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    Published on: February 1, 2006

    Notes at Comment from FMI’s Marketechnics Conference…

    SAN DIEGO – Yesterday’s opening presentation for day two of the Food Marketing Institute (FMI) Marketechnics conference featured Dr. Kjell Nordström, a writer and consultant known globally for his unorthodox approach to business.

    On this particular day, however, Nordström offered a message that was not so much unorthodox as it was remarkable it its simplicity – though not necessarily easy to implement. In business, Nordström said, it is critical to create what he called a “temporary monopoly,” an idea that differentiates you from the competition and that makes you at least momentarily unassailable. Such advantages, of course, are only fleeting, he said – and therefore one must always be seeking the next one, and the one after that.

    But Nordström made clear he was not talking about a technological advantage. “World class technology is absolutely necessary in every industry,” he said, “but it is not enough, not sufficient for a temporary monopoly.” When companies get into trouble, he said, they reorganize and reinvent themselves, but while this is necessary, it is not sufficient. “Anyone can do this,” he said.

    Nordström suggested taking a page from nature, where the rule is “survival of the fittest – not the biggest, not the strongest.” He said that the problem is that too many organizations are not fit, that they engage in what he called “karaoke capitalism.” The karaoke metaphor refers to the bars where people, fortified by alcohol, try to imitate famous singers. “There is a copy of a copy of a copy of a copy,” he said, “and the original is nowhere in the house. There is no point of differentiation.”

    It was a canny remark, especially because the general consensus from retailers walking the Marketechnics exhibit floor seemed to be that there was no breakthrough strategy to be seen, only technologies that offered tactical baby steps to retailers. There is a sense of an industry in waiting, a sense of expectation – what will the next killer application be that will point the way?

    Of course, the argument could be made that retailers looking to technology companies for killer strategies are looking in the wrong place – that technology, in Nordström’s words, is necessary but not sufficient for differentiation.

    This is the last Marketechnics, at least as a stand-alone show. Next year, it will be folded into the May FMI Show. (After that, the show’s future remains up in the air – it could return to stand-alone status, could continue to co-locate with the main show, or could co-locate with another technology conference, a possibility very much under consideration by FMI.)

    Maybe that’s a good thing. Maybe retail technology is best served when seen in the context of other disciplines and when available to a broader attendee pool. Maybe that’s the kind of environment from which temporary monopolies can spring. Maybe.

    Nordström said that the magic of 2006 and beyond is that it gives people the freedom to know everything they want to know, go anywhere they want to go, do anything they want to do and be anyone they want to be – allowing people to differentiate themselves in business and in life. That’s the good news, he said – the bad news is that pretty much everyone has the same tactical advantages.

    It’s what you do with them that counts.

    Which seems like an apt description of how retailers should be looking at technology.
    KC's View:

    Published on: February 1, 2006

    Published reports say that soft drink companies – including Coca-Cola, PepsiCo, Cadbury Schweppes and Unilever – are promising European Union officials that they will stop marketing their products directly to children under the age of 12. Moreover, the companies have pledged not to put vending machines in elementary schools, to vary the selection sold in secondary school vending machines so that healthier products are more available, and to contribute to marketing efforts that will emphasize health and nutrition.

    The EU had threatened legislation that would enforce such restrictions if the companies, represented by the Union of European Beverage Associations, had not moved to take such steps on their own. However, the soft drink companies’ initiatives have not prevented individual countries from taking their own steps to help fight the obesity epidemic. In France, for example, food companies are required to include some sort of health-oriented message in their advertising or pay a tax equivalent to 1.5 percent of their ad budgets to support national ad campaigns promoting better nutrition.
    KC's View:
    We’re not sure that including health messages with all food commercials is always a great idea – sometimes the contrast can seem so jarring as to undermine both the commercial and the message.

    It is like those ridiculous ads that some tobacco companies run saying that they are actively involved in trying to prevent teen smoking. They’re blowing smoke all right…we cannot imagine that there is anyone in America who actually believes it.

    Sometimes, in trying to do the right thing, credibility gets stretched to the breaking point.

    Published on: February 1, 2006

    The National Retail Federation (NRF) has released a new pre-Valentine’s Day survey suggesting that the average consumer will spend $100.89 on Valentine's Day, up slightly from $97.27 last year. With 60.9 percent of consumers planning to celebrate the holiday, total 2006 Valentine's Day spending is expected to reach $13.70 billion, an increase from $13.19 billion in 2005.

