Distribution Is More Important than Advertising

Posted 25 June 2010 by ezcall
Categories: Advertising, Brand, Marketing

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First, a disclaimer: I do not drink bottled water. I use filtered water using the same process most of the major brands use: reverse-osmosis. Almost all bottled water is either filtered tap water or water from springs that are usually less healthy than New York tap water. In fact, some bottled water is merely unfiltered tap water.

You may be interested to learn that US consumers spend more on bottled water than on iPods or movie tickets, although sales have fallen in the past few years due to environmental concerns and the bad economy. New York, Illinois and Virginia state governments have banned bottled water at public events and in state offices. Some eco-conscious companies like Cisco and Google have removed it from their corporate campuses as well.

I will not discuss why consumers would pay up to 10,000 times more for bottled water than what they can get in their own homes; I want to discuss who gets the major share of the 50 billion bottle per year sales in the US and why.

The top two sellers in the US, Aquafina from PepsiCo (launched in 1994) and Dasani from the Coca-Cola Company (launched in 1993), both originate from municipal water systems. But they did not start the bottled water business. There were hundreds of smaller, family-owned companies that were operating for more than a century. For example, Mountain Valley Water (launched in 1871) became the first bottled water to be available coast to coast in 1928.

But despite hundreds of companies, bottled water was barely a business in 1976 when the makers of a small green bottle opened an office in New York. By 1988 Perrier had 80% of the imported bottled water market by convincing restaurant owners that they could make more money touting bottled rather than tap water to their patrons.

So the two big Cola bottlers were decades late to the party. In addition, most of the century old bottlers were selling water from natural springs, while Coke and Pepsi were merely selling filtered tap water. But being first or having a superior product is not what drives a market.

As much as advertising and packaging are important to sales, nothing pushes consumer purchases as shelf-space. Advertise all you want, make it look pretty, but if your product is not in every supermarket, on the right shelves, you are not going to turn over product.

If there is one thing that Coke and Pepsi have, it is distribution. By tapping into their large network of bottlers, they have immediate access to the same shelf space at every supermarket in the country. If a new type of drink comes along, say goat-juice, as disgusting as it may sound, if Pepsi and Coke put it on their shelves then you can take it to the bank that those particular brands of goat-juice would outsell anyone else.

And with a little bit of advertising and the right packaging, it could be a national drink in short order.

By the way, NestlĂ© is the world’s largest water bottler by virtue of having many more brands, such as Poland Spring (3rd in sales), Deer Park, S. Pellegrino and Perrier. NestlĂ© as well has great distribution powers.

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iPad Uses Slave Labor

Posted 14 June 2010 by ezcall
Categories: Outsourcing

Tags: ,

Foxconn is the trade name of Hon Hai Precision Industry Co., a Taiwan firm with operations in China that is arguably the largest manufacturer of electronics and computer components in the world. Almost every major company in America contracts with them: Apple, Microsoft, Motorola, Amazon, Cisco, Intel, Dell, HP, etc. and Foreign companies as well: Sony, Nintendo, Nokia, and many others.

How does Foxxconn snag so many manufacturing contracts?

Actually, the answer is quite simple: slavery.

They can produce Mac minis, iPods, iPads, iPhones, motherboards, PlayStations, Wiis, Xboxes, cell phones, kindles, and routers cheaper than anyone else. To do that they require their workers to put in 11- to 12-hour shifts, six or seven days a week amid fumes and dust and constant harassment. No one can talk while working and you better have strong kidneys because restroom breaks are severely limited.

The working conditions are so difficult that there has been a spate of worker suicides at the plant (Between Jan 2010 to May 2010, twelve Foxconn employees attempted suicide, ten succeeded), according to Bloomberg News.

Now one would think that a big company like Foxconn would take measures to prevent such things from happening again. Perhaps better working conditions, fewer hours, better pay? They did better than that: they installed nets near worker dormitories to catch them should they jump. Now that is smart business. Spend a few hundred on nets and keep the price of manufacturing steady and cheap.

Apple did investigate but found most of the charges baseless. Apple CEO Steve Jobs has said a number of times that Foxconn “is not a sweatshop.” Could that be because T.C. Gou, the brother of Foxconn founder Terry Gou, plans on opening 100 stores to sell Mac computers and iPod music players in China, Taiwan and Hong Kong, by the end of next year?

I am not a person opposed to outsourcing; however when the outsourced workers are actually company slaves, I believe it is time for American companies to switch to other sources and vet those sources better.

It is time American consumers demanded that the products they buy be slave-free.

LifeLock -When You Become Victim of your own Scam

Posted 3 June 2010 by ezcall
Categories: Business Scams

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You have probably seen this ad, or heard this guy on the radio offering his social security number and then challenging scamsters to try and steal his identity.

lifelock ad

But now if you visit their website, you will not see that dare offered anymore. According to Threat Level | Wired.com the company’s CEO has been a victim of identity theft at least 13 times.

In March the company was fined $12 million by the Federal Trade Commission for deceptive advertising.

A careful reader at the Lifelock website will notice their disclaimer: “Due to New York state law restrictions, the Service Guarantee is not offered, applicable or available to residents of the state of New York.”

If the company’s own CEO cannot protect his identity, then obviously they cannot protect yours.

Chalk this up as another scam company.

Toyota Brand Still Strong

Posted 20 April 2010 by ezcall
Categories: Brand

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toyota recallA few months ago we read headlines that Toyota Customer Loyalty Takes a Hit After Massive Recall.

Yet according to the Consumer Reports 2010 Car Brand Survey, 60 percent of current Toyota drivers said they would most likely purchase another Toyota (that’s only a drop in 10 percentage points from a December 2009 survey) and Toyota’s Overall brand perception is still the highest.

But you couldn’t tell Toyota was having any problems at a packed local New Jersey auto lot. My wife and I went looking for an 8 passenger SUV the other day and we thought since Toyota was having safety issues that this would be a good time to buy a Toyota. Apparently so did many other car shoppers.

We asked if there were any discounts – nope. We asked if there was any reduced finance charges – nope. We asked if there were any deals – nope. The reason? Toyota Brand loyalty. People were still willing to buy Toyotas despite its current problems.

What does this say about building brand strength? Even bad news, if your brand is strong enough, cannot hurt you.

Catering to the Elderly

Posted 13 April 2010 by ezcall
Categories: Business Idea

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Since the purpose of this blog is to inspire our readers to start a business, I suggest that supplying clothes to the elderly is the next big thing.

With the increase in longevity, American seniors will soon be one of the largest demographic in our country. Certainly they make up a good share of the fashion market, and in response designers worldwide are now coming up with appropriate wear for the older generation.

Here are some examples:

clothes for seniors

clothes for seniors

clothes for seniors

clothes for seniors

clothes for seniors

clothes for seniors

clothes for seniors

How to Make Money Fast

Posted 9 April 2010 by ezcall
Categories: Business Scams

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So this morning I received an email from Patrick Chan, the Director of Hang Seng Bank. He was contacting me because he had a 42 million dollar business proposal for me.

I know what you are thinking – shouldn’t I put “Patrick Chan Hang Seng Bank” into Google and see if this is a scam? Wouldn’t it be wise to go to Consumer Fraud Reporting and see if they know about this?

Nah, the people who report this as a scam are probably trying to keep me from the fast money I can make just by sending Mr. Chan a few thousand dollars to register me as the next of kin to some Iraqi General who left $42 million in a Hong Kong bank. My cut will be 40%. That’s what I call fast money.

I hope I’m not too late and someone else gets all that loot.

Another way to make fast money is to pay a SEO firm a few thousand dollars to help you get high google page rank or to show you how to game the system so that your website gets to the first page on Google searches.

Now I have been told that these firms are a scam, that they merely put your website into a keyword density analyzer and repackage the results as if they did some research for you. But I find that hard to believe. Why would anyone pay a few thousand dollars when they can get the same info for free? I suppose next you will be telling me that the letter from Nigerian King Abdul Rubmyass is a scam.

The only people making money on SEO Search are the SEO Search scam artists. In my next article, I will outline how you can become an SEO Firm yourself and scam other people out of money. That’s how you can make money fast.

Modern Day Telepathy

Posted 7 April 2010 by ezcall
Categories: Website Mistakes

telepathyWe have now reached the point where notifications of all kinds are instant. Telepathy can’t be far behind.

There are pill bottles that send an SMS to you or a relative if you forget to take your medicine on time, vending machines that SMS what products need refilling in real time, and soon bloggers will be using Pubsubhubbub (if you don’t know what that is, see video) to instantly tell Google that their blog has updated.

So if you are the publisher of time-sensitive information, Google will instantly know that you’ve just published new content. However, pushing to Google and getting Google to index you in real-time is another matter. There is already a lot of spam out there and hubbub will only exacerbate the situation. You must carefully groom your online reputation, put out stimulating, fresh, non-trivial content, and engage (by commenting) with forums, related blogs, and social media to build community trust.

Google is busy honing its anti-splog skills. I expect in less than two years that sites strictly fabricated for link-love and keyword spamming will be easily detected and blacklisted seo-wise. Start now to build quality content and trust or shortly see your blog descend into oblivion.