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    Published on: July 15, 2010

    Now available on iTunes…

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    Hi, I’m Kevin Coupe and this is MNB Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.

    I’m going to do something right now that I’ve never done before here on MNB.

    I’m going to speak ill of Apple.

    I’m going to do this because the company’s current travails - if you can actually call them travails when the problems concern the most successful product launch in the company’s history - remind me very much of what happened to Toyota, BP, Johnson & Johnson and other companies that once occupied positions of respect and thought-leadership in their industries, only to squander them because they took their eyes off the ball.

    It can happen to any company. Indeed, at some point in time, it seems to happen to most. But to be honest, I expected more of Apple. My confidence is a little shaken. Not permanently, but I am, shall we say, worried.

    The problems concern Apple’s two most recent product introductions, each of which have sold millions in fairly short order. The iPad and the new version of the iPhone. In the case of the former, there are continuing reports that while the 3G version is good, the wi-fi version, not so much.

    The bigger problem is the iPhone, which apparently has a design flaw that causes reception to drop if you hold it a certain way...and let’s face it, when you have AT&T service, the last thing you need are complications. First Apple denied the problem, and then Steve Jobs essentially told a customer vie email, “get over it, it’s only a phone.” Then the company said that the loss of bars wasn’t the real problem...that the bars had never really been correct anyway because of a software glitch. Best I can tell, at this point, Apple remains in a state of denial about the seriousness of the part, i guess, because they’ve sold millions of the damn things.

    The problem is that Apple doesn’t seem to be taking the complaints seriously ... even when Consumer Reports says that the reception problems are serious enough that it cannot recommend the new iPhone. It doesn’t look to me like the complaints are coming from Apple haters, but rather largely from people who love this company and want to love its products.

    Even people like me - who have not yet bought the iPad or the new iPhone - are now sitting on the sidelines and thinking, “Maybe I’ll wait until the next version,” or until I’ve been assured that the products live up to the promise. Even people like me, who are deeply committed Apple users.

    Apple has other issues, such as whether it is seeking to exert too much control over its platforms, or even whether it has engaged in behavior that is questionable under antitrust laws. But it seems to me that the core problem is whether the folks at Apple, justifiably proud for having created so many new and exceptional products, ignited so many people’s imaginations, and prompted so many sales of both hardware and software, began to get a little arrogant, began to think that the company’s needs were the most important thing.

    That seems to be what happened at Toyota, where quality slipped to the point where the company’s central value proposition was questionable. That’s what happened at BP, where the bottom line took precedence over safety and environmental concerns. That’s what happened at Johnson & Johnson, which once wrote the book on how to handle a recall and now seems totally tone deaf.

    And now, it may be happening at Apple.

    I hope not. I hope that in Apple’s Cupertino, California, headquarters, there is someone running down the halls, yelling something like, “Stop! Don’t you people know what you’re doing? You are behaving in a way that threatens to bring down a truly exceptional company with a unique vision! Stop making excuses, and start listening! There is nothing less than our credibility - and how we are seen by millions of loyal customers - at stake.”

    Credibility and loyalty are hard earned and easily lost.

    It is like the lesson of the movie 50 First Dates, in which Adam Sandler’s character falls in love with Drew Barrymore...only to discover that because of an accident, she has lost the ability to create long-term memories. And so he has to find a way to romance a woman who never remembers him the morning after.

    That’s what we all have to do with our brands. Not just romance the customer, but act as if they have absolutely no loyalty to us on day two. We have to earn that loyalty, every day.

    It isn’t too late for Apple. I’m still rooting for them, still an enormous fan, still willing to give them the benefit of the doubt - just like millions of other people. But don’t take me for granted. Don’t think your needs are more important than mine. And don’t make the same mistake as the other companies I’ve mentioned - because I can’t imagine any circumstances under which I will ever buy a Toyota, I drive past BP gas stations just on principle, and there are a lot of other pain relievers I can take that are not made by Johnson & Johnson.

    To quote one of my favorite movie characters, Sean Connery’s Jimmy Malone in The Untouchables, “Here endeth the lesson.”

    For MNB Radio, I’m Kevin Coupe.
    KC's View:
    After I recorded this commentary, Apple announced a Friday press conference to discuss the iPhone. A recall is rumored. We’ll see.

    One thing seems sure. Half-measures would be a mistake.

    Published on: July 15, 2010

    Forbes has an interesting column by Rawn Shah, described as “a business transformation consultant in the Social Software Adoption team in IBM's software group and is the author of “Social Networking for Business: Choosing the Right Tools and Resources to Fit Your Needs.” She argues:

    “Older generations have an ingrained urge to avoid collaborating, having spent their lives being trained to hoard and control information. Their thick, almost-impermeable skin takes effort, time, encouragement and environmental change to break through. It isn't by chance that the need for greater collaboration is a regular theme in management meetings everywhere.

    “On the other hand, social software comes naturally to the millennial generation, born between the late 1970s and 2000 and raised in the Internet age. In a few years, according to Jeanne Meister and Karie Willyerd, the authors of ‘The 2020 Workplace,’ millennials will be about half of the world's working age adults. The oldest will be only in their early 30s, but they'll have been working for almost a decade, perhaps with MBAs or Ph.D.s and families, and likely in their second or third jobs.”

    She continues, “Millennials work with large networks. They swap contexts frequently and= rapidly during a typical day and use multiple modes of communication. They feel free to ask their managers and peers for candid opinions so they can improve their work. They seek social proof, some visible indication, that others are buying into an idea or activity. They see everyone in their organization as equal partners to collaborate with ... Leaders who connect to mentees in an enterprise 2.0 network can stay in touch with them more easily, understand their strengths and offer them more opportunities. They can mentor on an ambient level, openly broadcasting their ideas, knowledge and help for mentees or anyone to consider, by sharing their thoughts on micro-blog systems, and they can receive feedback the same way ... Millennials who converse freely with their friends socially are often told at work to stay strictly work-focused. This can limit the depth of their conversations and keep them from developing trust and extensive networks.

    “That's one reason why millennials need to see their leaders and people from all levels of the organization get involved in the collaborative environment. They need social proof that collaboration is widely acceptable at work. They need to grasp social norms and styles for interacting with their peers and superiors. A collaborative organization thus needs strong involvement from everyone to deliver the compounding value of knowledge, trust and loyalty among its workforce.”
    KC's View:
    Important lesson. They can learn from us, and we can learn from them. But if we tell the next generation of leaders that they have to do things our way, then we miss the enormous opportunity to make the kind of quantum leaps that can transform traditional institutions.

    Published on: July 15, 2010

    Supervalu-owned Bristol Farms will close one of its 14 California stores next month, shuttering the Redondo Beach unit that it has operated for the past decade.

    While Bristol Farms management is not commenting on the closure, local media reports suggest that there are two possible reasons for the move.

    One, the recession has been tough on Bristol Farms, creating an economic environment in which its customers would buy fresh foods there, but go across the street to Albertsons - or other nearby, more price-driven chains - for daily grocery needs.

    Two, rumors that the landlord wants to redevelop the location as a mixed-use development that would include condos.

    The store is scheduled to close down on August 19. Bristol Farms will continue to operate 13 stores, all but one of them in Southern California. (It has one in San Francisco’s popular Westfield Centre.)
    KC's View:
    The betting here is that the real reason for the closure is some combination of the two reasons. Sometimes, the stars align and it makes sense to step back and regroup in strategic places.

    The bigger question for me is how long Supervalu hangs onto Bristol Farms. Because there would seem to be no way that the service-oriented fresh foods-driven chain fits into the Save-A-Lot model seemingly favored by Supervalu CEO Craig Herkert.

    Published on: July 15, 2010

    USA Today this morning reports that “two university labs found that over 60% of olive oil tested labeled as 'extra virgin' was in fact cheaper, lower-quality olive oils.

    “The study, released today, was conducted by the University of California, Davis Olive Oil Chemistry Laboratory and the Australian Oils Research Laboratory. They collected 14 brands of imported olive oil and five California brands in March, and shipped 62 samples to an Australian lab for analysis ... Sixty-nine percent of the imported oils and 10% of the California oils labeled as extra virgin did not meet the International Olive Council and U.S. Dept. of Agriculture taste, smell and chemical standards for extra virgin olive oil.”

    As reported here on MNB several weeks ago, the US Department of Agriculture is preparing to establish new standards to make it more likely that products labeled as “100 percent extra virgin olive oil” is, in fact, 100 percent extra virgin olive oil. However, the standards will be voluntary, not mandatory.
    KC's View:
    The standards ought to be mandatory. No question in my mind. One hundred percent extra virgin olive oil ought to be precisely that...and companies that attempt to pass lesser oils off as something they are not should be penalized.

    Now, as happened last time that I wrote about olive oil standards, MNB’s editorial and sponsorship worlds have once again come together. I am pleased to say that the extra virgin olive oil produced by California Olive Ranch - a valued MNB sponsor - passed all the tests and is exactly what they say it is.

    Not that I had any doubt.

    Now, it needs to be noted that California Olive Ranch was one of the companies that contributed to the funding of this study, though it had absolutely no input into the methodology or outcome. (I’d help fund a study, too, if I knew that I was being honest about my product.)

    I’ll repeat what I’ve said before: This case demonstrates why transparency is so important. Consumers should know and will know that they can trust companies that are completely up front about what they make and how they make it. And they should avoid companies that are less so.

    Published on: July 15, 2010

    The New York Times reports that Nestlé has reached a deal with the Federal Trade Commission (FTC) that will have the company dropping claims that its Boost Kid Essentials drink was so healthy it would keep children from getting colds and missing school.

    According to the story, Boost Kid Essentials is “a nutrient-laden beverage made by Nestlé HealthCare Nutrition that comes with a straw containing probiotic bacteria, which is similar to the live cultures in yogurt. Many people say they believe that probiotic bacteria aid digestion and provide other benefits,” and Nestlé made that claim. Now, however, Nestlé has backed off under FTC pressure about what it called deceptive advertising.

    The Times notes that this is the second time in two months that the FTC has forced manufacturers - the other one was Kellogg’s - to remove ad claims that it said were illusory. Experts say that these moves are “groundbreaking,” and represent a new activist position on the part of federal regulators.
    KC's View:
    I know that the words “activist” and “federal” give some people hives when they appear in the same sentence, but this strikes me as appropriate behavior by the government. When marketers are less than accurate in their product claims, someone has to protect the consumer.

    Published on: July 15, 2010

    • Amazon has decided to offer college students a free one-year subscription to its Prime premium shipping service, which normally offers “free” two-day shipping on all orders for a $79 annual fee. All students have to do is take one college course and have a .edu email address.
    KC's View:
    Very smart. Get them while they are young.

    I’ve always said that Amazon prime is one of the smartest services devised by a retailer. I spend $79 a year and if I only order once, it is the most expensive shipping I’ve ever used. Place 20 or 30 or 40 or 50 orders, and suddenly it is incredibly cheap...and I’ve bought more from Amazon than I might have otherwise.

    Published on: July 15, 2010

    • The Boston Globe reports that Walmart has begun an advertising campaign in Massachusetts aimed at getting voters there to support legislation that would eliminate mandated item pricing. Walmart wants the state “to pass legislation that would let stores set up electronic price scanners in aisles rather than place price stickers on every grocery item. Massachusetts and Michigan are the only two states that mandate price tags be put on individual merchandise, a requirement that merchants says is outdated and costly.”
    KC's View:

    Published on: July 15, 2010

    • Tesco announced that its US division, Fresh & Easy Neighborhood Markets, will open nine new California stores in September.
    KC's View:
    I find it interesting that in the Fresh & Easy press release, the company puts a real premium on the fact that the openings will create 180 jobs at $10 per hour plus quarterly bonuses of 10 percent, plus a 401 (k) with a company match. The release also notes that “Fresh & Easy stores use 30% less energy than a typical supermarket – helping save customers money while helping the environment. Fresh & Easy uses LED lighting in external signs and freezer cases, offers customer recycling in every store, and uses advanced refrigeration and freezer units to cut back on energy usage. The company also recycles or reuses all of its display packaging, sending the majority back to its distribution center’s on-site recycling facility.”

    Sure, fresh and easy foods are mentioned...but the economic and environmental stories seem to be given equal or higher priority. The real issue is whether Tesco has gotten the format right...which most people seem to think it has not.

    Published on: July 15, 2010

    Convenience Store News reports that TravelCenters of America, which operates in 41 states and Canada, plans to add “Stay Fit With Flavor” items to its menu that are designed to offer healthier alternatives to traditional c-store cuisine. According to the story, “The new items are a shrimp stir fry, chicken stir fry, grilled chicken breast dinner served with wild rice and a classic grilled chicken sandwich.” If they are successful, the company says it will expand on the premise of healthy convenience foods.

    • The Associated Press reports that “last month, Baltimore hired a food policy coordinator, making the city one of the first in the country with a paid ‘food czar.’ While Holly Freishtat's directive may be straightforward - get more healthy food on the tables of the people who need it - accomplishing it may not be.

    “She doesn't get a budget for major initiatives, so much of her time is spent pursuing grant money. He salary doesn't even come from the city, which recently raised taxes and cut services to close a $121 million budget deficit. A coalition of nonprofits pays her salary, and they've only committed to cover 30 hours a week for a year. Nevertheless, this is progress.”

    Marketing Daily reports that “Procter & Gamble's Pampers division is launching a series of Web-based videos called ‘Welcome to Parenthood,’ on and the brand's Facebook page. The effort is co-sponsored by pharma company Abbott, which makes infant products Similac and Beech-Nut. The CPG giant says the program includes 14 episodes featuring real parents talking about how they are dealing with the rigors of parenting. The three sets of parents appear in five- to six-minute videos that are also meant to offer parenting advice ... The company will select from Facebook three of these consumer stories for every episode that airs. The selected stories will become part of a Digital Story Book on At the end of the series on July 30, P&G will select one story as winner, with the person who submitted it getting a free one-year supply of Pampers diapers.”
    KC's View:

    Published on: July 15, 2010

    Kate McMahon had a great column yesterday talking about the social networking efforts of Lady Gaga, suggesting that marketers have much they can learn from her.

    One MNB user responded:

    Your perspective was right on ... We forget the changing way the younger generations now get information and influence it has.  Hope to see more information and articles from you in the future.

    Count on it.

    I thought that MNB user Tom Devlin had an interesting take on this:

    I like many, am amazed and must admit admire the marketing genius of Lady GaGa and how she has turned the REMAKING of Madonna and the shock factor to a new level. Her following  on Facebook,Twitter  etc. is a great page of success that Barrack Obama used to win the White House. We have reached a new plateau and this will be common now on how our entertainers reach out to the public.... or consumers.   LeBron James and the Miami Heat also deserve kudos on how they took a free agent signing in sports to a new level.

    What concerns me more than anything is how young we are targeting the consumer. I have a very close relative that does security at Rockefeller Center where the Friday concerts are done for the Today Show on NBC. He actually takes the celebrity to the stage from their dressing room. When the Jonas Brothers did the Friday concert the security and police had to deal with three fifteen year old girls who were sleeping on the sidewalk two days before the event ..... When police contacted their parents in New Jersey , they were told they gave permission to the kids because they loved the Jonas Brothers so much that it was okay to do this... I am sorry .... We must take a step back and question ourselves and ask when does it end?. We have become a bunch of followers and not leaders.

    On another note a few weeks back I was at the Apple Store in Danbury CT when I witnessed a twenty something year old practically in tears because he was told he would have to be on a waiting list the Apple Iphone4...... Sorry , it is a phone...  I understand that early adaptors will always be around.... But what we are teaching our youth will have a very bad affect on their lives .... Very bad.

    I agree with you that allowing 15-year-old girls to sleep on the streets of New York without parental supervision borders on negligence. Lousy parenting. And crying over a phone seems a little extreme.

    I only disagree with you about LeBron James. I thought it was a ludicrous event, and the sole purpose seemed to be to give Cleveland the finger in as public a way as possible. the urging of Michael Sansolo, who also, it ends up, is a Lady Gaga fan, yesterday I watched the video of “Telephone,” one of her hit songs. My daughter was amazed that I wasn’t scandalized by it...but I just thought it was sort of dumb.

    Maybe I’m getting old.

    On another subject, I really liked this email from MNB user Jeff Folloder:

    Let's stipulate that the US Postal Service (USPS) cannot remain financially viable with the current menu of services/charges.  Given that most non-corporate communication has moved to other forms (Internet, etc.), it would seem that corporate clients are the only valid potential market.  Seriously, anything that is "courier like" can be done by many of USPS' competitors that offer better service and a better customer experience.  So that leaves mostly bulk and direct mailing (that a huge percentage of recipients loath) that doesn't make money for USPS, surly employees at the end of long lines, Netflix, and subsidized package delivery that will soon be just as expensive as the competition (with much worse tracking features).  It has already been demonstrated that the bulk/direct thing is too cheap and I really don't see the rates for this being substantially raised (read: political lobby).  It's not going to get better.

    So why don't we take all those conveniently located post offices and make them truly useful?  Wire 'em all up with Internet, staff them with cheerful staff, give 'em a fresh coat of paint (buildings, not staff), offer a full range of connected services from DMV, Social Security, municipal services... to a variety of courier services.  And raise the price of bulk direct mail anyway.  To put it in CPG terms, make the PO the destination and let the experience underline the value.

    That’s the kind of fresh thinking I’m talking about. It seems to address the problem instead of the symptoms.

    Responding to my piece about George Steinbrenner’s passing yesterday, one MNB user wrote:

    In your comments on George Steinbrenner's passing you mention that there is no estate tax on the books this year……those of us in the financial planning industry have long speculated that there will be some "mysterious" deaths between now and December 31 that might potentially benefit high-net worth families wishing to avoid estate taxes for large estates.    At the same time, it appears that Congress might pass a retroactive estate tax that could still cause estates created in 2010 to be subject to estate tax after the fact.   More than that, no one seems to have a clear idea where estate tax rates will be headed if they don't allow the current estate tax laws to sunset at the end of 2010.

    We'll see what our friends in Washington decide to do after the elections, I suspect.

    I think a retroactive estate tax for this year would be absurd. You’re supposed to play by the rules, not change the rules as you go along. I’m also not sure you could garner enough votes for such a tax. But I’ve been wrong before.

    And MNB user Daniel McQuade wrote:

    So in your opinion.....

    Does George make it to the Hall of Fame?

    I’m conflicted on this one.

    A lot of writers here have been arguing that Steinbrenner was the second most influential person in NY sports history, with only Babe Ruth having a greater impact on the city’s sports scene.

    My reflexive response is that owners probably don’t belong there. Then again, Walter O’Malley is in the Hall of Fame, and deserves it because he owned the Brooklyn Dodgers when the team broke the color barrier by signing Jackie Robinson.

    This, by the way, would be my response to the sports writers trumpeting Steinbrenner’s contributions. Jackie Robinson’s contributions were greater; indeed, in my view, he was one of the most important Americans of the 20th century. And both O’Malley and Branch Rickey, the Dodgers’ general manager who signed Robinson, had greater long term impact not just on sports, but the country.

    And I think it is hard to name to the Hall of Fame a man who was banned from the sport - twice.

    So I think my answer is no.

    But the discussion proves what the late, great Robert B. Parker used to say - that “baseball is the most important thing that doesn’t matter.”
    KC's View: