Brad Pierce Posts

Why the Bailout Plan is Destined to Fail

07 Oct , 2008 No Comments

I tend to think of myself as an optimist, but when it comes to the government’s $700 billion bailout plan, I think it’s destined to fail for one simple reason:  The money is going to the same people who got us into this mess in the first place!  Does anyone really feel like they’ll be any more responsible now that they’re spending taxpayer’s dollars rather than investor’s dollars?   They got a financial get out of jail free card rather than having to take responsibility for their actions.  So, what’s the lesson learned?  Make bad decisions and the government will bail you out.  This morning, I saw an interesting article in the Washington Times that highlights just how little these guys have changed their behavior since the bailout plan went into effect.  Some top executives of AIG spent $440,000 on a post-bailout retreat at a posh resort – including spending $25,000 on spa services.   Your tax dollars hard at work!  If these guys were serious about being fiscally responsible, they’d be meeting at a Hampton Inn by the airport instead of a high end resort.

So, what would I do if I were the man in the fur coat?  I’d lend the money to those companies and financial institutions which have made good, solid business decisions.  Encourage those businesses to continue on their positive course and capture market share from the companies who haven’t been fiscally responsible.  We’ll end up with a group of solid winners and the losers will cease to exist.   The free market system can work, but we need to focus incentives on businesses that do things right rather than rewarding those who don’t.

New TSA Uniforms Reduce Airport Security

02 Oct , 2008 1 Comment

Anyone who’s traveled commercially lately has likely noticed the new blue TSA uniforms worn by screeners. I have to admit, the new uniforms look good – but were they really worth the $12 million it cost for them? It looks like taxpayers have coughed up roughly $250 per screener in this classic example of government waste. Here’s the dirty little secret behind the new uniforms – instead of sewn on badges, they now have shiny new metal badges. I know what you’re thinking… So what? Well, the new metal badges set off the metal detectors at the screening checkpoints. After discovering this blunder, the TSA promptly updated their screening policy – TSA screeners no longer need to pass through the metal detector to be screened! Out of the 48,000 TSA screeners, common sense tells us that there are bound to be at least a few bad apples – even if the vast majority of the screeners are good, honest people. In essence, the TSA has now reduced security for the flying public and spent your tax dollars doing it! We live in the greatest country in the world – let’s start acting like it and focus our resources on implementing valid security measures to protect it.

Brad's Best Hotels in Las Vegas Guide

30 Sep , 2008 No Comments

I’m getting ready to head out to Las Vegas for meetings and was thinking about all the great (and some not-so-great) hotels I’ve stayed at there in the past.   So, here’s Brad’s Best Hotels in Las Vegas Guide:

Best View: Undoubtedly, the Bellagio wins hands-down.  Spend the extra money for a fountain view and you won’t be disappointed.  I must have watched dozens of fountain shows during my last stay. The movement of the water to the music is almost mesmerizing.  Keep the TV channel turned to the music channel and you’ll almost instinctively run to the window each time a show starts.

Best Service: The Wynn takes the top prize, despite being a mega-hotel.  One disclosure on this choice: I was staying at the “Tower Suites” at the Wynn.  It’s basically a separate hotel within the Wynn hotel – separate entrance, check-in area, bellman, concierge, etc.  You pay a premium price for these services, but they are well worth it in my opinion.  Each morning when I walked out the private tower entrance, the doorman addressed me by name and would ask if I needed a ride to the convention center – this even happened with doormen I hadn’t even spoken to before.  This hotel has figured out that communication between staff members to identify and greet guests makes people feel good.

Best Biggest Room: If you want a room the size of a palace, the only place to go is Caesar’s Palace!  Big rooms and big whirlpool tubs in the bathroom are a signature item of this hotel.  My only complaint with Caesar’s is the propery itself is just too big for my tastes.  It’s a trek to go virtually anywhere within the hotel, especially if you’ve got on-site meetings to attend.

Best “At Home” Feeling Room: The Venetian wins this one with their all-suite rooms.  I loved the the couch area with the TV and other amenities in the “downstairs” living room area.  Granted, it’s only about three steps down from the bedroom level, but even this minor elevation difference makes it feel like a truly separate room.  BTW, if you’re looking for a great snack or quick meal, check out the food court at the Venetian.  The Sicilian pizza is fantastic (and inexpensive)!

Best Honorable Mention: My first visit to Vegas was to the Mirage.  That was back in the day when the Mirage was the hottest, most amazing hotel on the strip.  The huge fish tank behind the check-in desk and the tigers in the lobby were elaborate.  By today’s Vegas standards though, they pale in comparison to others on the strip.  This hotel is still worthy of an honorable mention though since it’s a solid, nice property even if it is a bit dated.

Not-So-Great Hotels: No best of hotel list would be complete without a few tidbits of places to avoid.  The Flamingo (pink carpet = way too tacky!)  It may have been legendary back in the day, but that day has certainly passed.  Nice staff that works there and a terrific location on the strip, but I still would forgo the 70’s look and feel for something a bit more modern.  The Hilton (Star Trek theme = no dice for me)!  I stayed there for a convention once because that was the “official” hotel.  Worn-out hotel, mediocre service, a bunch of old men at the tables, and worst of all, a Star Trek theme!  Some may love it, but unless you’re and 80 year old Trekkie, go elsewhere!  Lastly, to finish out the not-so-great list – Treasure Island.  How do I put this eloquently?  It’s a dump!  The Sexy Sirens pirate show is cool out front!  The nightclubs are cool.  The Mystere show is cool.  The service and the rooms however resemble a Days Inn or worse.  One disclaimer:  I was staying on one of the top “premium” level floors.  I can only imagine how much worse it would have been in a “regular” room on a lower floor.  Fortunately, my stay was only one night so I escaped with little more than a rough night’s sleep.

I hope that you’ve enjoyed my little unofficial Vegas hotel guide.  Stick with one of the properties I’ve listed above and you’ll enjoy your stay.  Heck, even if you stay at one of the not-so-great hotels, you’ll still have a great time!  After all, it’s Vegas, baby!

Blackberry's Don't Float

11 Sep , 2008 No Comments

Well, I’ve personally confirmed that Blackberry’s don’t float!  My little experiment wasn’t really by choice but rather by a very late night of working and not paying attention as I got ready for bed.

It was about 3am and I was just finishing washing my hands in the sink when my elbow hit the side of my Blackberry 8830 phone clipped (not so securely) to my pants pocket.   An instant later I heard a thump sound which I knew was the sound of something bad… my Blackberry had gone for an unexpected swim in the toilet!  It’s at this moment that I paused briefly thinking to myself – do I just reach in there and grab it?  For those of you who know me, you know the Blackberry is sacred to me so a moment later I reached in and grabbed it to rescue the device from its watery grave.   I immediately pulled the battery and dried it off… but would it work again?   I pushed the on button but no dice – I figured that it was dead already!  Perhaps I shouldn’t have paused for a second before swooping my hand into the toilet to grab it out and the little guy would have made it.

So, the next day I went off to Verizon and shared the results of my exciting experiment with them – it turns out many others have done the same as me so my research was hardly groundbreaking.   About 15 minutes later and I was walking out the door with a brand new Blackberry 8330 Curve.   It’s a great phone and I love the camera and video recorder.  The keyboard is also much better than my previous Blackberry.   Anyway, I’ll leave the review for another time, that’s not the point of this post.  The bottom line is I love the new Blackberry!

But one thing still daunted me in the back of my mind…  could I still revive my old Blackberry?  Not that I’d be using it anymore now that there’s a new kid in town with my Blackberry Curve…  but, it was worth a shot regardless.

The CPR begins!  After doing some quick research online, I found two methods that are known to be good ones for reviving dead phones.  Instead of choosing one or the other, I did both.   First, I soaked my Blackberry in rubbing alcohol.   This is supposed to remove moisture (and also get all those nasty toilet germs off of the keys since it might someday be pressed up against my face again!).   I soaked it for a while and splashed it around a bit too.  I let it dry overnight sitting on top of a cable box which gave it a warm place to rest and recover.  The next day I used the second method I discovered.   I put the Blackberry into a bag of plain white uncooked (very important!) rice.  I sealed it up and let it sit for a few days.  The uncooked rice is supposed to absorb any type of moisture.

The conclusion:  (Drumroll…) I pulled my former Blackberry out of the bag… put in the battery…  on came the red light… then an few moments later… LIFT OFF!   The device started booting up and worked perfectly!  One of the things that makes Blackberry’s great is their ability to survive disasters – whether dropped, thrown, or even drown… they just keep on kickin’ and won’t ever give up the fight to survive!

Minimum Advertised Pricing (MAP) Policies Harm Consumers and Businesses

30 Aug , 2008 5 Comments

I am firmly against the policy of manufacturers implementing Minimum Advertised Pricing (MAP) programs.  The following is a position statement I wrote which I have been distributing within the foodservice equipment industry on behalf of my company and several other concerned dealers for the past several months.  I encourage you to use these talking points within your own industry to eliminate this practice which harms consumers and businesses.

My position is based upon the following points:

1. Discrimination Against a Single Channel:  MAP pricing programs, as recently introduced within our industry, generally target only one channel of the marketplace – dealers who sell online.  If MAP pricing programs are to be implemented, it is imperative that they be implemented equally across all forms of distribution and not discriminate against a single channel.

2. Successful Online Dealers Have Significant Costs:  There is a common misconception that dealers who sell in the online marketplace should have restrictions put in place because their business model costs less than others to implement.  This could not be further from the truth.  In reality, the lowest cost business model in our industry is the contract model in which some dealers have exhibited that they need nothing more than a small office and a phone to conduct business.  For a successful e-commerce venture, dealers need to invest in technology, programming, servers, security measures, fraud prevention systems, redundant backup systems, power generation systems and countless other infrastructure items.  Additionally, successful e-commerce companies need to invest in training of manufacturer’s products so that they are knowledgeable to field calls, e-mails and live chat sessions from end user customers.  The argument that e-commerce is “inexpensive” and therefore needs price controls to keep it in line is misguided and often comes from individuals who have no hands-on experience with how the online world actually operates.

3. Manufacturer’s Shouldn’t Protect Inefficient Dealers:  Protecting the distribution channel from themselves is outside of the scope responsibility of the manufacturing community.  MAP pricing programs punish efficient dealers and reward those who are either unable or unwilling to change their business models to embrace the marketplace.  If Dealer A invests in technology, processes and systems to make their dealership more efficient than Dealer B, they are then able to maintain their margins yet gain a competitive advantage and sell products to the customer at a lower cost than Dealer B.  There is no reasonable justification that artificial price controls should be in place to ensure that Dealer B still maintains his margins even though he has chosen not to improve his business to compete in the marketplace.  In essence, the principal of survival of the fittest should prevail with Dealer A prospering, as they are able to provide more value to their customers at a lower cost.

4. MAP Pricing is Not Automatically Legal:  Since the recent Supreme Court ruling declaring that MAP pricing (referred to as retail price maintenance agreements) are not automatically per se unlawful, numerous manufacturer’s have been touting plans to implement such policies on the basis that they are now “legal.”  This could not be further from the truth.  Just because something is not inherently illegal does not make it legal in all forms.  Each case will now be reviewed under the “rule of reason” which will look at various factors in determining the legality of an individual agreement.  The legal community has speculated that this will create a period of turbulence in our court system as individual MAP pricing programs are litigated.  It is not in the manufacturer’s best interest to be involved in this legal environment.  In essence, MAP pricing programs carry a huge legal risk for manufacturer’s who choose to implement them.

5. Collusion Risk:  MAP pricing programs expose manufacturers and dealers who support the programs to a significant legal risk due to the possibility of collusion occurring.  This collusion may be between competing manufacturers, or may be between competing dealers.  There is a very fine line that must not be crossed or an individual MAP pricing program will likely be considered unlawful under the rule of reason.  Again, this is another legal risk that could possibly subject a company to anti-trust litigation.

6. MAP Pricing Hurts Customers:  MAP pricing hurts customers – period.  Implementing a program that makes it harder for an end user to compare prices among a variety of dealers is not in the customer’s best interest.  Why would a manufacturer bite the hand that feeds them by choosing to hurt their customers?

7. MAP Pricing Makes Purchasing More Time Consuming for End-Users:  MAP pricing makes customers jump through hoops.  How many times have you been to an online site that makes you add an item to the shopping cart to see the “real” price?  It happens often in the retail industry as a way to get around MAP pricing.  This is because MAP pricing programs can not dictate the selling price of an item or they are illegal.  It is common practice that adding an item to a shopping cart is part of the purchase process and not part of the advertising process, therefore not subject to MAP pricing restrictions.  By making the end user do this extra step, what are you really accomplishing?  Quite simply, you are making them jump through hoops to see your “real” product price.  At the same time, your competitor’s product, which doesn’t have MAP pricing, is visible without making the user perform any extra effort.  Again, this action is not in the end-user customer’s best interest.  The end-user customer is who pays our bills and puts food on the table.  The last thing that I would ever want to do is implement a program that would annoy these individuals or cause them extra effort simply to view the “real” price of a product they are interested in purchasing.

8. MAP Pricing May Hurt a Manufacturer’s Sales:  MAP pricing may actually hurt a manufacturer’s sales who chose to implement it.  Aside from the costs of implementation, the enforcement costs and the significant legal risk, there is the competitive pricing scenario to take into account.  If a competitor knows that a company has a MAP price for a product, they can easily price their competitive product (without MAP pricing) so that dealers can freely sell the product at a price which is less than their competitor.  If a customer sees two competitive products, one priced at $500 and one priced at $450, my viewpoint is that customer will likely give their primary attention to the lower priced product for consideration first.  They may still determine that the higher priced product is worth the (artificially) higher premium price shown, but this opens the door to focusing a customer’s attention away from your products and towards a competitors products who don’t have price controls in place.

9. Advertising vs. Browsing Differentiation:  If a customer enters a dealer’s showroom, walks down an aisle, and spots an item, that dealer can the display whatever selling price they deem appropriate for that item.  How is the online channel any different?  If a dealer advertises their online site (at their own expense) and draws customer to it, that customer enters their site and begins browsing their virtual aisles.  The differentiation between what is considered advertising and what is considered browsing is a legal question that is still up for discussion as the case law has not been decided.  This is yet another legal risk that manufacturer’s expose themselves to when they decide to implement a MAP pricing program.

10. MAP Pricing Can Be to Circumvented:  MAP pricing can be circumvented by dealers who wish to continue advertising products below MAP prices.  The previous point mentioned the strategy of utilizing the “add to shopping cart to see the price” method.  Dealers can also implement instant rebates, coupons, and other financial incentives to customers to immediately discount an item to whatever price they desire.  Dealers can also create free or low cost membership “clubs” which get around MAP pricing as the price shown is not being advertised to the general public in an open forum. Dealers can also simply sell a bundled product offering in which the user pays for an insignificant item, then also receives the item which previously had a MAP pricing restriction for “free”.  The end result of any of these work-arounds is that the dealer can advertise the product to the end user at the price they would have anyway prior to the implementation of MAP pricing.  The MAP pricing simply puts a larger burden on the dealer to circumvent the policy, while still staying within the guidelines of it.  As previously mentioned, it also requires the customer to perform more effort to purchase a particular manufacturer’s product, versus that of their competitors who don’t have MAP pricing restrictions.

11. MAP Pricing Favors Dealers Buying Through Re-Distributors:  MAP pricing programs favor those who buy through re-distributors rather than those who have established relationships with manufacturers and buy direct.  I’ve heard comments from a number of companies who prefer to buy products through the re-distribution channel specifically for this reason.  All of the “authorized” dealers are stuck with an inflated MAP price, while the third party dealer is free to advertise the products at a lower price.  Most customers are unaware whether a dealer is authorized or unauthorized, and are more likely to engage a company who advertises a lower price to procure a product than a higher price.  What’s the solution?  Do you void warranties for those customers who buy products via an unauthorized channel?  This again hurts the end-user customer who did nothing more than support your company financially by purchasing your product.  If steps such as warranty denial are implemented, how satisfied will the end user be with your company?  More importantly, how likely are they going to be to buy your product again in the future?  I firmly believe they will have a bad taste in their mouth and will move to a competitive product the next time they need to purchase an item.

12. Lack of Joint Marketing Dollars in Current Programs:  Traditionally, MAP pricing programs have been tied to advertising dollars being given to dealers.  In return for these funds, the dealer agrees to adhere to the MAP pricing program.  The feeling is this is a “fair and reasonable” trade-off – we give you money and therefore we have a say in your advertising.  Manufacturers in other industries have conducted themselves in this manner for years.  In the foodservice equipment industry however, the MAP pricing programs have not included these additional funds to be paid.  This creates a system in which a manufacturer is dictating policies, yet is not participating financially.  This is again an extremely fine line that must be examined closely.  If a dealer independently advertises a product using their own funds, does a third party manufacturer have the right to dictate pricing policies?  Again, the rule of reason applies.  Ask a dozen attorney’s for their legal opinion and you’ll likely get a variety of different answers.  Currently, the common viewpoint is that this is yet another aspect that will be decided by the court system through litigation.

13. Difficulty in Enforcement:  MAP pricing is difficult, if not impossible to enforce.  While you can enforce policies against your authorized dealer channel, as stated previously, those dealers who procure products through re-distributors, or re-sell them to separate “online companies” (often owned by the same people who own the parent corporation) are immune from enforcement.  Therefore, you’ll be spending time and resources to enforce policies against who are most likely your best customers – your authorized dealers.  Along these same lines, the enforceability issue reminds me of the whack-the-mole game at amusement parks.  As soon as you hit one mole and eliminate one violation, another one pops up.  Do manufacturers want to spend countless hours and massive amounts of money playing this game, or would they rather focus on running their business and bringing new and improved products to the market that will be more financially beneficial in the long run?

14. Exposure to State Anti-Trust Laws:  MAP pricing may violate state anti-trust laws.  Each state has its own antitrust laws that can be enforced against companies.  This is an important consideration when developing a MAP pricing program.  Essentially, to ensure you are in compliance universally, you will need your program reviewed in accordance with the laws of each of the 50 states so that it can be written and enforced in a manner which doesn’t violate any of those state’s laws.  I highly doubt that most manufacturers in our industry will take such a time consuming and expensive step, yet by not doing so, they are opening themselves to the possibility of anti-trust violations and litigation against their company.

15. Dealers are Typically Independently Operated:  Dealers in our industry are not typically mega-corporations. Though there are a few notable exceptions, for the most part dealers are made up of entrepreneurial families.  They put their heart and souls into the business and enjoy the freedom of running it in a manner they deem most appropriate to meet the financial goals of the business.  It generates animosity towards manufacturers who take it upon themselves to dictate to these individual business owners what they can and can’t do in their business in relation to selling various products.

16. MAP Pricing May Not Be What Most Dealers Desire:  I have seen estimates that more than half of people in the foodservice equipment industry do not feel that a MAP pricing program can be effectively implemented in our industry.  This is an important consideration that should remind you that decision on this matter should not be taken lightly.  You should at the very least survey your dealer base to see where people stand on this issue prior to moving forward. I personally have noticed that those dealers who are in favor of MAP pricing tend to be more vocal, and therefore may make manufacturers feel that this is a move that most dealers want.  In reality, this may not be the case.

17. The Free Enterprise System:  Lastly, the United States economy is based upon a system of free enterprise.  The free enterprise system is an economy in which the pricing of goods is determined by the market economy.  MAP pricing programs are contrary to this economic system, as they come strikingly close to a socialized system of price fixing.

I hope you’ve learned more about some of the implications of MAP pricing programs as you’ve read this posting.  I fully acknowledge that there are a wide variety of viewpoints on this subject as well as arguments that make a case in favor of MAP pricing.  I fully respect the opinions of those dealers and manufacturers who have these viewpoints.  I personally, and my company, however, feel that the risks and downsides of MAP pricing programs far outweigh the arguments in favor of such price control programs.

IMPORTANT DISCLAIMER:  The views expressed in this document are solely those of myself and my company.  They are not in any way reflective of nor the official policy statements or views of an organization, group or association that myself or my company are affiliated with in any manner.