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    Published on: January 19, 2010

    by Michael Sansolo

    Although the United States grows increasingly diverse almost daily, many of us may find that reality easy to ignore. I spend very little time watching BET or Univision on cable and the music choices on my I-Pod mostly reflect the world in which I grew up, which means rock, not rap.

    I even manage to avoid an incredibly easy visit to the diverse world every morning in my daily newspaper. Simply looking at the comics page these days gives you a sense of America in 2010. There are comics geared to young kids, pre-teens and teen-agers; parents of those different aged kids; grandparents, working people and even those of us with strange sense of humor who love Pearls Before Swine. There’s something else too: comics geared at racial and ethnic groups including African-Americans and Hispanics.

    Now it’s possible that Hispanics love the strip Baldo, but try as I might, I never get it. The problem isn’t language, as I know enough Spanish to understand when it switches out of English. Rather, I simply don’t get the references or jokes, so I pass it by.

    That is until this past week. Both my daughter and I noticed a strange tone in the drawings that compelled us to follow the story arc. In reading it, we became aware of how different communities confront different problems.

    The story line itself was simple. The elderly family aunt was approached by a woman outside a supermarket who had a problem. The stranger had a winning lottery ticket, but couldn’t cash it because she was an illegal immigrant. So she offered the aunt a deal to split the money if the aunt would give her a check first in good faith.

    Stunned by this turn of good fortune, the aunt offers up $5,000 and is prepared to take the woman and a friend to her bank. Just then, her nephew shows up and rescues her from the scam. The comic strip finished with anything but a joke, instead offering a reminder for readers to visit the website of the National Council of La Raza (the nation’s leading Hispanic organization) for help on financial issues.

    Now here’s hoping that most of us already know it’s a bad idea to respond to e mails from Nigerian princes with large, yet untouchable, bank accounts or to ever consider a deal like the one proposed in Baldo. Yet somehow those scams go on and somehow they keep snagging the unsuspecting among us.

    While I may not “get” Baldo, I have to believe there are many struggling Americans who would see a proposal like the one in the strip as stunning windfall, especially in tough economic times. It’s possible that the problem is worse than we can believe among non-acculturated immigrants.

    That makes you wonder what else people don’t know and in the process, what opportunities exist for companies to build loyalty by building knowledge among customers. For instance, how many shoppers look at the new self-scanners and live in fear of the day they might have to use those things? How many have no clue that meats need cooking to a specific temperature to kill bacteria? How many have no knowledge about a trans fat, an anti-oxidant or a pro-biotic?

    Or how many have no idea that giving money to someone promising free access to a lottery ticket or a bank account is a really bad idea?

    And that has to make you wonder how can we help make them smarter, make them more aware and in the process, make them better customers.

    Michael Sansolo can be reached via email at . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: January 19, 2010

    The New York Times this morning reports that Kraft upped its bid to acquire British chocolate maker Cadbury from $16.7 billion to $19 billion, and Cadbury, after months of resistance, said yes.

    Roger Carr, chairman of Cadbury, who had previously described the earlier Kraft bid as “derisory,” now says that the improved offer “represents good value for Cadbury shareholders.” And Kraft CEO Irene Rosenfeld says that the acquisition transforms the company’s portfolio, “accelerates long-term growth and delivers highly attractive returns.”

    Experts tell the Times that it is unlikely that Hershey or any other company will step in to try to top Kraft’s bid.

    The Times also writes that “the prospect of a takeover of the 186-year-old British institution, especially by an American multinational like Kraft, sent shudders throughout Britain and prompted a wave of public protests ... Politicians and unions have pointed to both a loss of jobs — the Unite labor union has estimated that as many as 30,000 jobs could be lost — and of national pride. ... Cadbury had argued repeatedly that it would prefer to remain independent, pointing to faster-than-expected success in its turnaround program. But its executives have acknowledged that Kraft’s bid put the company in play and that they would consider any offer made at the right price.”
    KC's View:
    In the end, this isn’t about the preservation of British ownership at Cadbury. It is about money. To think anything else is probably naive.

