business news in context, analysis with attitude

Lots of email to get through this morning…

On Friday, in a story about Procter & Gamble licensing out its brand names to specific kinds of products, we commented that "we’re perfectly willing to license out the MorningNewsBeat name and brand to any company that makes us an offer. We’ll use all the marketing power at our disposal to help build sales and equity for any company that’s interested…"

One MNB user responded with a cautionary note:

"Today you said you'd take anybody’s money and promote their product with all your marketing power. You got it half right. You are the one with the marketing power within your universe. We are your customers.

"However, if you go and start promoting auto tires, oil, roofing material and the such, then, you may not keep us as customers for very long. So, the money you get at the back door on non-customer demand items better be enough to retire on, because you will lose customers to the people promoting the items your customers do want."

True. We actually were sort of kidding about taking "anybody’s money." Though if we made the mistake of doing so, and not only getting involved with products that reinforced and grew our brand equity, it’d hardly be a unique misjudgment.

This point is a valuable one. The brand, and the core values that serve as the foundation for the brand, ought to be every marketer’s top priority. Short-term money is just that.

Thanks for saving us from ourselves. (Not that the offers were pouring in from tire manufacturers and roofers, by the way…)

Last Friday, we had a piece about a satisfaction survey published by the National Association of Convenience Stores (NACS), which elicited a somewhat disbelieving email from MNB user Chris Hendricks:

"OK, lets stop sucking the Slurpee nozzle and really look at the study. 85.6 is a good solid "B". My questions to NACS would be: What questions were asked? Where was the study implemented? How many c-stores were studied? and finally What is the consumers definition of "Convenience"?

"Now I have been in several good c-stores here in the Mecca of c-stores, Texas, and I have been in really B-A-D c-stores in Texas, but the underlying theme in all was the proprietor’s definition of convenience. We should take a look at what we are asking the grocery industry to do, Know your consumer, and translate that to c-stores, Know your consumers’ view of TRUE convenience.

I mean isn't it nice to go pay for a bottled water and not have to wait in a line, and isn't it nice to be able to walk down an aisle and not worry about knocking over a salty snack display that are seemingly everywhere, and finally pay for items at a register manned by a nice, courteous, well dressed employee?"

There’s no question that c-stores, like supermarkets, run the gamut from exceptional to exceptionally bad. And we would agree with the notion that convenience means different things to different people.

Response to our story about Wal-Mart’s approach to supercenter and Neighborhood Market development…

One MNB user wrote:

"It’s all about managing Wall Street expectations. Wal-Mart wants to optimize supercenters for the next 5 years until they hit the 2200-2500 store saturation point. Then they can focus on a rapid ramp-up of neighborhood stores and have a growth vehicle that will propel sales and earnings from 2008/9 forward. If they push neighborhood stores more now, then international expansion via acquisition would be their sole growth engine later on. International is always mixed , particularly when you compete in markets with currency fluctuations such as Asia/Latin America where most of the growth opportunities are."

We got a question from an MNB user about the retailer lawsuit against MasterCard and Visa:

"Please help - is the point of the lawsuit to force MasterCard and Visa to eliminate the higher fees associated with debit card transactions? Or are retailers trying to get out of having to accept debit cards at their stores (find that hard to believe, but...?)

"What's the bottom line to consumers if the retailers win the lawsuit?"

Our understanding is that the retailers are more interested in having the transaction fees eliminated, which would be a direct byproduct of being able to not take the cards.

It’s all about choice. And for consumers, if transaction fees are lowered, the result should be lower prices. (Though we have no doubt that the credit card companies will try to find a way to get more money from consumers to cover whatever losses they may suffer if and when they lose the suit.)

In response to a story we had last week about what kinds of developments might prove to hurt Wal-Mart’s growth, MNB user Richard Lowe wrote:

"Wal-Mart is already in decline. Here is the response I received from a proposal to the new buyer of bath products after a second request for a response: ‘Are you currently a Wal-Mart supplier in hardware? If not--you need to call Supplier Development at 800-604-4555." The 800
number refers one to the web site as the only place to get and fill out a form. They also state Wal-Mart cannot be more than 20% of a companies sales.

"Where does that leave new products? Or new companies? They have killed the pricing of the old products and cannot replace them with new profitable

Another Wal-Mart-related email:

"I have heard comments that Home Depot and some other retailers frequently build new stores because they fear "someone else will go there if they don't." That type of decision-making underscores that they don't believe they really have a better business model which is a) more compelling to consumers and b) more efficient operationally. Wal-Mart does not seem to operate that way - they appear to make decisions based on their own strength, knowing they have a more effective and efficient machine – not out of paranoia. I don't hear anything about Wal-Mart making defensive moves, it seems to be all about offense. An old basketball coach I had said that the best offense is a good defense, while Wal-Mart seems to operate on the premise that good offense prevails every time. It didn't work for the Rams, but it works for Wal-Mart."

And another, this one from MNB user Ken Robb:

"Two years ago, Wal-Mart proposed to build a Supercenter in Galena, Illinois, the small Mississippi river town of 3,500 where I live. Their plan was to build a concrete block structure painted red, blue, and gray with their usual signage. Oh, and they wanted the City of Galena to give them $2,000,000 in tax abatements.

"Two years later, Wal-Mart is indeed building that Supercenter in Galena, but it will be a brick structure with dark green trim, set back from the road behind trees and grass, with minimal signage, complimenting other nearby old brick structures in our historic community. Oh, and the tax abatement request was denied.

