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    Published on: February 24, 2009

    by Michael Sansolo

    A few years back as I was leaving for a technology show, a friend asked me to keep my eyes open for the “killer application.” He was convinced that in technology, finding the next big trend was usually a matter of keeping one’s eyes open to the new system, new device or new solution that was quickly moving into dominance.

    As I walked the show I realized he was both wrong and right. At the show, I found the killer app, but surprisingly it had nothing to do with information technology. Rather, I noticed it in the baggage storage area where for the first time it seemed like every bag was a wheelie. Today that might seem like a ridiculous observation, but it really wasn’t that long ago that wheelies were a new application; and a killer app at that.

    My son found a killer app for me recently in the oddest of places. We were eating in a restaurant and he came rushing out of the bathroom telling me I had to go visit it immediately. That’s always a scary recommendation from an 18-year-old with a warped sense of humor. He worried me even more when he told me to bring my camera.

    But he was right, although the killer app wasn’t apparent until I was leaving the bathroom. There on the exit was a special handle that allowed me to open the door using my forearm instead of my hand.

    I don’t remember when we all became germaphobes, but my casual observations in public restrooms suggest that the world is divided into two groups. The first somehow has no need to wash their hands. The second, including me, figures out strange ways to avoid touching anything that might have been used by the first group. Opening the exit door is usually the biggest problem.

    With that reality in mind, the forearm-operated door opener seems like sheer genius. In short, it’s a killer app. (In case you are wondering, I did take a picture. It was the first and last picture I have ever taken in a public restroom and I plan to keep that record intact.)

    The question is, why aren’t there more? The basic principle of a killer app after all is pretty simple: find a widespread problem and solve it, though usually it is used in the IT world for a new bit of hardware or software wizardry that changes the basic value of the technology itself. I’d argue that while Microsoft did this by simplifying operating systems or Apple with the iPod, the killer app designation belongs to the genius who figured out we’d be better served pulling suitcases on wheels with telescoping handles. To my mind, killer apps come in all shapes and sizes.

    But where are they? For instance, when I was walking the aisles of my local supermarket this weekend, I was still struck at the missing killer app in the peanut butter aisle. Every shopper in America knows about the Peanut Corporation of America and its trail of tainted products. So why can’t my store have a little sign in the peanut butter aisle reminding us that jarred peanut butter isn’t impacted. I’m betting a lot of shoppers might find that a killer app at the moment.

    I’ve written before about some of the brilliant ads run by Walmart during the current economic hardships. These ads educate shoppers on the incredible savings they realize by cooking a pizza at home each week instead of ordering in; or having breakfast cereal instead of a quick serve restaurant offering. (My mother tells me in Florida Walmart now touts the savings of having a big special meal at home instead of going to the expense of eating at a sit-down restaurant.)

    Those ads aren’t quite killer apps. But when supermarkets give me recipes that clearly lay out how to make a simple, healthy and economical meals—that is a killer app.

    The possibilities are all around us, the problem is we need to look at the situation slightly differently to find them. Putting wheels on suitcases, with telescoping handles seems so simple now, but it wasn’t always that way. It requires curiosity, creativity and maybe just a bit of inspiration. And that is what all of us should be looking for every day.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .

    KC's View:

    Published on: February 24, 2009

    Good piece in Advertising Age about retailers that are “flourishing” or “floundering” during the current economic upheaval, looking for “common threads” that lead to higher sales: “keep spending, target your marketing and look for ways to offer value.”

    Among the companies cited in the piece:

    • Kroger, which “managed a 6% increase in stores open at least a year during the third quarter, and analysts said the grocer has narrowed the pricing gap with Walmart to less than 10%. Last year Kroger offered consumers 10% off if they spent their tax rebates at the chain, and it offered gas discounts and free groceries in exchange for points earned through its loyalty-card program. The retailer is also using a lot of direct marketing. For example, data from its loyalty-card program are being used to send unique coupon offerings to specific households.”

    • While CVS has lowered its broader marketing spending, the company points out to Ad Age that its loyalty marketing program is not tracked: “That program, which counts more than 50 million cardholders, has spawned more targeted marketing efforts, with promotional offers at the register, coupons, e-mail and direct mail.” And that program allows CVS to try to have personalized “conversations” with those cardholders.

    Ad Age suggests that Whole Foods, but cutting “its already meager advertising budget, may be exacerbating its problems with slowing sales, though the company argues that it “is benefiting from the trend toward more meals at home.”

    KC's View:
    It isn’t exactly a surprise that Ad Age would have a story suggesting that more marketing and advertising is the way to greater sales…but that doesn’t mean that the point is wrong.

    I continue to believe that smart companies should be in a market share game these days, expanding their marketing and services in a way that will build up their customers bases. As an example, check out our next story…

    Published on: February 24, 2009

    In California, the Press-Enterprise reports that “Stater Bros. Markets is forging ahead with construction of a new supermarket in the Lake Elsinore community of Canyon Hills, even as four Albertsons markets in Southern California closed Friday and their corporate parent confirmed that five more will close in April.”

    Stater Bros. CEO Jack Brown tells the paper that “his strategy for the San Bernardino-based supermarket chain during the recession is to grow his customer base while accepting lower profits … Because when this recession is over -- and it will be over some day -- I don't want to be looking for my customers. Hopefully most of the customers we have gained will stay with us.”

    Brown was clear about his priorities: "We work so hard on prices because we know that is what the customers need right now. We are a private company and so I don't have the pressure on me to increase my profits every quarter like the public supermarkets do."

    KC's View:
    Like we’ve been saying here for months…smart retailers these days are playing the economy as a market share game.

    Published on: February 24, 2009

    The Atlanta Journal-Constitution reports this morning that “federal health officials are investigating another Peanut Corp. of America processing plant as a possible second source in the national salmonella outbreak … Peanut Corp.’s plant in Plainview, Texas, was identified as a potential source of salmonella after Colorado health officials found six cases that have the same genetic fingerprint as the salmonella cases linked to the Blakely plant.”

    The paper notes that the new revelation complicates the investigation, which previously centered in product that emanated from the company’s Georgia plant.

    “The Colorado cases were associated with a natural-foods grocery store, Vitamin Cottage, that bought peanuts from the Peanut Corp.’s Texas plant and ground them into its own peanut butter,” the paper writes. “The natural foods chain recalled its Vitamin Cottage Fresh-Ground Peanut Butter.”

    More than 650 people have been sickened in the salmonella outbreak, and as many as nine have died.

    The Journal-Constitution offers a sobering assessment of the extent of the problem: “The additional recalls deepen what is already one of the largest food recalls in American history. The recall began in January with a few hundred products and as of Sunday stood at 2,591 products from more than 200 companies.

    “The recalls have extended beyond American borders to Aruba, Australia, the Bahamas, Bermuda, Canada, the Cayman Islands, Haiti, Italy, Jamaica, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Norway, St. Maarten, St. Vincent and the Grenadines, Singapore, Slovenia, Spain, the Turks and Caicos Islands, and the United Kingdom. The recalls also have reached into some surprising products, such as bird food.

    “The Texas plant had operated for several years with no license and no government health inspections. Recent preliminary tests at the Texas plant showed possible signs of salmonella contamination, health officials said.”

    PCA filed for bankruptcy protection on February 13.

    KC's View:
    PCA’s financial bankruptcy may be recent. Its moral and ethical bankruptcy goes back a lot farther, if all the reports are to be believed. There ought to be no protection from consequences when it comes to PCA’s moral and ethical bankruptcy.

    Published on: February 24, 2009

    The New York Times reports that PepsiCo-owned Tropicana, having gotten overwhelmingly negative reaction to the redesigned packaging and graphics being used for its orange juice, is scrapping the new designs and returning to the old packaging and symbol.

    The longtime Tropicana brand symbol had been an orange with a straw sticking out of it, but it was replaced by a glass of orange juice. Next month, according to the report, the orange and straw will return.

    Most of the negative reaction seemed to suggest that the new packaging was ugly and generic, and made it difficult to differentiate Tropicana from private label brands.

    Neil Campbell, president at Tropicana North America in Chicago, tells the Times that current technologies made it possible for consumer complaints to be made more quickly and loudly than in the past; in addition, Campbell says, the complaints that concerned the company the most came from loyal customers. “We underestimated the deep emotional bond” they had with the original packaging, Campbell tells the Times. “Those consumers are very important to us, so we responded.”

    KC's View:
    The reaction to the new packaging and graphics may have been sour, but Tropicana’s response is sweet. I’m sure that the folks at Tropicana must be shaking their heads right now, having done plenty of market research to assure that the decision to change was a smart thing. But they deserve kudos for being willing to listen to their shoppers and adjust. Quickly.

    It hasn’t been a good week for the market research business, it seems to me. Today we have the story about Tropicana, and yesterday we had stories about how Tesco’s market research in the US wasn't quite up to the task of being relevant to American consumers.

    You have to wonder if these market researchers are asking the wrong questions, or just not listening to or misinterpreting the answers.

    Maybe it is a good time to reconsider the role of market research, or the ways in which it is being used to dictate decisions.

    Published on: February 24, 2009

    There is an interesting interview in Advertising Age with the appropriately named Jill McDonald, chief marketing officer for McDonald’s in the UK and Northern Europe, who makes statements that seem at variance with the fast feeder’s traditional approach: “It's all about ensuring that McDonald's is seen as a modern, relevant, progressive burger company … There's a lot less red and plastic, and lots more greens and purples coming in, as well more natural materials, more use of wood. We don't want to go for a cookie-cutter approach; we want variety.”

    Excerpts:

    On priorities… “Three years ago [when I joined], we really took a step back and looked at what we needed to do, because 2005 hadn't been a good year for the business or for the brand.

    “We fixed the basics in restaurants in terms of processes and we franchised more -- when people own a restaurant they tend to run it particularly well -- and the banks are still happy to lend our franchisees money.

    “Once the basics were in place, we invested in things like the new look and feel of the restaurants and improved the nutritional content of the food, reducing salt, fat and sugar and only using white chicken breast, free-range eggs and organic milk. Since we introduced Rainforest Alliance coffee beans, we are selling 10 million more cups of coffee than we were a year ago, up 20%.”

    On obesity issues… “Obesity is genuinely a real problem and it's ridiculous to pretend it's anything otherwise. It is our lifestyle that is the problem -- but a brand that is as big as McDonald's and has a lot of families visiting it does have a role to play. We don't want to tell people what to do, but we provide customers with nutritional information so they can make informed choices.

    “Also, nutritional science does advance, so we can continue to preserve the taste that people love while reducing the saturated-fat content, so that's a role we can play to help make realistic small changes that people can stick to in their daily lives.”

    On how the economy affects marketing… “We are in a very good place because of the investment we've already put in and our affordability. We are going to be increasing our advertising budgets quite significantly this year.

    “As I sit here now, the marketing plan I put in place for 2009 back in the autumn I haven't had to change because we are close enough to consumers to understand what we think we need to do. But it would be silly of me to sit here and say it ain't going to change this year at all.”

    KC's View:
    This actually makes the same point we were making above…it seems pretty clear that McDonald’s is in the market share business right now, and is doing everything it can to broaden its constituency and drive more customers into it stores and onto its drive-through lines.

    Which ought to concern all of its competitors, from other fast feeders to supermarkets and convenience stores.

    Published on: February 24, 2009

    • In the UK, the Independent reports that Tesco has engaged a new “pay day” strategy, launching “a raft of offers targeting shoppers at the time they have the most cash in the bank, at the end of the month.” The story suggests that Tesco is responding to research done as part of its full ownership of a personal finance venture that it acquired from RBS, which has given it insight into how and when people are spending their money.
    KC's View:

    Published on: February 24, 2009

    Whole Foods is circulating an email to its New York customers, asking them to lobby elected representatives to change state law to allow wine sales by supermarkets.

    The text of the email, in part:

    “Want wine? Please sign.

    “Millions of New Yorkers agree. It is time for wine right here where food is sold. It’s time that New York State adopts some common-sense ideas to raise money without raising taxes. It’s time that New York allows food stores to sell wine — like most other states. Not only is it more convenient for millions of shoppers in New York, it will help close the state budget gap.

    “Please join the effort by clicking here and … urging the New York State Legislature to pass legislation — already proposed by Governor Paterson — to allow food stores to sell wine. This will help New York farmers and wineries expand their businesses, as well as generate more than $130 million for the state budget without raising taxes. And it will help make shopping more convenient for all of us.”

    KC's View:
    Wish they’d do the same thing in Connecticut. Though if the law is changed in New York, it certainly will lure people across the border from the Nutmeg State wherever it is convenient. Which might pressure Connecticut legislators to make the sane move on this…

    Published on: February 24, 2009

    • Walmart reportedly has made a follow-up tender offer to acquire the outstanding shares of Chilean retail company Distribucion y Servicio D&S SA. The previous tender offer allowed Walmart to buy 58.3 percent of the company.
    KC's View:

    Published on: February 24, 2009

    • The Las Vegas Sun reports that Costco has opened its first Costco Business Center in Sin City, which is designed as a combination office supply store/restaurant supplier/print and copy center. The store replaces a traditional Costco store, and does not carry such traditional Costco items as jewelry, clothing, sporting goods and pharmacy. Costco also will be offering delivery service to local zip codes.

    • The Washington Post this morning reports on the ongoing efforts by some legislators to reform the nation’s food safety apparatus. The story notes that while Sen. Dick Durbin (D-Illinois) and Rep. Rosa DeLauro (D-Connecticut) have been pushing for such an overhaul for more than a decade, the time may be finally be right. Secretary of Agriculture Tom Vilsack says that he is in favor of a single food safety agency, and “resistance appears to be softening, the result of high-profile outbreaks of foodborne illness from domestic and foreign food sources.”

    • In Texas, the Fort Worth Star Telegram reports that Aldi “has secured eight Tarrant County locations where it plans to build stores by the spring of 2010, the company said. The company is committed to building four stores in Fort Worth, and is also under contract on a site in Saginaw, which would bring the number of Tarrant stores to nine.”

    KC's View:

    Published on: February 24, 2009

    • Campbell Soup announced that its second quarter profit was down 15 percent to $233 million, from $274 million during the same period a year ago. Q2 sales were off four percent to $2.12 billion, which the company attributed to retailers cutting back on inventories at the end of the year.
    KC's View:

    Published on: February 24, 2009

    Lots of reaction to yesterday’s report that Tim Mason, who is running Tesco’s Fresh & Easy operation in the United States, said in an interview that the company “got it wrong” in the US despite its much vaunted market research.

    “We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake,” Mason said.

    MNB user Mike Griswold wrote:

    As one of the “watch out for Tesco” people, I found this revelation very disappointing and frankly concerning relative to their (Tesco) ability to continue to grow. In their defense, at the time they launched in the US, customers where much more interested in product assortments, quality, and the shopping experience and less concerned about price. What I think Tesco is most guilty of is coming to the market without their strengths (customer intelligence) and being very slow to recognize and adapt to the pricing challenges which I found troubling given their reputation for being a nimble operator. I’ve always thought Tesco’s US effort would go as either Lord Nelson’s stunning victory at the battle of Trafalgar or Churchill’s embarrassing retreat from the beaches at Dunkirk. It appears they may be headed for the latter.

    MNB user Debbie Wearn wrote:

    I saw Fresh & Easy (Simon I believe) present at the Nielsen 360 conference last year. The focus of the presentation was around their research approach before entering the US market. During that presentation, he made a big point in saying how surprised they were to find out how much food Americans store in their garages! This was a key point of difference versus the UK. This seems a big contradiction to the information in your story today. Maybe they had the learning from that research after all, but just did not translate it to the importance of price/value in the US?

    MNB user Dave D'Arezzo wrote:

    What is most amazing is that Tesco is willing to admit that they may misjudged the US consumer, not that their research led them astray. The retail scene is littered with companies that ignored their consumers' buying habits changing, and kept their collective heads in the sand. The same companies can point to research that reinforced their go-to-market strategies while their customer counts and market share eroded.

    Tesco appears humble (and savvy) enough to re-focus in a relatively short time frame. I wouldn't count them out of being a player in the California market just yet.


    One MNB user wrote:

    It just goes to show that old say the proof is in the pudding! One can do all the market research one wants and the truth is never know until it actually happens.

    Another MNB user wrote:

    Well, it’s about time they admitted what we all have been saying... All Tesco need to do was to go back and look at the list of UK companies that have come over to the US and have failed. From their site selection, to assortment they were DOA. Lets not allow them to use the "Starbucks" defense that the economic is the fall guy. Let’s be fair, 99.9% of us got the economic wrong, but in life you " pick yourself up, dust yourself off and move forward ". As for picking California, well here to there are many companies that will tell you that it is the wrong state to start a business in do to the labor laws, taxes, etc etc. (Nevada and Arizona not much better... )

    What we have here is a company that miss calculated the market from just about every standpoint. Just like Food Lion, they knew their back yard well, but getting to far way from home just didn't work.

    Don't get me wrong, I like Tesco and think in the UK they do well, but as many have found the US isn't the UK and the UK isn't the US. Too bad Tesco didn't listen to the so many of us, including ex associates, that this was not going to work before spending so much time and money.

    MNB user Dave Stoll chimed in:

    Interesting to note that a company who reveled in their strategy and operations didn’t see the downturn in the economy coming. I know for a fact a couple of retailers with dynamic operations and great leadership, did see this impact and planned accordingly. In hindsight, it’s easy to see the beginning of the demise with corn based subsidies, and the impact to food pricing, followed by the shaky investors and their own self-valuation of their mortgage futures. HEB, Publix…good for you seeing the crystal ball with 20/20 vision…the mark of a great marketer is evaluating the information and then have the courage to act.

    MNB user Cliff Albertson wrote:

    With all due respect to market researchers, if the meat industry followed market research as the primary indicator of products that will succeed, you would see shelves overflowing with low-salt bacon.

    Another MNB user wrote:

    What is also amazing about the Tesco “failure to date” is that others are following right behind with the same mistake – “just in case” thinking can cause great pain.

    Two points.

    One is that some of the headlines have suggested that Tesco “may” have to change the way it is doing business in the US. I’d be very surprised if it does not make major changes…and Tesco does have the reputation for being willing and able to do what is necessary to win.

    Second, you will no doubt read revisionist history today, with some people suggesting that Mason was taken out of context by the Times of London.

    Which reminds me of what journalist Michael Kinsley famously said: “A gaffe is when a politician tells the truth.”

    KC's View: