Midas repositioning shows it's more than just a muffler shop

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Meet the New Midas.

Midas, the public chain of auto repair shops, is trying to reposition itself as more than a muffler expert. Two new 30-second TV commercials break tonight on national network and cable and a print ad runs today in USA Today.

"We want to start signaling to the customers that there's something new inside Midas," said Bruce Hutchison, VP-marketing. "We're changing the way we do business."

The goal of the TV spots, part of Midas' overall $60 million ad effort, is to communicate that the marketer offers a wide variety of services. "It's not just a new sign. It's a promise," says the narrator in the commercials from Euro RSCG Tath-am, Chicago. The spots also tout the lifetime warranty for parts as long as owners have their vehicles. The tag remains "Go Midas."

Tatham also created a four-page direct-mail piece, which Mr. Hutchison said is aimed at generating store traffic. It lists various services, parts and their prices, including batteries, oil changes, windshield wipers and shock absorbers. Installation costs, which are extra, aren't detailed.


Some 46 million mailings will go out to households next week, mostly via Advo as free-standing inserts. Local newspapers will carry the piece in non-Advo markets.

A 60-second radio commercial bows this summer. Radio will be a combination of a branding effort and store-traffic generator promoting special deals.

The "ultimate impetus" for the New Midas, as the chain is called in the new ads, is the ongoing decline of the exhaust replacement business due to longer-lasting original mufflers in new cars and trucks, said Jim Barrett, who follows the company as VP-research at Josephthal & Co. In 1999, sales in the entire exhaust aftermarket replacement industry plummeted 15%.

Bob Troyer, director of investor relations at Midas, said the "aftermarket for the exhaust business collapsed in 1999" for all players. The marketer wants to make up for that slide with new services.

Last year, Tatham created :15s for TV promoting brake specials. Brakes account for 47% of sales in an average Midas store, Mr. Troyer said.


But Midas wants to see its customers more often than the years between muffler and brake repairs. "Under the new program, we want to see consumers every three months," said Mr. Hutchison.

Midas stores, many built in the 1960s and '70s, have been remodeled. The logo has been updated to look more contemporary, and store signage eliminates the word "muffler." The marketer spent $1 million training store staffers to improve service and develop customer relationships.

Midas tested its new concept last year in Tulsa, which has five stores, and Terre Haute, Ind., with a single store. Mr. Hutchison said business jumped in those markets after TV spots aired and rose even more after the direct-mail drop.

Only 3% of the 2,100 Midas stores in North America are company-owned. The rest are franchised.

Midas posted net income of $38.4 million last year, up 10% from 1998. But its 1999 sales were $355.5 million, down 31% from 1998. In Midas' annual report, Chairman-CEO Wendel Province cited the sale of Midas Europe as the reason for the sales' drop.

Mr. Barrett has a buy recommendation on the stock, which has been showing a turnaround since its 52-week low of 18 on Oct. 4. It opened May 10 at 25 15/16. He said Midas' new management team, led by Mr. Province, has "re-energized the system after decades of sleepy management."

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