    Men will be the biggest spenders this Valentine’s Day, with the average male spending $135.67, almost double the $68.64 that the average female will spend. When it comes to picking out that perfect gift, fewer men will be buying flowers (52.3 % vs. 57.8% in 2005) and more will be purchasing jewelry (22.4% vs. 18.1% in 2005).

    Greeting cards once again remain a holiday favorite for both sexes. According to the survey, 62.0 percent of consumers plan to purchase at least one card for the holiday. Close to half of consumers will celebrate by buying candy (47.1%) or enjoying an evening out with their sweetheart (42.1%). Other popular gifts include flowers (32.9%), jewelry (14.6%) and gift cards/gift certificates (10.9%).
    KC's View:
    Is the moral of this story that men love women twice as much as women love men? Or that we guys have twice as much to make up for when Valentine’s Day rolls around?

    We dare not speculate.

    Incidentally, the folks at NRF clearly weren’t hip to yesterday’s story about how fast feeder White Castle is taking reservations from customers for candlelight dinners to be served on Valentine’s Day – the promotion is geared for people who may have had first dates at White Castle.

    You can buy a lot of burgers for $100.89.

    We noted in response to that story yesterday that “Mrs. Content Guy is a very forgiving and patient person. But if we took her to White Castle for a first date, there wouldn’t have been a second date. And if we took her there for Valentine’s Day…well, there would have been arrows and hearts involved, but not in the romantic sense.”

    We got a number of emails in response to this story and commentary, and one of them is posted below in “Your Views.” But there was one that we have to tell you about here because it is appropriate…and it because it made us laugh out loud:

    You’re so out of it. Lips that don’t crave sliders will never be mine.

    Ought to put that on a card…

    Published on: February 1, 2006

    • Wal-Mart opened its 100th Neighborhood Market this week, a 39,680 square foot store in Albuquerque, New Mexico. It is the first of the format that Wal-Mart has opened in the state, and is open 24 hours.

    The retailer says that more than 400 people applied for the 83 jobs available at the store.

    In the press release heralding the opening, Wal-Mart notes that it employs 14,341 associates in the state at 26 supercenters, three discount stores, five Sam’s Club’s and one distribution center. It also says that it “collected on behalf of the state of New Mexico more than $141.1 million in sales taxes in 2004 and paid more than $6.52 million in state and local taxes.”

    Just in case you were wondering.

    • As expected, former Wal-Mart vice chairman Thomas Coughlin pleaded guilty to fraud and tax charges Tuesday, admitting that he embezzled more than $500,000 from the retailer. The Wall Street Journal reports that the 57-year-old Coughlin “faces a maximum of 28 years in prison after pleading guilty to five counts of wire fraud and one count of filing a false tax return. He also could be fined $1.35 million.”

    During the hearing, Coughlin admitted to what he called “serious mistakes in judgment” (as opposed to doing something wrong on purpose). He also said that pleading guilty “was not an easy decision,” suggesting an interesting relationship between Sam Walton’s former protégé and the notion of telling the truth.

    • `Wal-Mart has been hit with a consumer class action suit filed by two California residents who say that the retailer consistently and routinely overcharges consumers at checkout with prices that do not match those advertised.

    The consumers say that Wal-Mart overcharges 3.9 percent of the time, while the acceptable standard for accidental overcharging is two percent.

    Wal-Mart disputes the number, and its spokesperson, Sarah Clark, told Reuters, "More often than not, the error is in the customer's favor. We encourage our customers to point out any discrepancies, and when they do, we compensate them appropriately."
    KC's View:
    Whether this is a frivolous lawsuit or not, we think that saying most errors favor the consumer is a non-starter. Nobody is going to believe it, no matter what the stats say.

    Published on: February 1, 2006

    It apparently isn’t enough for Apple Computer that its iPod technology dominates the segment, offering the ability to download music, videos and podcasts from the Internet and pay them through an elegant little machine.

    Now, Apple is working with six universities to offer free course lectures and other educational materials via the iPod and its iTunes Music Store.

    Calling the program “iTunes U,” Apple believes that there are great synergies here – many if not most of university students are iPod users, and iPod users are thought to be willing to adopt the technology for uses other than music and video.

    Among the schools working with Apple are Stanford University and the University of Missouri.
    KC's View:
    This is an important object lesson. Apple understands that it has to maintain momentum, not just always improving the hardware, but continually upgrading the content it delivers as well.

    It is what allows Apple to continue extending its own temporary monopoly.

    Published on: February 1, 2006

    It is a well-documented Hartman Group tenet that consumers are full of contradictions…and unpredictable to boot. Quickly and correctly adapting to today's constantly evolving and complex consumer is an ongoing challenge for businesses in the contemporary cultural lifestyle marketplace.

    A challenge…but hardly impossible.

    To get an understanding of how consumers shop that not only facilitates product and retail innovation, but fuels brand distinction, check out this week’s HartBeat Consumer Pulse by clicking on the tile ad on the right hand side of the page, or go to:
    KC's View:

    Published on: February 1, 2006

    The Conference Board reports that its consumer confidence index hit 106.3 in January from a revised 103.8 in December. It was the third straight month of improvement and the highest it has been since June 2002.

    However, the Conference Board’s expectations index, which measures the near-term future, was off a bit, to 91.5 in January from 92.6 in December, suggesting some residual skittishness on the part of consumers.
    KC's View:

    Published on: February 1, 2006

    The Grocer reports that William Morrison Supermarkets in the UK, looking to keep up with the likes of Tesco and Wal-Mart’s Asda Group, is rolling out a number of private label nonfoods items, including housewares and bakeware.
    KC's View:

    Published on: February 1, 2006

    Yesterday, MNB ran the list of this year’s Academy Award nominees. The hour was late and our time was short, so we didn’t do any analysis.

    However, the Wall Street Journal made an interesting point that is worth repeating.

    The total cost to make all of the five Best Picture nominees – “Brokeback Mountain,” “Capote,” “Crash,” "Good Night, and Good Luck" and "Munich" – was $100 million. Total.

    Now, that sounds like a lot of money, but by Hollywood standards it isn’t. What’s interesting is that the big-budget films like “King Kong,” which cost more than $200 million to make and is far more typical of a major studio release, got pretty much shut out of the major award nominations.

    Not only that, but all five of the Best Picture nominees are a little offbeat, clearly differentiated in the marketplace. This year, at least, that seemed to matter.
    KC's View:
    Just thought this was interesting…being of an independent, differentiated mindset can work in the movies, can work in retailing.

    Published on: February 1, 2006

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    An all-new presentation by Kevin Coupe of, and based on proprietary qualitative and quantitative research by The Hartman Group, looks at what shoppers really want and really need…both today and tomorrow. You’ll hear from real shoppers about real issues…and their words will help you create and navigate a relevant consumer roadmap.

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    Where Big Ideas Mean Business
    KC's View:

    Published on: February 1, 2006

    Yesterday MNB reported on an Advertising Age story saying that News Corp.’s News America Unit – owned by media mogul Rupert Murdoch – is selling manufacturers including Procter & Gamble, Kimberly-Clark, Johnson & Johnson, Unilever, and General Mills “total control of advertising and promotion on the shelves of 35,000 U.S. stores for as long as two years at a time.”

    The cost of such exclusivity can be in the millions and “can effectively lock out competitors from in-store advertising for their duration - even if the marketer is not advertising at that time - and confer an edge in crucial retail territory described by marketers as the ‘moment of truth.’” News America itself has a 90 percent market share in the in-store media categories in which it participates.

    MNB user Glen Terbeek responded:

    Wow! This is the ultimate abdication of a retailer's responsibility of being the Agent for their shoppers. It is mass marketing trade dollars at its worst! Can you imagine letting someone else control your in-store marketing? Or excluding marketing programs for items that the shoppers may want because some other manufacturer owns the right? Will new suppliers/products ever have a chance? Will every store be the same? It is adding Friction to the shopping process, rather than making it Frictionless. Why not just give the whole center store to Wal-Mart right now? What are the retailers thinking?

    The next logical step would be for the manufacturers to go directly to the targeted shoppers through a third party web marketer, order processor, and fulfillment provider. After all, the trade dollars they would save would more than make this very cost effective and probably an easier shopping experience for the customer as well. And history has proven that the manufacturers quickly leave their current customers when a more direct (Frictionless) channel in reaching the shoppers they target develops.

    The economic forces in the last 15 years have changed the supermarket business from a distribution business to a store by store marketing business. This "total Control" store marketing program is a step back to the eighties, in my opinion.

    We had a story yesterday noting that baby boomers are not a homogenous group – that marketers have to treat early boomers different than late boomers.

    MNB user Philip Herr wrote:

    As part of the early boomer generation I cannot help but notice the advertising aimed at my cohort. Apart from remedies and drugs, which have always targeted an older group, I now see several financial services companies advertising to me in a fairly inept manner. And they all look the same. Specifically featuring footage and music of Woodstock, they anticipate gaining my attention and creating empathy by showing that they understand me. No, they don't. And the music and footage have nothing to do with my investment goals or fears. This is sloppy thinking -- they have opted to use these devices as a substitute for thinking through and uncovering real needs.

    Gee, that sounds familiar. We can think of some retailers guilty of exactly the same mistake.

    Another MNB use wrote:

    I agree that not all baby boomers are equal. As the last of the 50’s models, I am more than a little irritated at some of the “progressive” changes my older brothers and sisters (literally not figuratively – mine are in agreement with me on most of this), brought about in those oh so heady days of the 60’s and 70’s. So, when I saw the new Ameriprise commercials (with the Mitch Ryder and the Detroit Wheels –“Give Me Some Lovin’” track) for the re branded Amex Financial Services Co., I almost wanted to shred my Platinum card, then remembered they are actually separate divisions, so I am OK for now. What about those irritating ads for health products, too? Do I really need some fake doctor telling me about this or that product for incontinence or sleep? NEWS FLASH- when you get older, you sleep less, and if you take Ambien or Lunestra, it ain’t gonna flash you back to the Zep concert at Three Rivers no matter how fun it would be!

    In addition to being able to separate baby boomers based on when they were born, it also seems to us that you can separate them based on whether they think the sixties and early seventies were positive (in the long run) for this country or negative. How you feel about this sort of shapes your world view.

    MNB user David Livingston had some thoughts about Winn-Dixie:

    Winn Dixie has been bragging endlessly about how same store sales are up 7%. What don't mention is that hundreds of stores have been closed or destroyed. There has also been a huge population shift in Louisiana while at the same time many competitors were destroyed. Winn Dixie should be a bit more honest and show what their same store sales are by state. We would probably find that in Louisiana/Gulf coast, sales are up dramatically along with their competitors. Everywhere else it is probably the sad declines we have seen in the past.

    Winn Dixie did not take sales from anybody and their gain did not come from any improvements made at store level. If you check the same store sales gains at all of Winn Dixie's competitors, they are most likely far exceeding Winn Dixie. This is just a one-time fluke as a result in a population shift, the loss of competition, and the distribution of free food stamps to every warm body in the area.

    A year from now we will most likely see the largest same store sales drops in Winn Dixie history as Wal-Mart gets stores reopened and New Orleans begins to get repopulated.

    On the subject of check fraud, addressed in yesterday’s MNB, Al Kober wrote:

    I am amazed that many people still write checks for almost everything. Why is the big question. I saw customers in a restaurant leave their tip in the form of a check. To me the bigger question is why would a retailer still accept checks? I know there are security systems to run checks through at many stores. I was in line behind a customer in a small town hardware store. Her purchase was under $3.00 and she wrote a check, even though she had cash in her wallet. Go figure.

    I, too, use one credit card and charge everything on that card. I get online accounting and online billing and online bill payment. And besides the credit card pays me money every year for doing so. It cost me nothing for the card. It cost nothing for the statement or to pay the bill. Seems like a no brainier to me, so why would anyone still use checks? I have no idea.

    And finally, an email on the romance of White Castle and its appropriateness as a place for a first date, as MNB user Bryant Wynes wrote:

    While we didn’t go to White Castle, I’m proud to say that on our first date, my wife (of nearly 32 years) and I spent a warm summer evening driving around with the top down in my 1970 GTO convertible. We checked out the brand new shopping mall in town, then capped off the date with a nice walk in the park. Aside from a root beer at the local drive in, I didn’t spend a dime on the date. To this day, we simply enjoy each other’s company. And I truly believe that she’d be delighted to share a bag of “sliders” with me for Valentine’s Day!

    I’ll bet you’re selling “Mrs. Content Guy” short – and am guessing that she would enjoy a night away from the kids where the two of you could simply enjoy each other’s company – whether it was at a White Castle or Chez Paul.

    After two weeks on the road (and another one to go) we think she’d just be happy if we’d show up occasionally.

    C’est la vie!

    KC's View: