Linda's Marketing Leverage Blog

The Case of the Bay Area's Missing Matzoh

Why was celebrating Passover in northern CA different this year from all other years?

Well, for one thing, because there was an acute shortage of several kosher for Passover staples, including a critical one--matzoh.

Passover matzoh is made from flour and water but must be produced under specific types of conditions to ensure it does not  become leavened, or unacceptable for use during the holiday. Most Jews, even those who are not normally religiously observant, buy and eat matzoh for Passover, so the demand should be fairly constant from year to year.

This year it was the supply that was way off. It appears there was some sort of technical glitch w/a Manishewitz factory on the east coast that severely limited the amount of some types of specialty matzah produced. But that didn't explain why even plain old ordinary matzah,  not just the fancy kinds Manishewitz normally churns out, were MIA.

An article in this week's J, the Jewish News Weekly of No CA, claims this was really a case of confused signals in the distribution channel. For the last several years, chains like Costco and Trader Joes have sold large quantities of matzoh at a significantly discounted price. (The price of matzoh had gone through the roof over the last decade or so. Costco took advantage of this to sell matzoh at a price so so cheap that  one had to wonder if everyone else was gouging consumers or Costco was losing money on every box sold.)

Even though some people eat matzoh all year round, probably greater than 80% of purchases are made for the one-week Passover holiday. So if you don't sell your matzoh supply for Passover, you are pretty much stuck with it afterwards. And there are fewer things harder to get rid of than old, stale matzoh.

This year two things happened here that caused a big disconnect: 

• Most of the retail stores in the area cut way back on their matzoh purchases rather than be forced to "eat"  excess inventory after the holiday
• Costco and Trader Joes decided not to carry matzoh this year at all--eliminating a big source of the product

As a result, it was virtually impossible to find a box of matzoh anywhere in the Bay Area as Passover approached.

Even if you've never been lucky enough to indulge in the ritual consumption of matzoh each spring, what happened here is fascinating. Retail supermarket chains made a rational decision to carry only limited supplies of a product that is both under severe price pressure and has a very short promotional life. The chains causing the pricing pressure, for whatever reason (maybe selling at or below cost finally caught up with them?), decided not to carry the product at all. This resulted in the acute and unexpected shortage.

Who dropped the ball? The manufacturers and distributors take a good share of the blame. One would expect they could make a reasonably accurate forecast of expected annual demand (this is the season when they make most of their profits).  Why didn't someone put 2 +2 together and ask why wholesale purchases of matzoh were so much lower in the Bay Area than usual.

This is also a great example of how markets run based on expectations. We as consumers have been trained to expect a choice of product at both retailers and warehouse clubs/discount chains. The supermarkets had expected to be undercut by the big chains. The manufacturers expected that the market ran efficiently enough that advance orders reflected expected demand. When expectations didn't reflect reality, everyone along the chain, from the producer to the consumer, was caught by surprise, hence the unexpected.

How to prevent this in the future? For one thing, it has been reported that Costco has signaled they will carry matzoh again next Passover in at least some of their larger warehouses. Manishewitz should be expected to have resolved their terribly timed production glitches. And should there be even a hint of a supply/demand inbalance in the future,  some enterpreneur will likely develop a way to exploit and profit from this (maybe a Web2.0 application that lets users track the availability of matzoh on their mobile devices?).

In the meantime, the issue of market expectations has moved to a new front: rice. It appears that Costco and others are limiting the amount of rice sacks that can be purchased by each buyer--because of the expectation that there may be hoarding which would in turn cause a shortage. Except that now consumers are expecting a rice shortage and buying more...

Gee, in any other year, I would have been able to give them my excess matzoh...

Airlines Miss the Boat in Hawaii: How United and American blew a great opportunity to build customer loyalty

The collapse of ATA and Aloha Airlines left many unhappy stranded travelers in Hawaii last week. With virtually no notice, the two carriers shut down and those holding tickets were stuck with paying large amounts of money and/or waiting days to find a flight back to the mainland.

The airline business is a mess in general. Even supposedly well-run airlines can't seem to make much money, and just about all airlines are in the unenviable position of having customers who feel unappreciated, underserved, and often ill-treated. The attitudes are so engrained that they can't even see an opportunity to build goodwill and loyalty when it comes up and hits them in the face.

Here's how. Each of the two big carriers would run an extra plane or two to/from Hawaii to the mainland and make a public offer to carry all of those stranded passengers for a nominal fee (perhaps the $100 normally charged for changed tickets), enroll each passenger in their frequent flier club and give them credit for their entire round trip flight to Hawaii (including the part actually flown on ATA or Aloha), as well as a $100 voucher good on their next trip to Hawaii within the next 12 months.

Would it cost some money upfront? Yes, but with the media attention given to this situation, the amount of PR and free advertising generated would more than make up for the actual costs borne by the airline. Not only that, but the goodwill generated amongst not only these passengers but the general flying public, not to mention the media and regulators, would be incredible. How often does one get the opportunity to come out a hero?

Instead, here's what a spokesman for American Airlines said, as quoted in the Wall Street Journal on Tuesday, April 8, 2008:

"We didn't have a code-share relationship of any kind with any of these airlines, so anything we do to offer people a discount is basically out of the 'goodness of our hearts.' " Mr. (Tim) Wagner said. "Any discount we give is revenue lost, and we won't be getting anything out of their bankruptcies. So in a $100-a-barrel oil environment, anything that any airline does is generous."

Generous? How many people reading this actually thought American's actions here were generous? In fact, this whole approach seems very short-sighted to me. But wait, maybe American didn't have any planes available last week, because they were busy grounding a thousand or so flights to conduct maintenance checks. Their "generosity"  must have been taxed by all the ways the airline was helping the passengers stranded by the MD80 checks, right?

So United where were you? Hawaii has been a key market for you for decades. Instead of gloating about the fact that competitors who have been driving prices downwards (helping consumers) are now gone from your backyard, you could have been building goodwill and customer loyalty instead of more animosity.

Instead, both of you really missed the boat.

A Long, Long Time to Wait

From the sign in front of a financial investment firm in Salem, OR:

6 MONTH CD = 3.4 %
20 YEAR  CD  = 6%

Twenty YEARS? Are they serious?  You'd need a lot more than 6% to hold my money for two decades...

We've Joined the Invincibelle Column

Hi everyone. I've just joined the Invincibelle column, where I will be posting comments on marketing-related topics. Check it out.

Linda

FountainBlue Book of the Month

Our handbook, Marketing Your Career: Positioning, Packaging, and Promoting Yourself for Success has just been highlighted as the FountainBlue Book of the Month.

Check it out.

We're The Cool Book of the Day

My Book, Marketing Your Career: Positioning, Packaging and Promoting Yourself for Success is the Cool Book of the Day today on coolbooks.com.

Check it out.

Planting the Seeds of Success

Our article "Planting the Seeds of Success: Why Marketing in a Down Time Helps Business Turn Up" is featured as the guest contributor article for the most recent issue of the CB Software Systems News newsletter, published by tech guru Chad Barr.

Read the article.

When the Package Says About the Product Inside

This week I finally decided to dump my HP OfficeJet All-in-One printer. I know HP has a reputation for building good quality printers and I have an ancient LaserJet 4050 that I think will survive the next nuclear disaster, but the quality of this OfficeJet has been absolutely terrible.

Even worse, the quality of the service and support I've received from HP has been abysmal. I've spent hours talking to offshore support reps who spoke heavily accented English, couldn't move beyond preset standard support scripts, and managed to lose all my account support information multiple times. Finally, in desperation I was escalated to an executive support group in the US right before Xmas, where a pleasant but curt native English-speaker told me I was out of line to expect quick delivery of my package because it was right before the holidays. (Never mind that my replacement order had been misplaced by HP for the previous three weeks.)

But I digress. For all these reasons plus the fact that the fourth OfficeJet I was sent from HP still isn't working correctly, I decided it was time to dump the OfficeJet and move to something else--anything but HP.

I purchase a Brother color laser multifunction center. Since the machine itself is  maybe 1.5 feet wide by 1.5 feet deep by almost 2 feet high, I was surprised when the clerk told me he doubted whether this would fit in my BMW. Aw cmon, I said. I'm sure it will fit. Then he wheeled out a huge box that was nearly 3' cubed. And, yes, it did require an SUV to trek home.

Here's what was so important about this big package:

• From the first impression onward, the package was impressive. Inside the box was another box. Inside that box was a third box, and inside that third box was my printer.
• When I got to the actual machine, there were foam, cardboard, and plastic inserts and other packaging material to keep the machine in good shape, even within the triple boxing.
• There were detailed instructions on how to unpack the printer, step by step, including where every piece of packaging material was and what order to remove it in.
• Even more importantly, the instructions were written in real English that I could understand.
• There were also detailed instructions on what to save and how to repack the printer if it ever needs to be sent back for repair.
• The only assembly I needed to do was to insert the toner cartridges (as opposed to the HP which had loose pieces that had to be put on the machine by the user).

This is in direct contrast to the HP unit, which was sent directly from HP in a flimsy cardboard box that more often than not would arrive torn or pushed in. Within the box, the printer was packed in a thin plastic bag and stuffed in between a styrofoam insert on either side. I say stuffed because it was impossible to get the machine out of the packing without the styrofoam disintegrating. HP sent me three replacement units and they all were sent the same way, so it looks like we have a pattern here.

The key lesson  is that the first impression I have as a customer is what I see and encounter when I open the product. The impression I got from Brother is one of quality, concern for the customer and ease of use. The impression I got from HP, OTOH, is quick, dirty and inexpensive: we make our money on ink and that's where we put our focus, not on printers. BTW, the cost for the Brother was not that much more than an HP machine w/comparable features.

Remember that old saw: You can't judge a book by its cover? Well, sometime you can tell a lot about a product and its manufacturer by its packaging. Caveat emptor.

Astia Efforts Pay Off

As a coach, mentor and member of the Technology Review Board of Astia, the accelerator for women-led startups, I am really pleased to be able to share this recent news release highlighting the success of companies participating in Astia's most recent entrepreneurial venture conference last fall.

It was my pleasure to work with one of the companies mentioned in the release, Scout Labs,  a web-based service that helps companies tune into the voice of the customer across the web and turns that information into actionable insight to drive business growth.Talk about a great idea in the right place at the right time. And since they were funded right after the Astia conference, obviously other people thought so as well.

If you would like to interact with some of the hottest companies in the market and support a great cause too, I recommend getting involved with Astia in the future. They are always looking for volunteers to share their expertise with the next generation of entrepreneurs.

How the Book Began

Now that my Handbook, Marketing Your Career: Positioning, Packaging and Promoting Yourself for Success has been published and is available, I thought I'd reflect on the process I went through to conceive and deliver this project.

Birth seems to be an appropriate metaphor, because there really is a conception, gestation and then delivery process. Unlike having a child, though, this process isn't guaranteed to be over in 9 months. Sometimes it can take a whole lot longer to get from Point A to Point B, and sometimes, just as in real life, there are writing efforts that don't quite make it the whole way through the process.

In my case, there was about a two year process from when I decided I would write a full book to when I finally said, we're not getting anywhere--let's go at this another way. Last spring, after a discussion with my mentor Alan Weiss, I decided to create a series of shorter works instead.

The idea would be to take some of the key concepts in my Leverage2Market Model and create shorter booklets (which evolved into handbooks) as a first step in creating published works. The initial topic was a natural one: Take the material that had been so well received in my articles and workshops on Marketing Product YOU and evolve it into a guide to help professionals better market the ultimate product offering, themselves. From that point, the path to the final product was a bit circuitous and included a long discussion about whether this material was better suited to marketers in particular or professionals in general. (Arguments on both sides were compelling--I finally decided to be more inclusive and talk more generally to a broad professional audience.)

I also learned that writing a book is only a small subset of what's required to get a book published. The publishing process in itself has been an incredible learning experience. Look for more posts on this topic in the coming weeks.

What's interesting to me is that just like with a real life child, people tell me the book looks great and ask when I'm going to do the next one. Right now we're just recovering from the first one. Stay tuned