Cocktails with aspirations - something special for the weekend?

NB. Large detailed version here

Circular outsourcing?

Source: Kevin Kelly http://kk.org/kk/ Scott Adams was ahead by a whole decade. From Dilbert, August 3, 2003

Sainsbury's taking Tesco to court over Price Promise – a definition of like-with-like?

Sainsbury’s move to obtain a judicial review is good in that it is an attempt to distinguish a legal ‘letter-and-spirit’ issue from a true like-with-like comparison of what a consumer gets for the money.

In other words, when Tesco and the watchdog's independent reviewer Sir Hayden Philips focus on function of the product, bottled water in terms of say quenching thirst, they are adhering to the letter of the law ref like-with-like comparability.

In doing so, they are not taking into account the ‘spirit-of-the law’ issues such as provenance or ethics.

However, the consumer places some value on ‘source’ and is prepared to factor some of this value into the offering when deciding that a price is acceptable, compared with available alternatives.

Consumers live by what they take to be the spirit of the law and feelings of being misled arise when a ‘letter-of-the-law’ claim is found to be wanting in practice, as any true marketer will appreciate.

The problem for the judiciary will be in trying to establish a universal value for provenance or ethics….

However, in the meantime, the media coverage will hopefully cause consumers - and retailers - to think a little more deeply about making a like-with-like comparison that goes a little closer to the spirit rather than simply the letter of the law in deciding that a given Product-Price-Presentation-Place combination is better value for money…

Baked Bean Heist via lorry-based picking?

Given the brand’s pulling power, combined with consumer click & collect trends, it should be no surprise that thieves decided to dispense with the click and help themselves to 1.5 pallets of Heinz baked beans with sausages ‘off the back of a lorry’ while the driver slept upfront in a layby on the A441 at Cookhill, near Redditch in Worcestershire.

By way of endorsement of the cab’s two-way soundproof qualities, the thieves were able to work undisturbed as they cut a large hole in the side of the white Scania vehicle and helped themselves to 6,400 tins.

"Police are appealing for information, especially about anyone trying to sell large quantities of Heinz baked beans in suspicious circumstances," a force spokesman said.

Hopefully the police have been briefed that it is quite normal for NAMs to spend their days trying to sell large quantities of product, but nonetheless it might be wise to cut down on over-generous multibuys while this one blows over… 

P.S. For those who want to double-check, the product code is 71517000 with an expiry date of 31 March 2015.

Second-guessing the Guesstimate: Getting the Unit-price Wrong at Tesco?

Following years persuading shoppers to attempt to compare like-with-like via the price-per-kilo addition to the shelf price, it would appear that a savvy shopper may also need to check the basic arithmetic of the multiplier...

According to an article in the Guardian, following the summer's 'strawberry court case', Tesco is once again allegedly getting its price-per-kilo labels on soft fruit wrong. Tesco's website apparently says its "Everyday Value" strawberries are £5.40 per kilo, but they are not. In reality they are a third more expensive at £7.14 per kilo.

The punnets are priced at £1.62 for 227g, with the label helpfully adding that the quantity of strawberries is equal to £5.40 per kilo. Now even those whose maths is pretty rusty can do a rough calculation – you get just over four 227g punnets in a kilo, so that is four times £1.62, which is rather more than £5.40
(i.e. £1.62/2.27 x 10 = £7.136).

The article lists several other instances, and quotes Tesco’s apparent replies to queries:
- “…as prices change all the time this figure is just meant to be a 'guide'."
- “…We'd like to reassure our online customers that no one has paid more for their berries than the listed price."

As often happens with corporate answers to consumer queries, answering the wrong question can be more damaging than correctly dealing with a genuine concern.

As most savvy customers increasingly familiar with price-comparison web-facilities will realise, a ‘per kilo’ conversion is a straight-forward arithmetical calculation that can presumably be locked to the SKU price in even the most basic computer systems i.e. there should be little scope for ‘human error’ once the new shelf-price is established…

Secondly, attempting to reassure the shopper that they have been charged the correct shelf-price is a reply more in keeping with the letter rather than the spirit of the law – a statement which is legally correct but misses the point that the shopper can be making a purchasing decision based upon the ‘per kilo’ comparison with other SKUs...

It might also be claimed that the ‘per kilo’ represents only pennies and should make little difference, except to a savvy consumer that has undergone years of persuasion that every little helps…

A little self-amuse in a long-haul loo...

On your next trip overseas, why not repair to the aircraft rest-room and release your inner artist....?

While on a long-haul flight, when most people would sleep, read a book or chew on complimentary snacks, Nina Katchadourian spends her time locked in the airplane’s lavatory taking 'selfies' in the style of 15th century Flemish paintings...

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Details plus ten additional examples here

Thanks to Emma Carlin and Anne Johnstone for link and application

The Amazon approach to backhauling: from within P&G warehouses..

Each day, P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area of a joint-warehouse stocked with Pampers, and Bounty paper towels. Amazon employees then package, label and ship the items directly to the people who ordered them.

The e-commerce giant is quietly setting up shop inside the warehouses of a number of important suppliers as it works to open up the next big frontier for Internet sales: everyday products like toilet paper, diapers and shampoo. Amazon is going out to its suppliers with a program it calls Vendor Flex. By piggybacking on their warehouses and distribution networks, Amazon is able to reduce its own costs of moving and storing goods, better compete on price with Walmart and Costco, and cut the time it takes to get items to doorsteps.

Household staples have traditionally been considered too bulky or cheap to justify the cost of shipping. Americans currently buy just 2% of such goods online, retail analysts estimate. Yet even that sliver of business was worth $16 billion in 2012, according to Nielsen, who believe online sales will grow by 25% a year to $32 billion in 2015.

Having cracked the problem of bulky product shipments to consumers, why should Amazon and P&G not extend the idea to other parts of the portfolio?

With pay-offs for both parties (Amazon saving costs of bulky-storage, and P&G eliminating the cost of onward distribution) the idea has already spread to 7 P&G distribution centres worldwide…

...and with no mention of the resulting dilution of traditional multiples buying power, watch this space….

Selling ideas to the unresponsive buyer – challenging the status quo

A buyer who is ‘satisfied’ with your competitor’s brand, the status quo, is not in the market for change.

In other words, it is not possible to sell to a satisfied buyer.

Disturbing the status quo is crucial in making the buyer receptive to new ideas i.e. if the buyer is happy with the current situation, then there is no reason to change, and even less need to consider your proposition.  The first step means de-stabilising current levels of buyer complacency by appealing to their curiosity regarding how others are dealing more effectively with the same issue, or shocking them by exposing their personal vulnerability to changes in the market.

For instance, a buyer that buys at the same price and sells at prices equal to the competition yet nets 3% vs. the rival’s 5%, is obviously open to explanations…. Likewise, a highly geared retailer may not appreciate the danger of a 2% increase in cost of borrowing…

Successfully challenging the status quo means being able to capitalise on the key advantage of the NAM role – breadth of vision arising from experience of the category across the entire marketplace, an insight into all possible ways of making the category available to the consumer – combined with the indepth, but narrow view of the buyer operating within their own store environment.

This potential synergy can be leveraged when the buyer views the NAM as a pan-market expert, a source of insight as to how the other guys are doing. Nothing confidential, simply reassurance that tricks are not being missed…

However, successfully challenging the buyer’s perception of the status quo is not so much about opening the wound, but, having done so, being able to show a plausible link between your proposed solution and the ‘new’ problem.

Otherwise the buyer has simply been made available and receptive to your competitor’s next offer.