    There’s no question that the acquisition of Cadbury changes Kraft’s portfolio. But it hardly is writ in stone that the long-term picture is definitely going to be successful. The trick is going to be in the implementation and execution. And that’s how CEO Rosenfeld ultimately will be judged.

    Published on: January 19, 2010

    There was a long piece in the Washington Post the other day on the subject of health care, and it started out this way:

    “It's a seductively simple solution to rising health-care costs. Require workers to pay higher premiums if they flunk tests for measures such as weight, blood pressure and cholesterol. Then, bingo: You not only get a fitter workforce, you slash medical expenses.

    “Politicians of both parties have embraced that idea and expanded upon it in the Senate reform bill, inspired largely by the claims of Steven A. Burd, Safeway's chief executive. Burd says he has set an example for employers nationwide by rewarding employees for healthy behavior.”

    However, the Post suggests that the truth is a little more complicated:

    “In a legislative debate filled with misconceptions, few rival the myth about Safeway, which has become the poster company for a provision that big employers and insurers covet. The supermarket chain's story shows how the untested claims of interest groups can take on a life of their own and shape national policy.

    As the House and Senate work to meld their bills, the Senate's ‘Safeway Amendment,’ which would more than double the potential rewards and penalties tied to wellness tests, has become a point of contention.

    “Business groups have pushed for the increase, arguing that financial incentives encourage workers to take responsibility for their health. Opponents such as the American Heart Association and the American Cancer Society say the provision would undo a central element of reform -- the promise that people's insurance premiums would no longer be influenced by their health status.

    “Rewarding or penalizing people based on wellness tests may save money over the long run, but Safeway hasn't proved it. In the meantime, based on 2009 data, if the Safeway Amendment becomes law, American families with average health benefits could have $6,688 a year riding on blood tests and weigh-ins.”

    At issue is Safeway’s contention that its focus on personal responsibility has essentially “flatlined” its health care costs since 2005...a statement that apparently is inaccurate since its actual costs since 2005 have gone up. However, the company maintains that it defines “flatlining” as keeping a lid on per-capita costs, which are pretty much the same as five years ago.

    Adding to the confusion is the fact that Safeway does not divulge how health care costs for employees engaged in its voluntary Healthy Measures program - which lowers premiums in accordance with healthy behavior - compare to costs for those who are not part of the program.
    KC's View:
    It seems to me that in a lot of ways, five years is just the blink of an eye when it comes to reining in health care costs, especially when you consider the number of years during which health care costs have been rising and unhealthy behaviors have been increasing.

    If, in fact, Safeway’s employees are getting healthier and health care costs are going up, that may speak volumes about how the economics of health care dysfunctional. (It also may reflect the fact that, as the points out, that greater vigilance about one’s own health may actually lead to people discovering conditions and maladies that they may not have known about before. And treating those issues costs money. It also keeps people alive. Where I come from, that’s a good thing.)

    In addition to hopefully saving money down the line, encouraging people to live longer and healthier lives is, in my view, a good thing all by itself. If health care costs go down in the long term, that also is good. But they are not necessarily the same thing.

    The funny thing is that, depending on how the election in Massachusetts goes today, the whole debate about health care may be for nothing. And the Safeway amendment may end up just being a footnote in history.

    Published on: January 19, 2010

    The Los Angeles Times reports that Montebello, California-based Huntington Meat Packing has recalled 864,000 pounds of beef because of concerns about E. coli contamination.

    According to the story, a potential problem was detected by the US Department of Agriculture (USDA) Food Safety and Inspection Service. An investigation is ongoing, and the Times reports that “several products produced between Jan. 5 and 15 are being recalled. And after further review of the company’s records, the same products produced between Feb. 19 and May 15, 2008, are also being recalled.”
    KC's View:
    I am by no means an expert on food safety issues, but does it strike anyone else as odd that meat products produced as long ago as February 19, 2008 - almost two years ago - may still be out there? Forget E. coli...that stuff has to have gray hair on it by now...and I’m not sure I’d want to eat meat that old, no matter how it has been stored.

