Filed under: Products and services, Wal-Mart (WMT), Marketing and advertising

When I lived in Southwest Virginia, my house was about a mile from a Wal-Mart Supercenter. Even though I had shopped at Wal-Mart (NYSE: WMT) for years, the convenience of the massive store made it into my go-to place for everything from oil filters to rutabagas. I became a Wal-Mart junkie.

One of the things that I swiftly noticed about the Squalor Mart was the fact that it is a perfect example of capitalism in action. In my years of shopping at the store, I noticed that obscure products would show up regularly. Sometimes they’d stay, sometimes they’d leave; it all depended upon how well they sold. For example, when the area got a large influx of Latin Americans, the store dedicated an entire row to dried chilies, beans, hot sauces, tortillas and whatnot. Similarly, as more and more yuppies began frequenting the store, I noticed a definite spike in organic convenience foods. In both cases, Wal-Mart offered superior prices (and better service) than the small stores that specialized in these obscure items.

Wal-Mart’s problem lies not with what it can offer, but with what it can’t: intimacy and a small scale. This, of course, is why many areas have fought so hard to keep Wal-Mart out. They don’t want to lose their adorable little neighborhood stores to the large, bad capitalist behemoth, which leads to an inevitable question: can Wal-Mart, the ultimate superstore, offer a shopping experience that’s anathema to its time-proven formula?

To a certain extent, Wal-Mart has already done so with its “Neighborhood Market” outlets. At roughly 40,000 square feet, these stores are about 20% the size of the ubiquitous supercenters, and are designed to cover the same product lines as a standard grocery store. Recently, the retailing giant began unveiling “Marketplace” stores. These shops are much smaller, and their focus is on fresh food, prepared meals and quick service.

On the one hand, Wal-Mart Marketplaces could definitely fill a niche that the monstrous supercenters can’t. With their smaller size, reduced offerings and emphasis on service, they could provide a way for Wal-Mart to penetrate markets that have closed themselves off to the retailer. Moreover, there are no lack of harried purchasers eager to pick up good, fresh meals with a minimum of fuss. On the other hand, can a company that has made its mark with deep discounts and pave-the-earth warehouse stores really offer an intimate neighborhood venue?

My money’s on Wal-Mart!

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Filed under: Products and services, Consumer experience, Marketing and advertising, Hormel Foods (HRL), Recession

In tough financial times, certain food products and food preparation ideas seem to gain increasing favor with consumers. People try to find ways to prepare nutritious and interesting meals while gaining greater purchasing power from their hard-earned dollars.

Just the other day, some of us bloggers were engaged in a lively email chat regarding some of our tried-and-true strategies for stretching our grocery dollars. As you can guess, ramen noodles almost immediately took center stage. I was entertained with stories of the many ways that the slender pasta can be made quite appealing. For instance, if you take any brand of chunky salsa, cut it 50% with water, add a sliced hot dog and pour the heated mixture over the noodles, it’s really a very delicious and satisfying meal.

As the discussion ebbed, I couldn’t help but be amazed that no one had mentioned SPAM, by Hormel Foods Corp. (NYSE: HRL). Surely, I thought, these people must know about the illustrious history of SPAM! Could they ignore the fact that SPAM has carried literally millions of people though hard times since prior to World War II? Though there’s probably a ratio of three SPAM jokes to every one SPAM recipe, the fact remains that Hormel’s SPAM, in all its variations, still sells exceptionally well. It sells even better as times get tough, as indicated by a current Associated Press overview.

The Might 28 earnings call from Hormel Foods Corp., as provided by Seeking Alpha, stands as testament to exactly why I like the company. Corporate transparency coupled with deeply thoughtful, knowledgeable and expressive leadership makes this company easy to look into. For the first half of 2008, Hormel Foods Corp. is again performing in defiance of tumultuous economic forces and is referred to by The Motley Fool as an inflation-defeating stock.

You might consider putting Hormel Foods Corp on your list of stocks to float you through this tough phase of the financial cycle. The company’s stock is currently selling at what I would think about to be a mild discount. Analyst consensus on Hormel Foods is currently pegged as a very strong “hold.” At the very least, I have the ability to promise you that the idea of purchasing Hormel shares right now would be quite a bit more palatable than a Twinkie sandwich could ever be.

Gary Sattler is a freelance blogger. He has no financial interest in the companies mentioned in this blog post. This blog post was in no way solicited or compensated by Hormel Foods.

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Filed under: Products and services, Launches, Apple Inc (AAPL), Marketing and advertising, AT and T (T), Nokia Corp. (NOK), Research in Motion (RIMM), iPhone

So what happened?

For months now that investors and Apple Inc. (NASDAQ: AAPL) enthusiasts have been anticipating the 3G iPhone. The past few weeks, there was so much hype that speculation over features, dates and even a new business model surfaced daily, from bloggers, reporters, investors and analysts.

Finally the day came and Steve Jobs announced a 3G iPhone for $199 to be released on July 11 in 22 countries at first with the intention of selling the iPhone in 70 countries. Not only that, but the new model includes a GPS and push email.

Well, nearly all analysts have concurred that for Apple to reach the 10 million iPhones sold in 2008 target, and the iPhone to attract more business users and take market share from Research in Motion (NASDAQ: RIMM) and Nokia (NYSE: NOK), it would have to do just that — get a 3G iPhone with push email and GPS.

Apple also stated it will soon open up its iPhone software store where iPhone software add-ons and third-party programs could be bought, another key revenue source for Apple.

So with all that, why was the stocks down 3% today? For one thing, it could be the steep price cut in the iPhone. For another, it could be because the new business model is more traditional and eliminates the revenue-sharing model where AT&T Inc. (NYSE: T) paid shared monthly service revenue with Apple. It also could be that the anticipation had already driven the price of Apple stock and when no earth shattering news were announced, investors took some profit.

Personally, while of course I believe the iPhone is great and will contribute more and more to Apple’s revenue, I’m a little disappointed the focus was almost solely on that business segment. I’d have wanted more Mac developments, even though in Jobs mind, he likely sees the two converging at some point in the future…

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Filed under: General Electric (GE), Marketing and advertising, Media World

Ever wonder why conventional wisdom is so conventional? It’s because it’s the same people repeating it over and over.

The reason why this happens is mostly laziness. Reporters and TV producers call on the same people to render their opinions because they’re the ones who return calls and show up when they’re needed. I have done it myself so I know the drill well. Yes, Woody Allen’s claim that 80% of success is showing up continues to be proven right. These people can be summed up in several categories: wisemen — they nearly always are male — whose every utterance is treated as if it was etched in stone tablets by the almighty, and insta-pundits — who are able to give quotes on every topic imaginable. Finally, there are the personal finance gurus whose message is that by helping me make money, I have the ability to help you save money.

Below are my choices for the most overexposed business pundits and media personalities. They are in no particular order.

Wisemen: Alan Greenspan — Don’t you miss the days when no one understood what the former Fed Chairman was talking about? Now, his message is pretty clear: buy my book and the subprime mortgage crisis wasn’t my fault. Honorable mentions: former General Electric Co. (NYSE: GE) Chief Executive Jack Welch, billionaire George Soros, and oilman Boone Pickens.

Insta-pundits (analysts): A tech story does not seem complete without a word from Darren Chervitz of the Jacob World wide web Fund. Ditto for Fadel Gheit of Oppenheimer & Co. On oil and media stocks, pundit Rich Greenfield of Pali Research. Honorable mention: Too numerous to list.

Insta-pundits (academics) : Leadership expert Jeffrey Sonnenfeld of Yale University recently urged failed CEOs to not dwell on their disappointments. “People who fail should feel liberated,” he told Fortune.

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Filed under: Launches, Consumer experience, Competitive strategy, Time Warner (TWX), Marketing and advertising

It’s no secret that ‘Sex and the City’ has been an overwhelming success. According to Box Office Mojo, the motion picture grossed $56,848,056 this last weekend. This is almost nothing more than found money for Time Warner Inc. (NYSE: TWX) as it gets to recycle its old content into a fresh new round of content, and it gets to do so at $8 to $10 per ticket. Add in the merchandise sales, future DVD sales, and the redistribution, and you’ve bonus bucks for the company.

So what’s next? Seems pretty obvious to me.

‘The Sopranos’ was a monster success for Time Warner’s HBO. As I noted last year before the finale of the Sopranos, “….it’s hard to envision “truly” killing off a major franchise….”

Tony lived at the end of the series, but it looked like a showdown over a bust or bloody restaurant shootout was imminent as the “leave you hanging” point for future releases.

The series has the same winning formula for success as Sex and the City: Characters that get talked about beyond the show, trend-setting themes, extreme audience loyalty, and so on.

Yep, this all points to Tony and whoever really is alive from the end of the season finale to head next to the large screen.

For Time Warner, the money is just too huge and you don’t have to be a mobster to do that math. Plus, this will be a motion picture that guys won’t want to skip either. Don’t fuggedaboutit…

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Filed under: Products and services, Consumer experience, Coca-Cola (KO), PepsiCo (PEP), Marketing and advertising, Kraft Foods’A’ (KFT)

Is there anything cooler than Kool-Aid? Kraft (NYSE: KFT) believes there’s, my friends. In fact, Kraft thinks a healthier Kool-Aid is pretty darn hip!

According to this AP article, Kraft wants to position the Kool-Aid brand to health-conscious mothers as a beverage that is okay for children to consume. The food company will be adding vitamin E to one of the Kool-Aid varieties, and it has reformulated its sugar-free lineup to improve the taste. There’s also a new Kool-Aid product on the market called Burstin’ Waters that’s supposed to be relatively healthy.

The company actually has been pretty good about trying to make its products not as junky. As the article says, Kraft introduced an initiative a few years back to create a set of nutritional guidelines that would aid the company in making its portfolio more in tune with the current zeitgeist; indeed, mothers everywhere seem to be getting sick of putting sugary, fat-inducing foodstuffs into the stomachs of their kids. Of course, I’m sure children still get away with eating junk at times (it’s like an inalienable right of the youth); for the most part, though, consumer choices are shifting, and woe be the consumer-goods entity that does not respond. Just ask Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP). Those two have been kicking it into high gear when it comes to alternatives to sugary carbonated sodas. Pepsi and Coke now offer all kinds of waters and enhanced beverages; in Pepsi’s case, many of its salty-snack products are decidedly healthier. Coke purchased VitaminWater last year, and has been doing well with it. And with vitamins all the rage, Kraft would be smart to really promote the heck out of that vitamin-E addition.

From this point on, the public is going to increasingly demand food and drink of a higher quality, consumables that can promote wellness. Kraft needs to sell the public on its new Kool-Aid, especially since, no matter how much improved it is, it still is, well, Kool-Aid. It’ll never be the healthiest thing on the market, but with the right campaign, perceptions can change, and sales can grow. Kool-Aid is still a famous brand, and little evolutions like this can help it remain relevant.

Disclosure: I own shares of Coca-Cola; positions can change at any time.

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Filed under: Wal-Mart (WMT), Marketing and advertising

When it comes to Wal-Mart’s (NYSE: WMT) impact, I’m ambivalent. In some ways it’s good, in some ways it’s bad and, on balance, it’s hard to state. I think that’s the most rational position to hold on something as complex as this company.

Well aware that its increasing size has brought increased controversy, Wal-Mart has launched a number of initiatives designed to convince you that it’s really, really good for the world. While a lot of it brings up valid points, a lot of it is propaganda that would make Lenin proud.

Take this one for example. If you go to http://www.savemoneylivebetter.com/, a site run by Wal-Mart, there’s a little counter at the bottom that “represents the amount of money Wal-Mart has saved American families since January 1st, 2008.” As I write this, it’s at a tiny over $123 billion, but it adds another million every 30 seconds or so.

How Wal-Mart is saving American families $2 million per minute at 4:00 AM ET is a little bit beyond me but hey, this is advertising. Back in March, I wrote about Wal-Mart’s claim it saves the average family $2500 per year: “the National Advertising Division of the Council of Better Business Bureaus is set to release its finding that the claim is misleading, promoting a statistic “for which the advertiser provided no support and, in fact, conceded that there was none.”

On the SaveMoney site, Wal-Mart provides the name of a study it clams supports the statistic, but provides no link to its contents or methodology. I wonder what the Council of Superior Business Bureaus would have to say about that.

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Filed under: Products and services, Consumer experience, Marketing and advertising, Activision Inc (ATVI)

The next installment of Activision, Inc.’s (NASDAQ: ATVI) Guitar Hero franchise, Guitar Hero: Aerosmith, is coming out this month, but that has not stopped rumors about future installments, namely one based on the music and career of Metallica. No official announcement from Activision has been made, but Billboard cites a current SEC filing and a Gamespot post that fuels the rumor. According to Gamespot, the new game is the second rumored title relating to Metallica, a vehicle-based shooting game was announced and canceled a few years ago.

Guitar Hero 4, now known as Guitar Hero: On Tour, is expected for release later this year, but if speculation is correct then a Metallica-based game could see release next summer similar to the release schedule for the Aerosmith version. On Tour will feature a full compliment of instruments like the Rock Band game. Guitar Hero: Aerosmith follows the career of the band from their beginnings in Boston and uses the band’s music prominently, “along with a smattering of songs from bands that Aerosmith wanted included.” Aerosmith appears in the game as motion-captured animated versions of themselves.

Like Aerosmith, a Metallica-based game would provide a lengthy career storyline to follow, as well as numerous songs that have remained a staple of the band’s live acts over the years. It would also present an interesting case to examine success with Metallica since the band seems doomed forever due to band member’s stances on illegal music trading and Napster in the late 1990s. Not that the band does not have a large and loyal fan base, but the lasting stigma from that debacle has not abated in the last few years.

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Filed under: Products and services, Consumer experience, Apple Inc (AAPL), Marketing and advertising

Fresh off the heels of a successful mini-tour of the United Says, Radiohead’s former label, privately-held EMI Group, has released a new greatest hits album and made the band’s back catalog available on Apple Inc.’s (NASDAQ: AAPL) iTunes Store. British-based download retailer 7digital first scored Radiohead’s back catalog last September but was only able to sell the music as album-based downloads, but without the anti-piracy technology digital rights management. iTunes will offer DRM-free files, but also individual track downloads in addition to album-based purchases.

The back catalog’s availability on iTunes follows the band acclaimed seventh, non-EMI released album, In Rainbows, by about five months. According to Billboard, “Radiohead had been holding out because of its desire for fans to buy the albums in complete form, rather than as individual tracks.” Billboard also quotes unnamed sources that claim “iTunes always had the option of selling Radiohead’s back catalog in album-bundled form, but did not do so, in keeping with the fact that the overwhelming majority of artists sell their music as individual track downloads on the service.”

Billboard calls iTunes practice of offering individual track downloads over album-bundled forms “a smart one from a financial standpoint.” Digital sales of In Rainbows accounted for 106,000 of its 526,000 copies sold. It is also a good one for the industry since single track downloads have grown in popularity and make it simple for listeners to select what they want to hear from artists. Even though Radiohead tracks are available as individual track downloads now, it would be unsurprising if the albums did not also witness nice sales from new and old listeners.

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Filed under: Consumer experience, Marketing and advertising, Gap Inc (GPS)

In a move designed to make it easier and more appealing for consumers to shop at its websites, Gap (NYSE: GPS) is consolidating operations to allow for the purchase of clothing from Gap, Banana Republic, Old Navy and Piperlime using one shopping cart, paying one shipping fee.

The Wall Street Journal reports that “By integrating the sites, the San Francisco-based company hopes to encourage shoppers to purchase products from more than one of its brands. Gap says about a third of its online orders are placed by customers who shopped at more than one of its Web sites in the past year.”

Since this seems like an obvious way to spur sales growth, you have to wonder what took so long. One concern may be that keeping the sites separate kept the brands more distinct in the eyes of the consumer. Will having pricey Banana Republic merchandise in the same shopping cart as the more budget-oriented Old Navy detract from the value of that brand? It’s possible. It may be why a more successful retailer like Abercrombie & Fitch (NYSE: ANF) has chosen to keep Hollister and its namesake brand entirely separate.

But with recent cost cuts aimed at improving profitability, Gap’s recently-anointed CEO Glenn Murphy appears focused on improving performance now rather than building brands. With its shares trading at about half of where they were a decade ago, shareholders are probably ready for that.

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