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Wednesday, October 01, 2014

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Kate's Take: Field Of Chips

by Kate McMahon

Forget the much-hyped social media success stories from Silicon Valley, Madison Avenue or Amazon headquarters. Just as Kevin Costner learned to believe amid Iowa corn stalks in Field of Dreams, today we have a lesson straight from the heartland on how to parlay potato chips and Facebook posts into paying customers.

It started with an August 6th MNB column on the four finalists in Lay’s $1 million Do Us A Flavor potato chip contest, and the sour grapes Facebook comments from those who weren’t chosen and/or hadn’t even tasted the flavors. I located the chip final four mixed in with Lay’s and other salted snack products at my area grocers, noting that none were grouped in a stand-alone promotional display that I had seen in an online photo. I commented that seemed a missed opportunity for both Lay’s and any retailer, and we went ahead to create our own MNB taste test panel (the target audience of 13- to 28-year-olds) to evaluate the flavors.

The column caught the attention of Marty Jarvis, director of marking for B&R Stores, a Lincoln, Nebraska-based, employee-owned corporation with 18 stores. The company set out to create a taste test for its nine Super Saver locations in southeast Nebraska and western Iowa. Jarvis’ team reached out to Frito-Lay for graphics and then customized promotion materials for a chip test on Saturday August 23rd from noon-3 p.m. Super Saver advertised the four products the old fashioned way – its weekly circular. And it promoted the taste test on Facebook and through in-store displays, promising participants in each location the chance to win a $20 store gift card as an incentive.

The results? Some 200-300 people participating at each Super Saver site. “The goal was to have some fun and create some excitement in the store,” said Jarvis. “It did. The customers enjoyed it.”

The cost? One employee assigned to the taste test table and the time spent developing the graphics and posting on Facebook. And the nine $20 gifts cards which required the randomly chosen winner to come back to the store.

All too often social media coverage focuses on the hippest Facebook page, the wittiest Tweet, the best “food porn” on Instagram or the laugh-out-loud parody on YouTube. All of which create buzz but may not necessarily drive customers from their laptop or smartphone into a bricks-and-mortar store or on to a website to make a purchase.

Jarvis said their social media goal is to “funnel it back into the store. We want to create relationships so consumers know our people and the products.”

The net-net on this promotion? Customer engagement and revenue – the best return on investment.

Looking ahead to next year, Frito-Lay and retailers may want to take note:

If you promote it (wisely), they will come.


And for those keeping score, the totally unscientific MNB taste test ranked the Do Us A Flavor finalists as follows:
1. Cheddar Bacon Mac & Cheese
2. Kettle Cooked Wasabi Ginger
3. Wavy Mango Salsa
4. Cappuccino

The results from the nine Super Saver stores were comparable:
1. Cheddar Bacon Mac & Cheese (37.5%)
2. Kettle Cooked Wasabi Ginger (35%)
3. Wavy Mango Salsa (22%)
4. Cappuccino (5.5%)

The voting ends October 18th, and the winner will be announced next month.


Comments? As always, send them to me at kate@morningnewsbeat.com .

Wednesday Morning Eye-Opener: Coffee Klatsch

by Kevin Coupe

Starbucks isn embarking on a new brand advertising campaign, but it isn't focusing on the products that it sells. Rather, the video campaign - which can be seen in a 60-second version on television, and an almost six-minute version online (at left), is designed to focus on the coffee chain's "third place" origins - the place that, other than home and work, people go to for a wide variety of reasons.

What makes this commercial an Eye-Opener is the audacity of the concept - it was shot all in one day, in 59 different stores in 28 countries by a total of 39 local filmmakers. This team shot more than 200 hours of footage, with an agency called 72andSunny coordinating the shoots and assembling the footage into a cohesive package.

There are some suggesting that this is Starbucks being a little desperate, that it needs to prove that it is still cool and relevant. But while I think Starbucks wants to demonstrate a continued relevance to a broad swath of the culture, there is nothing in this ad that strikes me as desperate in any way.

Remember that interview a few months ago in which former Apple Store head Ron Johnson said that those stores succeeded because they achieved an unusual level of brand intimacy with consumers? Well, I think that's exactly what's going on here … and rather that indulging in hyperbole, this strikes me as a pretty fair representation of some of what I've seen over the years in Starbucks stores all over the globe.

Here's a basic reality. Even in the heights of the recent recession, if you went into a mall, there were only two stores that you could count on to be busy - Starbucks and The Apple Store.

That's my definition of an Eye-Opener.

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California Governor Signs Statewide Single Use Plastic Bag Ban Into Law

The Sacramento Bee reports that California Gov. Jerry Brown has "signed legislation phasing out the single-use plastic bags that grocery stores and other retailers use to package products at the checkout line. Brown’s assent hands a sweeping victory to environmentalists and vindicates the scores of cities and counties that have already banned bags … Minutes after Brown announced signing the bill, an industry group called the American Progressive Bag Alliance vowed to begin collecting signatures in an effort to overturn the law via a referendum on the 2016 ballot."

“This bill is a step in the right direction – it reduces the torrent of plastic polluting our beaches, parks and even the vast ocean itself,” Brown wrote in a signing message. “We’re the first to ban these bags, and we won’t be the last.”

In its press release, the Bag Alliance said, “Our research confirms that the vast majority of California voters are opposed to legislation that bans recyclable plastic bags and allows grocers to charge and keep fees on other bags." It denounced the law as “a back room deal between the grocers and union bosses to scam California consumers out of billions of dollars without providing any public benefit – all under the guise of environmentalism.”

Also in a prepared statement, Ron Fong, president/CEO of the California Grocers Association (CGA), said that the organization "has worked diligently on this issue for several years, seeking to obtain a uniform standard that will level the playing field. Consistency helps alleviate supply chain logistics and employee training issues while at the same time eliminate customer confusion. The minimum charge applied to recyclable paper and reusable bags has been shown to be effective in encouraging consumers to make the shift to reusable bags, and in fact experience across localities shows that in the end most consumers quickly adjust and avoid the charge altogether.”

According to the Bee, the legislation "authorizes local governments to impose fines of up to $5,000 on businesses that don’t ditch their single-use bags or fail to charge for substitutes. But in San Francisco, where California’s first bag ban has been extended to cover businesses large and small, a spokesman said the city has not leveled a single fine."

KC's View: In other words, they changed behavior. It takes time, but it seems to me that the point is to do that, not gauge the public.

Ultimately, I would prefer that changes in behavior happen at the grass roots, rather than through legislation. But sometimes, I think, a culture does have to bite the bullet and force things along.
By the way … let's not kid ourselves about the American Progressive Bag Alliance. What it is an alliance of is plastic bag manufacturers who are trying to protect their businesses. Not that there's necessarily anything wrong with that, but maybe it would be more accurately named the American Protectionist Bag Alliance.

How People Pay Said To Be Ripe For Disruption & Transformation

The New York Times reports that the announcement last week that Apple has created a new payment system called Apple Pay, combined with eBay's announcement yesterday that it will spin off its PayPal business into an independent company as a way of allowing it to be more nimble, indicated that while other mobile payment concepts have run into trouble, there remains significant momentum for a game-changing application that replace cash, checks and credit/debit cards.

An excerpt from the story:

"It remains far from certain that Apple Pay, which uses the fingerprint reader on recent iPhones to confirm identities, will become a hit. The promise of convenient and secure mobile payments has long been hailed — by start-ups and powerful companies like Google and Verizon. That promise has remained largely unfulfilled.

"But the swift reaction by companies in the three weeks since Apple Pay was unveiled makes clear that how we normally pay for goods and services is ripe for transformation.

"Square, a prominent payment start-up, plans to allow merchants the ability to accept Apple Pay transactions in the future. Stripe, a payment processing start-up based in San Francisco, has agreed to work with Apple to help more small businesses accept Apple Pay."

The story goes on to say that "perhaps no company has more to lose from a new payment system than PayPal. Started in 1998 by a handful of entrepreneurs, PayPal quickly grew to become the dominant online payment company, widely recognized as a safe and easy way to send and receive money over the Internet.

"In 2002, eBay bought PayPal for $1.5 billion, and PayPal has continued to grow. It now has more than 150 million regular users, and last year, it had revenue of $6.6 billion."

The sense among some analysts is that PayPal has, despite its growth, avoided the kind of innovation that could have dissuaded Apple from jumping into the fray. Now, with Apple Pay threatening its base, Pay Pal needs to find ways to recapture both momentum and people's imaginations.

Bloomberg writes that "an independent PayPal, which could fetch about $47 billion based on rivals’ valuations, would have more latitude to forge alliances with retailers and other financial firms as Google and Apple seek to turn their products into tools for digital payments."

KC's View: To me, the key phrase is this - that "how we normally pay for goods and services is ripe for transformation."

I think that is utterly true … and it is going to be fascinating to watch different companies maneuver to take the lead position in this movement.

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Walmart Will Have To Defend Suit In Foreign Bribery Case

Bloomberg reports this morning that Walmart has been ordered by an Arkansas federal judge "to face a pension fund’s claims the retailer defrauded shareholders by concealing corruption tied to bribes allegedly paid by officials of its Mexican unit.

"U.S. District Judge Susan Hickey in Fayetteville rejected Wal-Mart’s bid to throw out the Michigan-based fund’s lawsuit accusing it of making misleading statements to regulators about claims it paid bribes to facilitate Mexican real-estate deals … The fund properly alleged that a 2011 filing with the U.S. Securities and Exchange Commission about Wal-Mart’s probe of the Mexico bribery claims may have been 'materially misleading to a reasonable investor,' Hickey said in her Sept. 26 ruling. Hickey adopted a magistrate’s recommendation that the case proceed."

Walmart has said that it has spent more than $400 million "since 2012 in connection with investigations into allegations that employees paid bribes in Mexico, China, India and Brazil. Both U.S. and Mexican prosecutors have said they are probing whether executives of Wal-Mart’s Mexican unit were paying off local officials to clear the way for construction of new stores and warehouses."

KC's View: Walmart says it wanted the lawsuit tossed by the courts because it believes that the fund cannot prove its allegations. Okay, let's find out … I, for one, would like to see the process of depositions and discovery go forward. And I'm reasonably sure that this is exactly what Walmart is worried about - having its present and past executives deposed, and having to open its files to unfriendly eyes.

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Tesco Gets Called Onto Government Carpet Over Financial Misstatements

The BBC this morning reports that Tesco has been notified by the UK's Financial Conduct Authority (FCA) that it is under investigation after its admission that the company's first half profit projections had been overstated by the equivalent of more than $400 million (US) because of what the company acknowledged was "early booking of revenue and delayed recognition of costs."

While the company has not said whether the misstatements were the result of fraud, incompetence or a mistake, four company employees - including Chris Bush, who has been running Tesco's UK business - have been suspended, though not disciplined, pending the results of an internal investigation.

The BBC also writes that "the chairman of the Parliamentary Business Committee, Adrian Bailey, has described Tesco's error as 'stratospheric,'" and has said that recently deposed CEP Philip Clarke could be called to appear before his committee.

KC's View: Y'think?

It would seem to be a pretty good bet that a lot of past and present Tesco executives could find themselves marched before a whole bunch of committees, especially if it starts to look like the company has been a fraud, in every sense of that word. And I'd still like to see the CEO who preceded Clarke, Terry Leahy, compelled to ask a few questions on the record…

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Naked Came The Marketers

The Chicago Tribune reports that the Federal Trade Commission (FTC) has ordered a clothing company to stop selling bras, girdles and leggings that they said were infused with caffeine and capable of helping the wearer close weight and cellulite.

The companies, Wacoal America and Norm Thompson Outfitters, were accused of deceptive advertising and ordered to refund close to $1.5 million to people who bought any of the items. The FTC said that there was absolutely no evidence to back up their claims.

KC's View: Normally, I'd congratulate the regulators on being so decisive, and talk about this as an example of how the federal government actually can do something useful. But there's a part of me that thinks anyone dumb enough to believe that caffeine-infused underwear will actually help them lose weight ought not have their money refunded. That ought to be part of the lesson …

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Consumer Confidence Said To Be Down In September

The Wall Street Journal reports that the Conference Board's monthly index of consumer confidence showed that "US consumers unexpectedly pulled back on their economic optimism in September," as the index "fell to 86.0 in September from a revised 93.4 in August, first reported as 92.4." The September reading was the lowest since May.

In addition, "The present situation index, a gauge of consumers' assessment of current economic conditions, dropped to 89.4 this month from a revised 93.9 in August, originally put at 94.6.
Consumer expectations for economic activity over the next six months plunged to 83.7 from a revised 93.1, first reported as 90.9. The current expectation reading is the lowest since May."

KC's View: War with ISIS. Ebola. Credit card data breaches. An election cycle in which each side competes to throw the most mud at each other. Derek Jeter's retirement.

Jeez…I'm amazed the consumer confidence index didn't go down to 25, since it seems to me that the country has plenty of reasons to curl up in the fetal position, suck its collective thumb and hang onto a security blanket for dear life.

Dreams Come True: Amazon Close To Concluding Deal With Disney

The Wall Street Journal this morning reports that it appears that Amazon and the Walt Disney Co. are close to resolving the pricing battle that had reduced pre-order availability of some Disney movies - including Maleficent and The Guardians of the Galaxy - on Amazon's website.

The dispute broke into the open two months ago, as Amazon's other major supplier dispute - with publisher Hachette - seemed to reflect a harder line being drawn by the online retailing pioneer.

According to the Journal, "Details of the talks weren't available and it is unclear whether the two companies are finalizing a new long-term deal or have simply progressed far enough that Amazon was willing to make a concession. But upcoming Disney DVD releases including Guardians, Maleficent, Million Dollar Arm, Planes: Fire and Rescue and The 100-Foot Journey returned to Amazon last week, a knowledgeable person confirmed."

Meanwhile … the New York Times is reporting that Hachette-published authors who have been extremely vocal in their support of their publisher, creating an activist coalition that has criticized Amazon for what they view as bullying and even censorious behavior, are getting some company.

"Now, hundreds of other writers, including some of the world’s most distinguished, are joining the coalition," the story says. "Few if any are published by Hachette. And they have goals far broader than freeing up the Hachette titles. They want the Justice Department to investigate Amazon for illegal monopoly tactics.

"They also want to highlight the issue being debated endlessly and furiously on writers’ blogs: What are the rights and responsibilities of a company that sells half the books in America and controls the dominant e-book platform?

"Andrew Wylie, whose client roster of heavyweights in literature is probably longer than that of any other literary agent, said he was asking all his writers whether they wanted to join the group, Authors United. Among those who have said yes, Mr. Wylie said in a phone interview from Paris, are Philip Roth, Orhan Pamuk, Salman Rushdie, V. S. Naipaul and Milan Kundera."

KC's View: I remain torn on this one. I'm sympathetic to the writers' position, but I also recognize that without Amazon's more democratic way of stocking books, we would've sold a lot fewer copies of "The Big Picture: Essential Business Lessons from the Movies."

This is business hardball, no different than that played by a lot of other retailers … but bigger in scope, because that's what Amazon is.

Not So Fast: Walmart Offers To Settle Tracy Morgan Truck Accident Suit

It was just Monday when Walmart, in court documents, said that actor/comedian Tracy Morgan was "in whole or in part" responsible for his own injuries when a Walmart-owned truck, driven by a Walmart driver at a speed 20 miles over the speed limit on the NJ Turnpike, plowed into Morgan's car and five others last summer. The reason? Morgan and the other passengers in the car were not wearing seat belts.

Yesterday, however, Walmart applied the brakes to the legal strategy:

“Walmart is committed to working to resolve all of the remaining issues as a result of the accident," Brooke Buchanan, a Walmart spokeswoman, said in a prepared statement. "As part of the ordinary course of legal proceedings, Walmart filed an initial response yesterday to the lawsuit that included facts and defenses that may impact the case moving forward. While we were required to respond to the lawsuit, we have also taken steps to encourage settlement discussions. Our thoughts continue to go out to everyone involved, and we remain committed to doing what’s right.”

The crash killed Morgan's friend, comedian James McNair, and injured several others. The Walmart truck driver, Kevin Roper, has pleaded not guilty to criminal charges that include vehicular homicide and assault by auto. Reports at the time said that Roper had been awake for 24 hours.

KC's View: I'm not surprised by this … and, in fact, it is pretty much what I said yesterday when I suggested that the legal strategy was going to create some PR nightmares for the company. Blaming the victim is rarely a good idea. (Except, apparently, in the NFL … but that's a different story.)

By the way, if you;re interested in reading an amazing story about a different truck accident and the impact it had on a number of people, I'd suggest you click here. It's a little long, but worth it.

PCC Changes To Healthier Paper Receipts

Seattle-based PCC Natural Markets announced yesterday that "customers at all ten locations now receive receipts made from paper free of Bisphenol A (BPA) and Bisphenol S (BPS), compounds linked to a variety of health concerns. BPA has been banned from baby bottles and sippy cups and has been voluntarily eliminated by manufacturers of some other consumer products … "In recent years, PCC had been using a double-sided receipt paper which, while free of BPA, contains BPS. BPS is suspected of having toxic effects similar to those of BPA."

In a prepared statement, Nancy Taylor, PCC’s director of human resources, said, " “PCC provides more than 7 million transaction receipts annually, touched first by our cashiers and then put into the hands of our customers. We are pleased to provide Appvion’s Alpha Free paper, which we believe to be much safer to use in an environment where food is handled and sold.”

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Your Views

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From The MNB Sports Desk

In a 12 inning thriller, the Kansas City Royals defeated the Oakland Athletics in the American League Wild Card one-game playoff. The Royals will now go on to play the California Angels in one of two AL Division Series.

PWS 28