    I mean, aged beef is one thing. But this just sounds funky.

    Published on: January 19, 2010

    • The Wall Street Journal reports that Walmart Canada is sponsoring a Green Business Summit next month in Vancouver - on February 10, the day before the Winter Olympics begin there.

    According to the story, “The conference will bring together more than 300 leaders from government, non-government organizations, and business to share best practices and new ideas in areas like energy and waste management. David Suzuki, Canada's legendary environmental activist, is the keynote speaker.”

    Among the companies attending will be a number of Walmart competitors: Loblaw, Shoppers Drug Mart, Home Depot, Staples, and Best Buy. However, several competitors that were invited are not planning to attend, including Sobeys and Metro.
    KC's View:
    I can understand why some competitors don’t want to attend a Walmart-sponsored conference...after all, some might think that this concedes issue leadership to the Bentonville Behemoth. On the other hand, there is the old truism that if you are not part of the solution you are part of the problem.

    Here’s the one thing that everybody needs to keep in mind as they develop their own environmental philosophies, strategies and tactics: Walmart will do everything it can to establish leadership on this issue and then extract the maximum financial and marketing benefit from its actions.

    This is the reality of Walmart’s approach to the environment: it wants to create an environment in which it gets the maximum possible advantage.

    Published on: January 19, 2010

    Advertising Age has an interview with Procter & Gamble’s new CEO, Bob McDonald, in which he addresses how the company is evolving since he took over from former CEO AG Lafley.

    A couple of excerpts:

    • “We were under-exploiting the scale of this company. ... Many analysts covering our company think size is a detriment. They believe in the law of big numbers -- the larger you get, the harder it is to deliver the same percentage growth. Size doesn't matter. What matters is turning size into scale and turning that scale into accelerated growth.

    “So you'll see more multi-brand commercial innovation. We've created a new team, which we call the Vice Chair Team, which includes myself, [Chief Financial Officer] Jon Moeller and the vice chairmen, who get together weekly, plan personnel moves, look at our programs focused on various competitors and countries, and work to make sure we're showing up as one company and our scale is having an impact.

    “[Another strategy is] simplification. The natural tendency of a company is to become bureaucratic, hierarchical and slow-moving. We're trying to [combat] that through the removal of layers and hierarchy and the use of technology, which frankly fits my engineering background and the fact that I studied computer science. ... We're going to use technology to make this company operate like a $10 billion company rather than an $80 billion one.”

    • “We've got a $25 billion business in developing markets now. That's larger than a lot of our large competitors. Again we've got to turn that size into scale and scale into growth. ... A lot of the opportunities in these markets [aren't] about switching people from a competitor. It's about getting them to use a product at all, whether it be disposable diapers, feminine care products. Or if you get into some parts of the world, you find people using the same soap to wash their hair, their bodies, their clothes, their dishes, their walls. It's a huge opportunity.

    “But I don't want you to take away from that that we're not serious about growing our business in developed markets, because we are. We need more new categories, more new Swiffers, more new Febrezes, more discontinuous innovation, and we're working on that ... And that's the kind of thing that will provide important step change in developed markets, as well as we need better loyalty to all of our brands in all of our categories, and we're working on those things as well. Multi-brand commercial innovation is one example. If you look at our Olympic sponsorship or NFL sponsorship, it's about scale, multiple brands and increasing the size of the market basket for American consumers.”
    KC's View:

    Published on: January 19, 2010

    Agence France Presse reports that French retailer Carrefour is close to a deal with Future Value Retail, a unit of Pantaloon Retail, which would allow it to set up franchise stores in India. Foreign retailers are not allowed to operate in India except in partnership with local concerns.

    Bloomberg reports that Nestle “will begin selling drinks to fight malnutrition among the elderly in an effort to revive its nutrition business, which has trailed sales and profit forecasts every year since they were set in 2006. Resource SeniorActiv supplements will go on sale in Switzerland this year, the company’s nutrition unit said in an e-mailed statement today. The product includes protein, calcium and vitamin D to promote muscle strength and prevent bone fractures, the world’s largest food company said.”
    KC's View:

    Published on: January 19, 2010

    Glen W. Bell Jr., the founder of Taco Bell who is credited with discovering the market for Mexican fast food, died Sunday after a quarter-century battle with Parkinson’s disease. He was 86.
    KC's View:

    Published on: January 19, 2010

    We had a story yesterday about how Walgreen is positioning itself for a move into the fresh food and convenience grocery business, which led MNB user Beatrice Orlandini to write:

    Boots did it and rather successfully in the UK so I guess Walgreen could do it, too. One smart move was to address its wide female customer base with the "Shapers" range: low calorie sandwiches and snacks for people (but you can tell they had mostly women in mind!) that want to keep in good shape.

    A pharmacy that sells junk fund would/should be a contradiction, but you never know. The Romans used to say "pecunia non olet" (money has no smell). Let's hope that Walgreen's sense of smell is quite developed.


    MNB user Gary Maxworthy wrote:

    When Walgreen’s  opened a store near us my reaction was we do not need another national drug store chain.

    Five years later, Longs is no more, taken over by CVS, which epitomizes to us how to project a lousy national chain image, and Walgreen has become a well run well priced operation with an ad that fits our needs. They price milk and ice cream and other perishables extremely competitively everyday. Plus their ad as I mentioned is excellent on key drug and grocery items.

    MNB user Mary Ellen Lynch wrote:

    Our 24 hour Walgreens already fills the convenience store void in my town.  The parking lot is always full even though there is a major grocery retailer across the street, and a key drug competitor a half mile down the road.  Walgreen’s is smart to leverage their premium locations.  If Walgreen’s can establish appropriate controls to insure consistent high quality fresh food they will succeed.  Our community is “starved” for quick fresh food options.

    MNB user Richard Evans wrote:

    Walgreen's is uniquely poised to get into the food business. Question is space. How are they going to work in the thousands of skus they now carry with the additional items and still offer competition to the big grocery retailers?

    Whoever they decide to hire to head this up had better be pretty sharp because it's going to be a huge challenge. Can't wait to see what they come up with.

    In a story yesterday about how Johnson & Johnson apparently has mishandled a new recall, as opposed to how it famously handled the Tylenol recall back in 1982, I noted that it doesn’t matter what anybody did thirty years ago or thirty hours ago...what matters is what you do today.

    Which led MNB user Rosemary Fifield to write:

    My favorite all-time reminder for myself: "Yesterday's home run won't win today's ballgame."

    Regarding the FDA’s new reconsideration of the health impact of bisphenol-A (BPA), a compound used in plastic bottles and food packaging, MNB user Glenn Cantor wrote:

    A recent issue of Time magazine featured an article addressing epigenetics, which is a science that investigates the short-term genetic impact of environmental factors.  The FDA’s concerns about the BPA used in plastic bottles and packaging are particularly relevant not only because of the direct harm these environment factors create in people, but also their ability to temporarily alter predisposition to health issues in successive generations.  The article mentions, as an example, a study that validates the effect on children of men who smoke in their preteen years, because of changes to the switches that direct DNA.

    If there is scientific validity to the concerns about this chemical, the FDA is in a unique position to impose restraint on an industry that would not otherwise do so independently.   This is justified protection against something for which consumers would have no other recourse.

    And in response to all the emails I got yesterday about my Jimmy Durante reference, all I can say is...

    Good night, Mrs. Calabash, wherever you are.
    KC's View: