Building desire for Carmax: Ellis Verdi, president, DeVito/Verdi, New York. CARMAX OFFERS RESPECT TO WIN TRUST: ELLIS VERDI TALKS ABOUT CHALLENGES RETAILER FACES AS IT CARVES AN AUTO SALES NICHE

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Carmax, a unit of Circuit City Stores, is using its roots in consumer electronics to challenge traditional used-car buying in the U.S. CarMax pitches no-haggle prices, low hassle trade-ins and a wide selection of late-model, low-mileage used vehicles to capitalize on a widespread consumer distrust of the automotive dealership industry.

DeVito/Verdi, New York, won the CarMax account in 1993. Since then, it has used humor to develop an image for the 18-unit chain of used-car superstores still expanding into a national retailer. Agency President Ellis Verdi, 42, talked with Automotive News reporter Bradford Wernle about the challenges in creating the CarMax brand.

Automotive News: How does CarMax plan to create a national retail brand?

Mr. Verdi: Branding is the ability to create trust for some kind of trademark. Developing trust on a national basis is what CarMax's intentions are. The right message must be delivered in all aspects of the retail concept-from store design to the cars and how they look, the merchandise mix, advertising, full presentations of car information in newspaper.

AN: What will differentiate CarMax from traditional dealers and other national retail brands?

Mr. Verdi: Not all dealers are alike. But, there is typically a tense negotiation process, poor customer service, limited selection and sometimes a lack of convenience. There's also haggling, and it's about as enjoyable as going to the dentist. We're a full-disclosure environment where we respect the customer's desire for information and price.

AN: How will the CarMax brand interact with the brands of vehicles it sells in its stores, particularly with brands at stores where CarMax sells new vehicles?

Mr. Verdi: The manufacturer must continue to build emotional desire for the vehicle and the driving experience and must deliver good strong attributes. That is the emotional sale. When the consumer gets to the retail level, I would consider that the rational sale. They want to believe they're not being sold a bill of goods.

AN: CarMax was basically the first company to try a national automotive retail brand. What challenges have you had in creating a national retail brand that you did not expect?

Mr. Verdi: The first instinct is to say to the consumer: "Trust me." But that would not be believable. The customer hears that many times. The typical dealer talks about trust all the time. The first instinct is actually the wrong instinct. Trust will come from the very specific unique attributes of the CarMax offering. At this time the consumer wants to learn facts, not what they've been hearing for years. The challenge is to stay away from claiming trust and get closer to proving it.

AN: How does the store itself work to foster trust?

Mr. Verdi: This is an environment in which you are not pressured by a salesperson to make an expensive purchase because the sales people are not rewarded on that basis. The sales people are also trained to provide information and help the customer through their process of choice, based on the customer's need, not on some financial gain by the sales person. The customer is led to a computer screen, which allows the customer to choose his vehicle by inputting certain criteria. Those criteria are set up by the customer.

The stores are designed to give a customer a broad selection. The merchandise mix is rich and therefore you don't feel as though you're being pushed into one vehicle or another based on availability.

Very importantly, the sale of a used-car is not tied in any way to a purchase of another car at the facility. Therefore, you don't have a situation where a consumer appears to be getting a very high price for a trade-in and ends up paying for it on the purchase price of the car. The transaction between selling and buying is independent.

AN: Do you believe that large retail chains will develop private-label vehicle brands, perhaps using Korean manufacturers, such as Daewoo?

Mr. Verdi: I really don't have an answer to that question. Right now the challenge is: to market at the retail level cars that already have strong demand created by the millions [of dollars] spent by factories across the country.

AN: Discuss your advertising. How does it set CarMax apart from other dealers?

Mr. Verdi: The executions are not screaming at the customer like typical dealer executions. Their tone and manner are of an intelligent witty nature, which treat the customer with respect and some degree of intelligence. Each of the executions points out an overall specific benefit to the CarMax experience. A specific benefit that's done in a straightforward, factual and simple manner. The executions are clean.

Also, we're not relegating all the benefits to a single spot, because that level of clutter might prevent consumers from understanding or remembering any single individual point we want them to remember.

AN: What role does print play?

Mr. Verdi: Print provides a terrific vehicle for the shopper to have access to an inventory and pricing. We will constantly figure out the best way to build the business and therefore explore all alternatives.

AN: You've used touches of comedy in creating an image of what CarMax does. How would you characterize that aspect of your work?

Mr. Verdi: We categorize the advertising and the tonality as smart, witty. What we're attempting to do is show that we're a better choice, a smart choice. The impression has to be a lasting one and has to be simple enough to drive home a lasting impression.

AN: Why did DeVito/Verdi decide to pitch CarMax?

Mr. Verdi: We've done a lot of work generating a retail brand without relying on promotions or price and items to generate traffic. When we were first approached with the idea, it felt enormous and very relevant to today's consumer. There is an important place for promotion activity and specific price and item, because we are a full disclosure environment. The role that each of the vehicles must take is not necessarily the same.

TV provides us with a broad reach and the ability to deliver a tone and personality. Therefore, we see the TV medium as allowing us to increase top of mind awareness on the core benefits.

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