Charity As Gimmick

During December, BMW North America will help make wishes come true with a donation to the Make-A-Wish Foundation for every new vehicle leased or sold at participating dealers. A contribution of $25 will be made to the Make-A-Wish Foundation for every new BMW sold at participating locations from Dec. 1-31.

Wow... how generous of BMW considering that the lowest priced car in their line-up, the 328i Sedan, carries a $32,400 MSRP. BMW is donating less than 1/10 of a percent of the car's MSRP. If you consider the top of the line 760Li sedan and its $122,600 MSRP, then the $25 donation is embarrassingly tiny. If BMW was serious about making a high impact contribution to Make-A-Wish, the company would at least scale its donation to the value of the vehicle. How about $100 for the 328i and $1000 for the 760Li?

BMW is putting to use what is referred to within the marketing trade as an embedded-giving program. The basic idea is that when a consumer buys a product during the promotion period, the company makes an automatic donation in his/her name to a designated charitable organization. While it sounds like a noble idea, rest assured that the promotion is based first and foremost on a marketing premise and less about social responsibility.

Case in point is the Barneys "Have a Green Holiday" catalog I referenced in an earlier post. In the catalog, the World Wildlife Fund is mentioned as a participating charity in the Barneys' holiday promotion. It turns out, as reported by The New York Times, that the World Wildlife Fund was unaware of their participation in the promotion -- oops! link

Mixing charity and commerce is problematic. My suggestion is to take the high road and keep them separate. If you can afford a six figure car, then you shouldn't need prodding from BMW to make a donation to those in need. And if you lead a company as successful as BMW, then you should not have to rely on promotion results to justify making a high impact, charitable donation.

Charity is best felt from the heart rather than analyzed by the brain.

Attack Of The Killer Santa

Beware of the 12 foot high inflatable Santas tethered on the front lawn of your neighbors home. Not just the Santa -- in many neighborhoods you will also find the inflatable reindeer, snowman, Christmas tree, manger or snow globe. I just don't get it. They are billboard ugly. Why would anyone showcase their house in this way?

Don't get me wrong. I'm all for stringing lights on a house or decorations here and there. I also enjoy the hobbyists who spend all fall constructing their Christmas light extravaganzas. But these inflatable displays are all wrong. They have nothing to do with tradition, an eye for display or effort -- it's simply plug in, tie down and inflate. Instant Christmas!

These inflatable decorations are not defined by economic strata. My suburban New Jersey town is blessed with a diverse make-up and these inflatables are on front lawns all across town -- gracing the homes of the rich as well as the working class.

Last night, I saw a giant Santa in front of a multi-million dollar, center hall colonial mansion. The inflatable seemed to be a story and a half high. The scale of the house and the size of the inflatable only made matters worse. More "Attack Of The Killer Santa" than "Deck The Halls..."

I can only imagine what will be under this family's Christmas tree on December 25th. Right now, I'd guess a $12,735 crocodile leather Dopp Kit from Dolce & Gabbana?

What Me Worry?

It looks like Madison Square Garden and the New York Nicks are being run by Alfred E. Neuman.

Stay on top of the news these days and you are likely to encounter stories of fallen idols, dethroned chieftains and corporate big wigs that have lost their job. Michael Vicks of The Atlanta Falcons -- sentenced to 23 months and required to return $20 million in payments for his involvement in in a dog fighting ring. Conrad Black -- who once presided over the 3rd largest newspaper chain -- sentenced to 6 1/2 years in prison for his convictions on fraud and obstruction of justice charges. On Wall Street, Charles Prince of Citigroup and Stanley O'Neal of Merrill Lynch both lost their CEO positions due to huge losses related to the subprime mortgage meltdown.

But life goes on at the Knicks. The team is securely in last place in their NBA conference with a 6 and 14 win-loss record. And, the team has dragged its fans through the mud with its recent conviction on charges of sexual harassment. The Garden settles charges this week -- just ahead of a judge's ruling on compensatory damages -- paying $11.5 million to the victim, a former marketing executive.

One NY radio DJ remarked yesterday -- if I cost my company $11.5 million and my ratings were in last place, I would be off the air in a matter of days if not hours. But this logic does not apply to the leadership of Madison Square Garden -- the Knicks' parent organization. Coach Isiah Thomas seems secure in his job due to the continued support and patronage of James Dolan, Chairman of the Garden.

Mr. Dolan lacks the business acumen of his father, legendary cable television pioneer, Chuck Dolan. And its clear that moral fortitude is not Junior's strong suit. It doesn't look like the embarrassment caused to his family will prompt him to take a new leadership direction either. With a tight ownership grip on The Garden, James Dolan puts his interests way ahead of any other constituency.

Answering To A Higher Authority...

Like the classic tag line for Hebrew National hot dogs, more and more consumers today are expecting the brands they purchase to “answer to a higher authority.”

For these values-driven consumers, quality, design and price are still important but no longer sufficient criteria for purchase. They expect product ingredients to pose no potential harm to humans, animals or the environment. They also want to know how the Company behind the product treats its workers; and whether a portion of its profits are directed to doing social good.

Not all brands for sale meet these criteria. The very best of these brands might be referred to as “good karma” brands. A “good karma” brand should satisfy consumer needs in a manner that promotes the wellness of people, the environment, the business community and society at large.

To assess a brand's karma, here are five general factors to consider:

• Safety of product ingredients
• Equity, fairness and safety of the supply chain
• Integrity of product and marketing claims
• Service and overall customer experience
• Price and value relative to profit
• Corporate citizenship and social responsibility

Now comes the challenging part. Don't expect a "Good Karma" label on the packaging just yet. And as you stand in the aisle evaluating your purchase, do not expect a binary outcome as you weigh these factors. Products will most likely fall within a range of acceptability. Unfortunately, the factors often interplay with one another compounding the confusion.

For example, nutritionists suggest eating a variety of fresh fruits and vegetables to maintain a healthy diet. But, how do you accomplish this if you are also trying to eat local? Only the fortunate few live in tropical paradise with a diverse mix of fresh produce available all year long.

Or take the example of eating organic foods. How do you evaluate the net karma impact of organic, fair trade bananas from Central America, given the CO2 emissions of long haul air freight? It is a better choice than less expensive, the non-organic/non-fair trade bananas, but the carbon footprint is likely the same.

My advice is to keep these criteria in mind, do your own informal research and make comparisons across products. The more informed you are, the better the chance that you will make purchases that you feel good about. And if you make a mistake and buy the wrong product, don't beat yourself up. Instead, use the experience to make a more informed choice next time. Over time, more and more of the products and services you use will satisfy your broader concerns for life, your community and the planet.

Why Is This Man Smiling?

In one of the largest executive-pay givebacks in history, former UnitedHealth Group Inc. Chief Executive William McGuire has agreed to forfeit about $620 million in stock-option gains and retirement pay to settle civil and federal-government claims related to stock-option backdating. Stock-option backdating refers to the illegal practice of "backdating" stock option agreements so that options are priced at a historical low price rather than the current price, generating higher profits for the option holder.


Under the agreement, other key executives agreed to return ill gotten stock option gains as well bringing the total value of the settlement to almost $890 million. McGuire's payment dwarfs the $500 million junk bond king Michael Milken returned in the 1980's. McGuire still faces criminal charges.

So, why is he smiling? He still retains about 24 million stock options that currently could be cashed in for a gain of roughly $800 million, on top of about $530 million in pay he pocketed while running UnitedHealth from 1991 to 2006 -- obviously, the public defender will not be called upon to handle his criminal case.

Why would McGuire cheat the system to make $600 million, when he already was making more than a billion dollars?

This level of greed is in a whole different league than the six-figure executive who cheats on his expenses by taking his wife out to dinner and pretending she is a client. Or, the $50,000 bookkeeper who embezzles a $1,000 a month to cover her mortgage expense. I find McGuire's case disturbing. A billion dollars should be enough to keep anyone on the right side of the law. Obviously not.

Ho Ho Ho! Holier And Richer Than Thou!

Ultra-exclusive, fashion retailer Barney's New York released its "Have A Green Holiday" catalog this week. link Naturally, the papers and printers used in the catalog are all certified to Forest Stewardship Council standards! Here are my favorite picks.

First up -- A Goyard "St. Louis" shoppers tote at the lofty price of $1065 for those of you for whom the LL Bean extra large canvas tote @ $30 is a bit too pedestrian. The Goyard bag is made of unique 100% recyclable canvas and is made of all natural ingredients without plastic or petroleum. And while you are at it, you might as well spring for the $310 custom monogramming!

Second -- a very special collection of women's accessories including an alligator skin wallet and card case, assuming your Humane Society membership does not extend to those farm raised Florida gators...

Third -- Salvatore Ferragamo neck ties. Sorry, the silk worms are not free range. Do buy a tie anyway and a donation will be made to the Natural Resources Defense Council.

And my favorite. A "billionaire's boys club" made-to-order bike @ $3950. The perfect gift for those who want to reduce their carbon footprint but dread the thought of taking public transportation...

This holiday season, spend your green to be green!

How long should a consumer product last?

Yesterday, I purchased my third HP printer in just over 36 months. Buying the first new printer was my choice based on an upgrade in technology. I decided to rid my home office of a separate printer and fax machine and consolidate into a single unit that prints, copies, faxes and scans. This printer lasted just about two years until it died a quick death after an electrical storm (so much for my surge protector). The replacement printer died after a year when the ink cartridge mechanism jammed and broke off.

In both cases, my manufacturer's warranty had expired and I was told that I would be better off buying a new printer rather than fixing the old one. This recommendation considered the cost of shipping, handling, service and parts; and the time I would be without a printer. On my trip back from Staples yesterday, I got to thinking about the expected life of a consumer product. Certainly, I had hoped that a printer would last a number of years rather than months.

Often, expectations about the useful life of a product are built into the customer mindset only to be reinforced by marketing messages. Price is largely an irrelevant matter. For example, single use products range from the inexpensive -- Gillette disposal razors (@ $3.50 for a pack of 3) to the absurdly expensive -- a bottle of 1996 Dom Perignon Rose for $349.99. Likewise, there are inexpensive products that last almost forever -- a Kitchen Aid can opener for $9.99. And, there are many expensive products with long, useful lives -- the 2008 S600 sedan from Mercedes Benz, which has a base price of $144,975. For a more utilitarian, automotive example, remember the Volvo ads showcasing owners who had driven their cars for hundred of thousands of miles?

Let's leave aside the factor of technological obsolescence -- consumers have learned this will happen particularly with technology gadgets. In this case, manufacturers argue that consumers are getting direct benefits from upgrading to new models -- so at least there is a payoff. Also leave aside fashion items. Those who purchase a $2,000 suit from Armani Collezioni recognize that the appeal of the suit's design is short lived.

How long should a printer realistically last? Or, an iPod? Or, a cell phone? Products that cost between $100 and $1,000 are a no man's land for consumers especially if the life expectancy is hard to guage or the product is prone to break or fail. In essense, products like this are not expensive enough to repair but still cost a sufficient amount to make you say ouch!

In this $100 - $1,000 price range, consumers are often told that the expense and hassle of repairing s product are just not worth it -- you are better off buying a new one. For my money, this is an unacceptable consumer experience and appears to be built into the manufacturer's business model. Once or twice burned, you are convinced to buy the extended warranty. You actually pay more for the printer up front for the peace of mind that if it dies a premature death, you can have it easily replaced.

But buying the extended service policy is optional and many customers worry that they are being ripped off if they buy it. Are we really equipped analytically to calculate the risk of forgoing the extended warranty especially if we are prone to suspicions about the manufacturer? In my case, I bought the 3 year extended warranty on the new HP printer for about $95. A far simpler model in my view would be to simply raise the price of all HP printers by half this amount -- say $50 -- and then offer a LL Bean like service policy to all -- if for any reason, your printer stops working, we will fix it for free, no questions asked.

This works to every one's benefit. The consumer saves money in the long run and has a happier customer experience. And the model benefits HP as well -- not only is consumer loyalty enhanced but this approach provides the discipline to develop and produce high quality, low maintenance products. And that's what HP should be all about.