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    Published on: March 26, 2012

    by Kevin Coupe

    Yet another example of the world is changing...

    The Los Angeles Times reported over the weekend that the research firm IHS Screen Digest is projecting that in 2012 consumers will watch more movies online than they will on DVDs - the first time that the balance of movie power has slanted in this direction.

    However, despite the shift, the economics of home movie viewing are still very much weighted toward DVDs; it is projected that in 2012, “people will spend only $1.72 billion on digital movies, compared to $11.1 billion on DVDs and Blu-ray discs.”

    From the perspective of those in the movie business, this would qualify as a “whew!” moment, since streaming is not as profitable as DVDs because of “the array of low-cost options to consume movies online, particularly ‘all you can eat’ subscription services like Netflix, which streamed more than 2 billion hours of video during the fourth quarter of 2011.” This means that movie studios have to figure out ways to protect traditional revenue streams even as consumers move toward less expensive options.

    In so many ways, this seems like an object lesson for marketers in a variety of businesses. First, the technology makes it possible to get a product more conveniently than ever, and consumers flock to this new option, even though this isn’t necessarily good for the product supplier, which then has to figure out ways to maintain profit margins in a changing world.

    The one thing you can’t do, it seems to me, is deny that the shifts are taking place. This is reality, and all marketers have to learn how to adapt to it, whether by figuring out even more efficient and profitable distribution systems, developing new pricing models, or coming up with proprietary product that will allow them to exert more control over the supply chain.
    KC's View:

    Published on: March 26, 2012

    Got the following email from an in-the-know MNB reader...

    “Another bad management move at Supervalu. Last week it was announced that our Employee Discount on private brands items was going from 15% to 10%. Not a huge deal for most of us, but the store employees are very upset. They have taken to posting anonymously on our company's home page (they aren't allowed on yammer). The largest area of complaint is the fact that the Executives & Great Store Managers just returned from an all expense paid cruise & all Store Managers (company wide) are getting iPads/iPhones. Once again, the timing couldn't be worse. Morale at store level is at an all time low (doing more with less) and these people are on the front lines.

    “It's really tough to think about a turn-around of this company when the only person that addresses the employees is our CMO & he's been in that role all of about 2 months.

    Where is the leadership? Where is our CEO?”
    KC's View:
    I’m not sure this is a universal sentiment at Supervalu; I’ve met some folks recently who believe that the company is making hard decisions and positioning itself properly for the future. The issue of the recent cruise continues to be a problem for leadership, though a number of folks point out that it was long planned and almost impossible to cancel. (Bad optics, though.)

    But this message suggests that Supervalu continues to have morale and personnel issues it needs to address.

    Published on: March 26, 2012

    The Associated Press reports that there is a new trend developing in the business world, with job applicants being asked “to reveal their Facebook passwords so their prospective employers can check their backgrounds.”

    The story notes that “Facebook is warning employers not to demand the passwords of job applicants, saying that it's an invasion of privacy that opens companies to legal liabilities. The social networking company is also threatening legal action against those who violate its long-standing policy against sharing passwords.”

    At the same time, Sen. Charles Schumer (D- New York) and Sen. Richard Blumenthal (D-Connecticut) have asked for an investigation into the practice by the US Equal Employment Opportunity Commission (EEOC) and the US Department of Justice.
    KC's View:
    This is a crock.

    Employers have no business requesting personal passwords. None. It violates people’s privacy, and it is just generally unwise.

    That said, potential employees need to show a certain level of maturity and intelligence about what they post online. Once you get to be a certain age, you have to assume that a potential employer might see everything you post.

    But just because some potential employees are stupid and immature does not justify an invasion of privacy.

    Published on: March 26, 2012

    USA Today reports on how “store brands are taking on their name-brand counterparts with splashier packaging and a growing number of organic, all-natural and higher-end products. The push is part of a broader expansion of store brands into every corner of the supermarket; shoppers can now find cheaper versions of Greek yogurt, organic frozen pizzas, gelato and even specialty chocolates.”

    The story notes that “supermarkets are being pressured by rising fuel and commodity prices, which have forced them to pay more to keep shelves stocked with name brand products. But grocery chains fear passing on those higher costs could send shoppers running. So to keep expenses in check, they're revamping the taste and packaging of their house brands to boost sales. The added benefit is that once shoppers get used to a particular product, they're more likely to keep coming back and try other items in the line.”

    One of the byproducts of this shift in emphasis is that “supermarkets can charge more ... prices for store brands on average rose 5.3% in the past year, compared with 1.9% for name brands.” In almost all cases, the store brands are less expensive than high-end options, though not necessarily cheaper than low end products.
    KC's View:
    I’m always a fan of anything - products or services - that provide a differential advantage because the other guy cannot or does not have them.

    Published on: March 26, 2012

    Reuters has a piece about former U.S. government scientist Gerald Zirnstein, who reportedly coined the phrase “Pink Slime” to describe an inexpensive meat filler made from low-grade trimmings.

    Some excerpts:

    • “He made the slime reference to a fellow scientist in an internal – and he thought private – email. But that email later became public, and with it came an explosion of outrage from consumer groups.”

    • “Descriptions of a mix of fatty beef by-products and connective tissue, ground up and treated with ammonium hydroxide, then blended with ground beef have led the nation’s largest supermarket chains to ban the product.”

    • “Zirnstein, who worked in a meat plant growing up in Kansas, said the situation came to his attention a decade ago. In 2002, he was working as a USDA food scientist and was assigned to a project to determine what was going into ground beef and whether the ingredients met federal regulations.

    “At the same time, the beef industry was asking the government to endorse a new product they called ‘lean finely textured beef’ that was largely trimmings typically used for pet food and cooking oil. The trimmings were treated with ammonia to kill dangerous bacteria.

    “USDA officials approved the processed product. Zirnstein was disgusted, and made his opinion known to co-workers in an email that called the processed product ‘pink slime.’ The email was later released to the New York Times as part of a Freedom of Information request for a 2009 investigative article on food safety. The newspaper article mentioned the slime reference in passing.”

    • “The American Meat Institute says the product is 98 percent lean beef and USDA continues to say it is safe. But that has not stopped a parade of major supermarket chains and fast food companies from spurning the product.”

    • “Asked if he and his family still eat hamburgers, Zirnstein sighed. ‘The labels aren’t clear, so we don’t eat it. That’s the thing,’ he said. ‘It isn’t freaking labeled.’”
    KC's View:
    More reaction to the Pink Slime controversy below in “Your Views.” This story is the gift that keeps on giving...

    Published on: March 26, 2012

    The Los Angeles Times reports that while the Los Angeles City Council voted last Friday to temporarily ban large chain store from opening units in the city’s Chinatown neighborhood, they were a little late - because on Thursday, Walmart obtained the necessary permits to open a grocery store there.

    Walmart had announced its intentions a month ago. Opponents of the store say they plan to file an appeal of the retailer’s construction permits.
    KC's View:

    Published on: March 26, 2012

    The New York Times this morning reports that “as Congress begins work this week on legislation to shore up the finances of the debt-ridden post office, companies representing a cross-section of American business are spending millions of dollars lobbying lawmakers to oppose or support various proposals to keep the agency afloat.”

    According to the story, the US Postal Service (USPS) “as proposed closing 3,700 post offices, mostly in rural areas; shutting more than 250 mail processing centers; cutting Saturday delivery; expanding into new lines of business; and increasing postal rates.” The reason is simple: the USPS loses $36 million a day, and its business model is seen as increasingly untenable.

    The irony is that while the USPS may not be financially viable in its current state, it remains an important part of doing business for a wide range of organizations, ranging from greeting card manufacturers to newspaper/magazine publishers to medical supply companies. And so, these businesses are willing to spend millions in lobbying against many changes to the USPS, fearing that they could have enormous long-term implications for the economy.
    KC's View:
    I get the economic implications, but I cannot help but feel that whatever changes are made amount to applying to bandages to a series of wounds and diseases that require major surgery.

    Published on: March 26, 2012

    ...with occasional, brief, italicized and sometimes gratuitous commentary...

    • The Associated Press reports that Wendy’s internal animal welfare council said last week that one of its chicken suppliers “has started using a low-atmospheric pressure system that renders the chickens unconscious before the birds are handled by plant workers. The process, known as LAPS, replaces the industry standard practice of stunning chickens with electricity.” The story notes that Wendy’s says it is the first fast feeder to back use of the system.

    At the same time, AP writes that Wendy’s is working with pork suppliers to eliminate the use of small sow gestation stalls that the animal rights activists say are inhumane. While suppliers have maintained that “larger stalls increase labor and food costs,” public opinion has nudged Wendy’s and its suppliers toward making the change.

    Bloomberg reports how how Starbucks seems to want to emulate Kraft.

    “ Increasingly, the Seattle-based chain is playing in an arena staked out decades ago by Big Food: the grocery aisle. While Schultz still presides over about 10,800 macchiato- and scone selling cafes in the U.S., grocery revenue is rising almost three times as fast as store sales.”

    “We think we can build a business that can be as a large as our retail business,” Jeff Hansberry, president of channel development, tells Bloomberg.

    I can’t say that I am 100 percent convinced that this is a strategic shift that Starbucks can pull off. After all, CEO Howard Schultz does have a history of over-reaching; it wasn’t that long ago that he saw the company as being a major player in the book, music and movie businesses, and he does seem to have a bit of a messiah complex.

    That said, Starbucks is a powerful food and beverage brand, and competing in the supermarket aisle is a lot closer to its sweet spot. But we’ll see...

    • The Associated Press reports that a Tucson, Arizona, Safeway store has decided to use cardboard to obscure the cover of the April Elle, which features a pregnant and almost completely naked Jessica Simpson “with one hand covering an exposed breast and another wrapped around her nude belly.” The photo emulates a similar pose by Demi Moore on the cover of Vanity Fair in 1991.

    Safeway said it covered the cover after receiving “multiple complaints.”

    I was trying to remember what my reaction was to complaints about the Demi Moore cover more than 20 years ago. (The world was different then. She was married to Bruce Willis, who had hair. I was in my mid thirties. Sigh...) I suspect I thought that covering up the cover was silly and that it was much ado about nothing. Now, being two decades older, I still think it is a silly controversy, but that covering up the cover is fine if customers feel scandalized.

    • The Boston Globe reports that “CVS Caremark Corp. said Friday that it mistakenly sent letters to about 3,500 Tufts Health Plan members, giving them personal information about the medical conditions and medications of other members enrolled in a supplemental Medicare plan managed by Tufts.”

    The company attributed the error to a “programming error,” and said that there is no evidence that the erroneously distributed information was used improperly.
    KC's View:

    Published on: March 26, 2012

    • The National Retail Federation (NRF) announced that Katie Wilson, who has been Senior Director of Communications and Strategy at the US Chamber of Commerce, has been named NRF’s new Vice President of Communications.

    • The Global Market Development Center (GMDC) announced that Kellee Hardy, former Marketing Specialist for Bold Technologies, has been hired to serve as Communications Specialist.
    KC's View:

    Published on: March 26, 2012

    I had a piece on Friday about Mitt Romney’s Etch A Sketch controversy, in which a campaign aide suggested that if Romney wins the GOP nomination, he will just erase everything that happened in the primary campaign and restart with a more centrist message for the general election.

    While Etch A Sketch sales were up last week, I wrote that “I’m not sure that this makes the Etch-A-Sketch more relevant to a generation growing up with iPads. (I also wonder if familiarity with the Etch-A-Sketch may reinforce the notion that these are old people running for the presidency...) But it certainly adds some juice to a product that probably had more visibility lately in the Toy Story movies than anywhere else...”

    One MNB user replied:

    This cracks me up. I guess I had been in a cave this week and quite honestly I am sick to death of the campaign that has 5 more months to go. I was thinking of my iPad and how with the proper app, it could become a modern day etch-a-sketch or may already be one (still learning how to use my iPad and don’t know everything it is capable of… probably won’t know until my 20 something children get a hold of it). Great for the toy, not sure what it says about the politicians as the reference could make them seem out of touch (more than they already are), even to baby boomers who actually played with etch-a-sketch.

    The more I think about it, the more I think that the Etch A Sketch references make these guys all seem hopelessly out of touch ... but for another reason.

    Y’see, we do live in an iPad world. You can’t simply erase things the way you could in the old Etch A Sketch days. Today, what one says and does lives forever. And anyone, on any side of the aisle, who thinks they can run away from their records and statements is fooling themselves.

    And the same goes for business.

    On another subject, MNB user John Parkin wrote:

    There is one other player in the Sacramento market that was missed from the article. Nugget Markets is a small family owned chain of around 12 stores, based in Woodland, just outside Sacramento. They are ranked in the top 10 places to work, but are an even better supermarket than they are employer. (I should say at this point that I have no connection to the company other than being a customer.) Nugget has truly mastered the art of making grocery shopping into an experience; so much so, that when my mother visited from New Zealand, many people suggested that the local Nugget Market was a must visit destination. Personally, I have seen nothing from any of the competitors mentioned that comes close to changing my Nugget allegiance.

    Commenting on a story about the economic recovery last week, I wrote that “I remain convinced that the whole recovery is a house of cards.”

    Which led MNB user Mark Raddant to write:

    I agree with your assessment that the recovery is a house of cards, but I would expand it to the economy in general.  With a global economy, there are so many interrelationships the degree of complexity—and exposure to unforeseen, distant risk is now vast.  My hope and suspicion is the risk is balanced by an equal number of supporting elements,  just as complex, holding the whole thing up.

    Another MNB user chimed in:

    Out of curiosity, what convinces you the recovery in the US is a "house of cards"? Not to say that you're wrong, but I'd be curious to hear your reasoning/research.

    I, for one, am hesitant but I don't have as cynical a view. For one thing, hiring is recovering and manufacturing is growing (two strong signs for me). Furthermore, the dollar is weak which I think is good for the time being to increase our competitiveness globally.

    That said, my concerns are long term: 1) Credit is still overwhelming personally and publicly in this country. 2) Inflation is happening very slowly which concerns me. I'm worried that the Fed has masked a real currency problem and that truly could be a house of cards. 3) Political change is slow and painful and often partisan. Our system needs to be fixed or the country will suffer. 4) The income disparity in the US needs to be turned around IMMEDIATELY or the economy will not sustain it's growth.

    Anyway, that is only part of my feelings but I'd love to hear more of your thoughts.

    I guess my feelings about the fragility of the economy is tied to three things. One is the continuing unemployment and under-employment problem. Second, the political culture and the ongoing presidential campaign means that a lot of people are going to spend the next six months talking about how bad things are or how bad things may get ... and that kind of rhetoric isn’t helpful.

    But my biggest concern is that anything can happen at any moment that can affect the economy ... and we have no idea what that “anything” may be, nor how to prepare for it. it could be the collapse of a foreign economy, or war in the Mideast, or a terrorist attack, or a natural disaster. But anything could happen, and if/when it does, everybody will know about it instantly ... and then, watch out.

    Needless to say, I keep getting emails about the “Pink Slime” controversy.

    One MNB user wrote:

    Kevin, in your last blog post you commented “BTW...I’m not sure it is a bad thing that people actually know what is in their food. Transparency creates a healthy debate.”

    This whole string of commentary is endlessly fascinating to me. While I don’t eat much red meat in my diet (‘pink slime’ or no ‘pink slime’), this seems to be setting up the ultimate ‘customer knows best’ battle between the public at large and the retail food industry.

    While I generally agree that transparency is more often better than no transparency, there is a certain amount of responsibility that goes along with having knowledge of something. In the case of ‘pink slime’, we are presented with this ‘substance’, which is generally portrayed and perpetuated as ‘bad stuff’ or ‘not desirable’. OK, cool with that. If someone finds out that they are putting arsenic in my hamburger I’d LOVE to know that because I know for a fact that that can kill you dead. However, the ‘experts’ (meaning those who have been educated in the knowledge of food and food safety) are telling us that this stuff is perfectly good to eat and in fact helps them to prevent the spread of food borne illness, and oh, by the way, makes the product cheaper for the consumer.

    Let me just pause for a moment and state clearly that I could care less about this specific ‘pink slime’ issue and I do not fall on one ‘side’ or the other in this debate. I am simply acting as a third party witness to the events taking place here. I am far, far more infatuated with the ‘who knows best’ aspect of this story.

    So, what I will be looking for in future readings on this issue are the following:

    If in fact cases of food borne illness rise due to the change in processing of ground beef, who then will the customer point the finger at?

    If the cost of ground beef rises, which it will almost certainly do, who will the customer point the finger at?

    Or, will the customer not point the finger at all and just accept the fate that they worked so hard to create for themselves?

    If #1 or #2 occur and there is ‘backlash’ from the public, how then will retailers respond? Will they buckle under public pressure again? At what point do we then come to the conclusion that ‘the tail is wagging the dog’?

    Again, this is compelling stuff and may be a good case study of how the media can be used to shape opinion one way or another and put the power in the hands of folks that may think they know what’s best for them, but in fact may not know.

    I CANT WAIT for more on this topic.

    From another MNB user:

    To me, the whole problem lies in transparency. Grocers didn't label their products so consumers could make he choice. Instead they simply sold the slime and told nobody. Dishonest and not helpful to grocers who ask consumers to trust them. Grocers who defend their sneakiness by asserting that pink slime is "safe and nutritious" miss the point of their own disingenuous dishonesty, and ignore the fact -- not the perception -- that consumers find pink slime disgusting.

    And, from still another reader:

    I get a kick out of the pink slime defenders.  And there are plenty, and there should be because there is an entire, vast industry built around processing food.  The thing is that we are finding out now that, while efficient and definitely improving food cost and delivery to the masses, processed food is simply not as good for humans’ health.  People are arguing and defending a system of “Protein delivery” that is based on trying to gain efficiencies from a hugely inefficient process: livestock.

    The great thing is, these are mostly conservative arguments, and true to conservative principles, the market will decide.  And the market is an odd place, where the same people who may love a grilled sausage do not want hamburger with pink slime added.

    One more:

    As a consumer and a person who strives to maintain healthy living goals for me and my family, I absolutely love that this knowledge is now available to us. Choices are the spice of life and being empowered to make well informed choices, especially when it comes to the health and well being of my family (not to mention the whole world of humans outside my own little world), should always be considered a positive.

    With transparency comes many opportunities. On the business side, (have worked in the corporate grocery industry for almost 2 decades) don’t forget that “fillers” keep prices down and retailers might be “shooting themselves in the foot” if they completely stop offering beef with this filler. Give your consumers the choice. More choices more opportunity for sales – basics.

    I love emails like this one, from MNB user Mike Verble:

    I am a long time MNB user, everyday reader, yada yada; you hear it every day.  I especially enjoy the Friday Offbeat section.  This is primarily because of how very much alike I find you and I are (both in age and life experiences).  Our tastes in movies (Godfather), old SciFi series (Star Trek, the original of course), sports teams from ours pasts, dry sense of humor (Seinfeldisms), partaking a great meal, joy for cooking, etc.  Not to mention our love of ALL things APPLE!  I also enjoy fine wines, although I must admit I am a tad more deeply invested with a 400 bottle cellar but I still have hope for you!   There are so many areas where I find we are alike and very few where we differ.  I must admit, being raised on the north side of Chicago (until I turned 14 and moved to Miami) I am a long suffering and lifetime Cub fan.  I still very clearly remember the summer of 1969 as I know you do, but with a totally opposite emotional response. It’s so very often when I read your column I find myself completing your sentences or know in advance exactly the point you are about to make.

    I, like you, am also long winded and tend to go on and on, so I will finally get to the point of my responding today.  You mentioned the Jeff Greenfield book today and I will be seeking it out to download to my iPad to read.  I am a sucker for “time travel” type books as you will see.  The story reminded me of a book I just finished “reading” (actually I took advantage of’s offer of a couple free book downloads trial and listened while driving) Stephen King’s relatively new book 11/22/1963.  I admit I have never knowingly been a Stephen King fan although since listening to this book I did some research and discovered that he in fact had written the books that a couple movies I consider among some of my most enjoyable viewing (Shawshank Redemption and Green Mile) were both written by him.

    On a side note (here I go again) Shawshank is a movie that I put in a class that I call “watchable whenever encountered”, i.e. the sort of movie that when I am surfing through the channels at 2 a.m. blindly and come across it being broadcast I will sit down or lay down and, regardless of what point the movie is at, beginning or end, will watch the remainder regardless of what time it is or what time I will eventually end up in bed.  The Hunt for Red October is another movie in this same category for me.  There are others but I of course am running on again...

    Back to 11/23/1963; I saw an excerpt of an interview with King discussing the book in Wired magazine and there was a link to an audio of the entire interview.  I was fascinated by the premise of the book.  Basically it’s a novel about a guy who discovers a “worm hole” that allows him to freely travel back to Sept. 1959, spend as long as he wants and when he returns only a couple of minutes have passed in the present regardless of how long he spends.  He gets the idea to go back and attempt to stop the assassination of Kennedy in Dallas.  His attempt to do so and the ramifications of changing even the simplest things in the past were fascinating.  In my estimation it is the most enjoyable “novel” I have read (listened to) in a very long time.

    Of course, “The Big Picture” is the best “book” I have read in a very long time.  I think based on our similar tastes you have either already read it and just not mentioned it or already looking it up on Amazon to download.  You won’t be sorry and if you really want to be adventurous, check out Audibles deal for 2 free book with a trial month subscription.  I used it to download 11/22/1963 and the new Steve Jobs book (even though I also purchased a hard copy just because I had to have a physical copy to keep!).

    Anyway, sorry about the very long note.  I have been tempted to write many times but just had to pass along the book idea and thank you for what you do every day.  Cheers!

    And to you.

    FYI...a bunch of people referred me to Stephen King’s new novel last Friday, apparently forgetting that I reviewed it last December. But thanks.

    One thing, think I’m long-winded? (You sound like my kids...)
    KC's View:

    Published on: March 26, 2012

    • The men’s NCAA basketball Final Four has been determined. Next weekend, it will be Louisville vs. Kentucky, and Ohio State vs. Kansas.

    • Tiger Woods yesterday won the Arnold Palmer Invitational golf tournament, his 72nd career title but first in 923 days, since the 2009 marital infidelity scandal that enveloped his life and career.

    I did love the NY Post headline this morning: “Look Out, Ladies.” Pretty funny.

    KC's View: