Executives Council August 19, 2008 Council Updates  AAPEX Joint-Association Marketing Sub-committee  Vision Conference Follow-up Global Selling & Sourcing – List of in-country 3 rd party QC & inspection services in China – Benchmarking – Soon to launch link to NAM – AASA Member Global Database – Planned from Harris/D&B Collaboration – Survey & evaluation of freight consolidation program – Consulting & assisting on Free-Cat Training – Exploratory session planned on forming Training Council  AAPEX – NetworkNow! - Webinar?  Membership 30 Members / 24 Member Companies Other areas of marketing participate as Alternate Member Prospect suggestions?  Other

Marketing Executives Council August 19, 2008 Wrap-up and Adjourn Next Meeting: November 18 Chicago, IL Location???