"A message to other communities...Wal-Mart will negotiate."

We had a number of stories last week about executive compensation, which prompted the following email from MNB user Terry Leonard:

" It makes me wince to read all the commentary about the high level of executive compensation and how no one person could possibly be worthy of that kind of money. The reader who wrote "look at what they pay their employees" should just go ahead and apply now for their Socialist Party card. When did so many of us come to the conclusion that to be highly successful is evil and we should somehow all make close to the same income? Lenin would be proud!"

While we agree theoretically with the notion that people ought to be paid what they’re worth, and that exceptionally talented people ought to get exceptional salaries, we do think that there needs to be some connection, however tenuous, between what employees make and employers make…if only because, at least in customer service businesses, it is the employees who are on the front lines.

If there is no connection, it can backfire on a company. Look at the case of American Airlines, where employees were prepared to take a big hit…until they found out that top executives were planning to get a big bump in compensation even as the unions were giving in to avoid bankruptcy. Now, the airline may be unable to avoid going bankrupt, and there’s a lot of ill will between employers and employees.

In response to Friday’s "Colloquy Corner" about the relationship of loyalty marketing to payment methods, one MNB user wrote:

"The COLLOQUY article cleared up some confusion I had about the retailers vs. credit companies lawsuit. Also got to the point I wanted to make - what's in it for the customer. Thanks for publishing - good stuff."

Our pleasure.

In a story on Friday, we reported the death at age 72 of Dr. Robert Atkins, the controversial weight loss guru who preached the benefits of a diet high in fat and low in carbohydrates. Atkins had been in a coma since April 8, when he fell on an icy sidewalk in New York City. In our commentary (which we noted was offered with the utmost respect), we asked if, "while lying there in a coma, at any point it went through Atkins’ mind that, ‘I should’ve had the bread. I should’ve had the ice cream. I should’ve had more red wine and beer." Or, should have had whatever the food or drink was that he really wanted, but denied himself." After all, even with all his efforts, he died at age 72…

Not surprisingly, our comments generated some reaction.

One MNB user wrote:

"I usually enjoy your iconoclastic comments, however, you went too far & were disrespectful. As you are aware, Dr. Atkins died from complications following an accident, not a broken heart because he did not eat ice cream."

MNB user Stephanie Asher wrote:

C'mon, KC - give the guy a break (Dr. Atkins) - it's not like he died from
heart disease!

Another member of the MNB community wrote:

"He died from complications resulting from hitting his head in a fall on ice. Food had nothing to do with that."

MNB user Wendall Ponder added:

"Are you serious? You’re wondering if someone near death is thinking about food instead of family and friends? In my opinion, you didn’t give that viewpoint much thought."

Just for the record, Mrs. Content Guy was equally appalled by our commentary. Not everybody agreed, however…

One MNB user wrote:

"Kinda reminds you of Jim Fixx dropping dead while out on his morning run, doesn't it?"

True…though that wasn’t exactly the point we were making.

Another member of the MNB community chimed in:

"In my position, I hear all sides of the Atkins debate on a regular basis. And not all the people I work with agree with his diet philosophies but one thing I think we owe Dr. Atkins for is keeping the debate going and the issues of diet and health top of mind for nearly two decades. I should be so influential. I was sad to hear of his passing. I am always game for a debate especially one that includes Pork"

And finally, an MNB user wrote in our favorite response (because it spoke to one of our inner yearnings):

"Your bit on Adkins would make nice material for a stand-up comedian. Thanks for making me laugh this morning."

You’re welcome.

We should note that our comments on Atkins actually were thought through and, again, not meant to be disrespectful. We were and are aware that his death was not related to his diet, but to an unfortunate accident.

The point we were trying to make was that sometimes you like your whole life with a set of assumptions -- like if you eat a certain way and exercise you’ll live to a ripe old age -- and then something happens that tosses all those assumptions out the window.

The broader philosophical point is this: Does it make sense, within the bounds of not hurting anyone and living up to your responsibilities, to always live your life like you’re going to get hit by a truck tomorrow?

Finally, we got some nice notes about the movie and wine recommendations we made last Friday.

In response to our brief wine reviews, MNB user Herb Meischen noted that we did not give vintages for our suggestions…which is true, and an oversight. They were:

o Francis Coppola Pinot Noir (2001)
o St Clement Chardonnay (2000)
o Guernoc Cabernet (1997)
o Valley of the Moon Syrah (1999)

And MNB user Jason Dodge wrote:

"I normally enjoy taking in all of the commentary rather than providing my own, but I saw your recommendation on the Valley of the Moon Syrah, and found it so ironic I just had to drop you a line. I spent a long weekend out in Sonoma over Labor Day weekend last fall, stopped by Valley of the Moon during the trip, and picked up six bottles while I was there.

"Just this week we polished off the last bottle (the first five were so good we
were desperately trying to save the sixth for a special occasion!). Of course, it was the 1999 Syrah - like you said, oh so tasty...."

And, one MNB user reacted to our movie review of ‘Anger Management" in which we said that Adam Sandler may be a big start, but is a minor talent, as opposed to someone like Albert Brooks, who is a major talent without the box office clout:

"Albert Brooks is the funniest man on earth. ‘Lost In America’ is one of the top five funniest movies ever made. If you haven't seen it you should go rent it tonight! The 100k box...nest egg....the whole thing is way too funny."

We agree…though we think that "Defending Your Life" is better…and maybe, on reflection, even has a message that ties into the whole "live your life like you’re going to be a hit by a truck" philosophy…
KC's View: