costco

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Jeff Bezos is one daring dude. (Wanted to use the F-bomb, but mom might be reading.) By purchasing Whole Foods he sent a shiver through the stock market, knocking some competitive grocers down significantly. He announced yesterday that Whole Foods will cut prices beginning this Monday. Some analysts predict as much as 15-25%. Oohfah. Mr. Bezos doesn’t give a rat’s ass about profitability.  He has enough money in the bank to lose near-term so he can win long-term.  A player.

Were I Mr. Bezos, here’s what I would do. Take it a step further. Reduce prices even more for one whole month. Bring prices down to Aldi range. Costco range. But only for a month. Use it as a “trial balloon.” Trial is a promotional tool known for breaking behaviors. Once people are actually in Whole Foods and shop there a cycle or two, they will be fans.

Many people who volume shop at Costco and Sam’s Club throw away perishable food. “I can buy 20 tomatoes for the price of 6. Even if I toss out 10, I come out ahead.”  Whole Foods can and will educate shoppers about better-for-you-food, healthier shopping and less waste, something that’s not happening in a Costco or BJs.  

The promotional month will be crazy — with high traffic and supply hiccups, but it will be worth it.  “Prime” the Amazon pump, Mr. Bezos. Prime the pump.

Peace.    

 

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I like beer. More accurately, craft beer. The wifus was at Costco a few days ago and asked if I wanted a case of Kirkland craft beer. I’d seen them in the store but never paid them much mind. “No thank you” I texted back, but was too late. In the fridge last night looking for a Fat Tire or Montauk, Session IPA there was that case of Kirkland. Doh! So I tried one. Wasn’t bad.

I thought I’d heard somewhere that Kirkland was white-labelled by a more famous brewery. After checking the label it turned out the beer was brewed by an unfamiliar company in Minnesota or Wisconsin. A Google search suggested, based upon where your Costco is, it could also be brewed by Saranac or Gordon Biersch. What evs. Not the point,

The point is, what is the brand name on the label?  And what it says to the brain and the taste buds. Kirkland makes underwear. And olive oil. And batteries (maybe.) It therefore can’t make beer.

The smart men and women at Costco headquarters have to know this. They have a chance to establish a strong new brand in a not insignificant category. Let’s get to work on a new name.  The beer is spoiling.

Peace.

 

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Wikipedia defines deterministic system this way:

“In mathematics and physics, a deterministic system is a system in which no randomness is involved in the development of future states of the system. A deterministic model will thus always produce the same output from a given starting condition or initial state.”

I am here to argue that brand strategy is s deterministic system. Most would argue it’s chaos theory.  Frankly, most people would be right. Brand strategy is chaotic. It is random,

Ninety percent of marketing organizations are set up to deal with brand strategy as a communications consequence. “We need order in our messaging, ergo we need a brand strategy.” Tasked with spending money mainly on ads and events, these orgs spend hundreds of millions each year on naming, logo development, style manuals and ad templates. Landor says, “Thank you very much.”

A smaller number of marketing orgs take it to the next level plotting out consumer experience; mainly in retail or online settings. What does t a Dunkin’ Donuts store look like? Where do we put the seasonal stuff at Costco? How do we offer online professional development at Teq?

And lastly, in the smallest percentage of marketing organizations, are those who actually think about the product. What do we do to the product to improve it to meet customer needs? Or with what do we replace our product to better deliver our value promise?

A tight brand strategy leaves nothing to chance. It speaks to all three marketing organizational models.  One claim and three proof planks drive all measures of business success. It starts at the brand level and IS accountable. I used to call it Return On Strategy (ROS), I now call it Return On Brand Strategy (ROBS.) Stay tuned.

Peace.           

 

 

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If you visit big box stores like BJs, Costco and WalMart, no matter where you walk outside the food aisle you are going to find some really low cost products. Izod shirts for $16. Patio furniture for $399. Plastic hose winders for $14. Most of this stuff shares one thing in common.  It has a shelf life of about 3 months. Then it will be put out with the trash. You just know the colors will fade, the nylon  unravel, the legs will be uneven and the handles fall off.

When all this stuff — imported from other countries, stuff that low earning families buy to fill the American dream — breaks, they go out and buy more.  Because it’s so cheap. When the new administration puts a border tax on this “stuff,” adding, who knows, 40% more to the price, what will people do?  No longer will they be able to send their kids out in the snow in a $22 ski jacket.

It will change consumerism. It will force to people to spend more wisely. On better quality. I will force makers of dreck to become makers of goods. (There’s a reason they were once called goods.)

This isn’t a political statement. It’s a quality statement. We need more quality. We need less crap in the land fill. Less is more.

Peace.

 

 

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I write a lot of sales training stuff for one client.  The company does a good deal of cold call intercepts at stores such as BJs and Costco.   As someone who never really did any direct product selling – ads and brand strategy don’t count – I needed to get out of my comfort zone and into the selling zone. It took some time — but looking fast-moving custies in the eyes and learning how to “pitch” by trial an error, was quite a learning experience. David Ogilvy would have been proud.  

First there is the approach — customers walking toward you. Then the engage, getting them to slow, stop and talk. Then the position and sell.  And finally the close…get the fish off the hook and into the boat.

One tenet I’ve long believed in that works across all these sales steps is “education.” All people like to learn. They may not like sitting in a class room, but there isn’t a brain on the planet that doesn’t want a little stim. A little new information. We are curious animals. So, all you salespeople out there, subscribe to the unbeknownst, the never seen, and the inheard of.

It works. Peace.                   

 

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On Long Island where I live we lost 1,200 grocery store jobs year-over-year. Where did those jobs go?  Costco I am betting — a much more efficient and price-favorable retailer. This is the way of the world, this big box approach. Yet as we know, what goes around comes around and even Amazon is experimenting with brick and mortar retail stores. And big consumer packaged goods companies like General Mills and Campbell’s and even Anheuser-Busch InBev are investing in start-ups and small participants in the craft economy.  The craft economy dabbles in small batch, high-value products with an artisanal bent.

I suspect the craft economy will also result in a resurgence in small specialized retailers popping up in towns again.  In our little town, Crushed Olives opened a year or so ago offering assorted olive oils and balsamic vinegars.  Kilwins is offering specialty fudge. And our second independent coffee barista just opened. They’re premium priced but seem to be worth it. The craft economy will by no means be in every neighborhood. But it’s here for those with a little extra cash who like to savor the flavor.  It is fueled by people tired of selling junky or pedestrian quality products. And there is demand.  The craft economy is a multi-billion dollar category.

Peace.

 

 

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purple carrot

Mark Bittman makes my mouth water. As a New York Times critic he excited the food world for many years. It was just announced he’s moving to start-up Purple Carrot as content creator. In this case the content will be recipes and comms. Purple Carrot is a meal delivery and some-assembly-required service.

What I like about Mr. Bittman, along with his recipes and writing, is his current mission. Quoted in today’s NYT his goal is to get “people to eat more plants.” Can’t get more focused than that. Great brand strategy.

He and start-up founder Andrew Levitt are smart marketers and brand builders. Purple carrots sounds intriguing. The “meal kit,” is an awful and un-tasty food classification, but it’s descriptive and appropriate for the time.

I spend a good deal of time in Costco and BJs and must tell you the percentage of overweight people with poor feeding habits is appalling. Obesity may be a class thing and a money thing, but if the price point of these vegan meal kits can be made elastic enough, it may open up new markets for Purple Carrot and do some real good.  I’ve done enough marketing strategy in the obesity space to know that good tasting plant-based fare has a nice economic upside. I believe Mr. Bittman’s hire will be a good one.

Peace.

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The promise of the craft economy is higher quality products. There’s little question that the love that goes into craft beer (or batch beer) is exponentially greater than that going into mass produced brew like Bud Light. Sir Kensington Ketchup is another example of a craft product in search of a sliver of market share. With less sodium and sugar and no genetically modified ingredients, the product has a built in market. So long as the taste is there. Hampton Creek’s Just Mayo is a successful craft product. The craft economy is growing.just mayo

Here’s the thing about the internet age. A craft product can go from zero to 3/5th of a mile in ten seconds like that. Distribution channels aside, if a craft product “hits,” demand can soar in hours. New product producers and manufacturers need to have a “soar” plan.

And not all craft product people want to mass produce (wink wink), but those who do shouldn’t be caught off guard. It takes months and lots of money (in stocking fees) to get consumer packaged goods onto a grocery store shelf. That’s too long. You need a plan. Costco? BJs? Direct to consumer via the web? Options all.

New product people in the craft space – crafty they must be.           

Peace?

 

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Tomorrow Apple is announcing a lower cost iPhone along with its latest version of the new iPhone – what will that be the 6?  (Were he around, Steve Jobs would have killed the number thing.)  Anyway, as mentioned last week and long before, I think the Nokia/Microsoft strategy will be to cover the planet with Windows-based smarties and the way to do that will be, though a nice phone at a low, low price. Sold at cost (or a hair below), these Windows phone 8 Nokia hardware devices will be cheaper than two rounds of drinks with your signif. at a NYC hotel bar. Before tip.  I’m thinking US$49.  That’s my price point and I’m sticking to it.

Messrs. Ballmer and friends will create a Costco-priced, beautiful smart phone and price it in a way that the ROW (rest of world) will be hard pressed to ignore. It will offer the cool tiles interface, a good camera and enough design panache to bump iPhone and Androids growth aside for a while.

Rather than pay taxes or sit on the billions in the bank, MSFT is going to be bold and give people without smarties an affordably priced piece of hardware (and software) — effectively buying market share.  It will lose then make them billions. It’s a nuh-uh brainer.  (Go Geno and the Jets.)

And, of course, peace!

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I’m a man. Here’s how I shop: I go to a store, walk around, talk to a salesperson, maybe another shopper and I buy.  If the store doesn’t have what I want, I either go home or visit another store.  More often than not, it’s a one store and buy experience.  Price is important, but usually only when comparing choices in the store.  Convenience.

As technology wends its way more and more into the shopping process and the best price on a skew (product number) is only a click away, (#bestpricesamsungTV) many of the shopping choices we make will be made for us. And price variation will be minimized.

There will be Amazon for eshoppers and for those who want instant gratification there will be SuperRetailStoreCo or something.  Variability will be minimized in marketing. All that will be left, variability-wise, will be the brands. But marketers who spend too much on branding, will have reduced margins and will likely fall off.  Will it be a brand new marketing world in 2050?  Oh yeah. Should be exciting. Peace!

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