Archive for February 2nd, 2009

“No special interests” … unless you count labor unions

February 2, 2009

Ken’s Take: Candidate Obama pledged that he wouldn’t play to special interests if elected.  Yeah, right. 

First in line to get their favors: the labor unions.  No surprise, except for the fast timing. (Source post from left-leaning CBS News is below).

Ken’s Prediction: Laws prohibiting secret ballots for  union elections — the misnomered “Employee Free Choice Act” which allows union thugs to “encourage” employees to sign-up for unions publicly — will be enacted before the end of the summer. 

And, the Southern-based “transplant” auto factories will be among the first targets.  Why?  There are 2 ways to make Detroit’s labor costs competitive: either lower Detroit’s unionized wages and work rules, or force the the high wages and restrictive work rules on the transplants.  I’m betting the Obama administration pursues the latter tact.  Wrong answer !

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Excerpted from CBS.com, “Obama  Reverses Bush Orders For Labor Unions”,  Jan. 30, 2009

The Democratic president, not even two weeks into his term, was already trying to address the needs of one of his party’s most reliable constituencies – organized labor.

Labor leaders visited President Obama in  the White House for a second consecutive day Friday. Unions have been lobbying the Obama administration to repeal scores of executive orders they view as hostile to their cause. Officials gave administration officials their top 10 executive orders they wanted to see dismantled quickly.

Pres. Obama signed a series of executive orders Friday that he said should “level the playing field” for labor unions in struggles with management.

“I do not view the labor movement as part of the problem. To me, it’s part of the solution,” he said, to a round of applause. 

“Over the last 100 years the middle class was built on the back of organized labor. Without their weight, heft and their insistence starting in the early 1900s we wouldn’t have the middle class we have now.”

Full article:
http://www.cbsnews.com/stories/2009/01/30/politics/100days/economy/main4764111.shtml 

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PVP: Consumer Goods Rethink Price Hikes

February 2, 2009

Excerpted from BusinessWeek, “CEO: Clorox rolls back prices, more cuts possible”, by Vinnie Tong, January 9, 2009

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Price hikes on some consumer staples may be hitting their limit.

As prices for oil, gas and plastics rose to unprecedented heights last year, most major consumer products companies raised prices for a range of staples, including pet food, toothpaste and toilet paper.

Now that commodity prices are easing up and consumers face a financial crisis, some companies are cutting prices to attract shoppers.

Clorox has rescinded a 10 percent price increase on Glad trash bags that took effect in October, for example. And many of the hikes Clorox had planned for the first half of 2009 have been abandoned.

“Competitors will definitely do the same. We’ll see that the people who took pricing aggressively are going to have to give it back aggressively. Companies that took more measured pricing will have less pressure.”

Edit by DAF

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Full article:
http://www.businessweek.com/ap/financialnews/D95JS7380.htm

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Posted in Mktg - Pricing | Leave a Comment »

PVP: CVS Earnings Dive After Offering “Disciplined” Pricing

February 2, 2009

Excerpted from Dow jones Newswire, “Medco: Kept Pricing Discipline While Winning Business”, by Dina Wisenberg Brin, January 9, 2009

Ken’s Take: (1) “Discipline” is an interesting name for price cuts  (2) Pricing is somewhat of a  throttle on the hardship tough economy.  If folks have any $$$ in their wallets, they can find plenty of good deals

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While a disappointing 2009 forecast from CVS Caremark Corp. has some worried about a pricing war among pharmacy-benefits managers (PBM’s), competitor Medco Health Solutions  has been able to keep “disciplined” in pricing its contracts.

Medco said in a statement: “Based on our ability to deliver considerable value to our clients and the power of our advanced clinical model, we have been able to both maintain our pricing discipline and win $7.2 billion in new business in 2008.”

CVS issued disappointing earnings guidance for the year, with repricing of pharmacy-benefit management contracts a major factor.

The company said more than half of its PBM business received “improved pricing” in 2009, part of an effort to lock in three-year contracts that become more profitable after the first year.

Wall Street analysts voiced concern about the price concessions.

Wachovia said it “stokes fears that the PBM business has become more price competitive or that CVS is in a weaker position vis a vis its peers. Pricing has become broadly more competitive. CVS sells a differentiated product and seems willing to accept lower margins in the PBM to boost returns in the retail business and gain traction for new offerings, arguing that returns in the consolidated business will improve.”

Edit by DAF

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Full article:
http://money.cnn.com/news/newsfeeds/articles/djf500/200901091705DOWJONESDJONLINE000836_FORTUNE5.htm

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Attention! Food safety alert …

February 2, 2009

Excerpted from Marketing Daily, “CPGs Are Improving Their Recall Response” by Karlene Lukovitz, Dec 5, 2008

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During the past two years, the U. S. Department of Agriculture (USDA) and the U.S. Food and Drug Administration (FDA) issued nearly 500 food safety alerts…

A recent consumer survey … found that 58% of respondents who had heard about product safety and/or quality problems changed their buying habits. Consumers turn away from such products for more than nine months, on average, increasing the likelihood that they will discontinue the use of the product or brand entirely.

“Consumers are becoming less tolerant of recalls, with more than 50% changing their product choices … As these consumers continue to buy different products, product manufacturers can expect lower sales and run the risk of damage to their brands.”

So how well-prepared are CPGs when it comes to product recall response time? Better than many consumers might assume, it turns out.

According to new research…24% of CPGs can currently trace and track a product and issue a 100%-correct recall alert within 6-24 hours, 20% can respond within 1-6 six hours, 12% within 1-2 days, and 8% within 1 hour. However, for another 20%, the response time is between two and five days…CPGs reported having specific goals for further recall response improvement…

Consumers can get food product alerts delivered by email by signing up for free membership in USFoodSafety.com. The service also says it will deliver unbiased articles on food safety issues and advice on safe food handling from academics who are experts in the field.

“Consumers have to become their own food safety advocates by actively searching for recalls and alerts”…

Edit by SAC

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Consumer tolerance of product recalls is declining. While recalls negatively affect brand value, companies with fast response times are more likely to retain the trust of their customers.

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Full Article:
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=96115

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