Vancouver Sun, August 15, 2011

20% dip in oil not reflected at the pumps

With stock portfolios in shock given the markets’ recent gyrations, consumers have at least one thing to look forward to: The slump in oil prices happening in neartandem with the stock market blowout means motorists should see pump prices drop, if not immediately.

The benchmark price for crude oil is now about $86 US a barrel in New York – rebounding from an almost 12-month low below $80 a barrel last week – after reaching $110 US in early May. That marks a decline of about 20 per cent, raising the question of why gas prices haven’t followed.

Looking at different gauges of gasoline prices in Canada, the average price at the pump has come down less than 10 per cent over that same period.

Kent Marketing Services’ – formerly known as MJ Ervin and Associates – weekly Canadian gas price survey showed the average price for regular fuel this week nationally was a little more than $1.25 a litre and $1.15 in Calgary.

Kent’s records show the average pump price hasn’t been less than $1.20 since February and was as much as $1.35 in May.

During the financial crisis in 2008, while many lost money on the stock market or even their jobs, consumers got a big break on pump prices.

Crude oil fell from more than $145 US a barrel that summer to less than $45 US by the end of the year. The average price for gasoline went from more than $1.40 a litre to just more than 70 cents by the end of the year.

Jason Parent, senior consultant with Kent Marketing Services, said people often mistakenly think gasoline prices are supposed to move in direct correlation to the cost of crude oil, which is one of many factors that determines the price of gasoline.

He said refiners tend to get bigger profit margins on the finished gasoline product during the summer because there is more demand for it.

“In general, the refining margins over the last couple of months have been high,” Parent said. “Normally, this time of year, in the spring or the summer months, refining margins – or crack spreads, as people like to call them – come up and retail prices come up accordingly. It’s just a supply-and-demand thing.

“More people are driving in the spring and summer months, so demand tends to increase and that puts pressure on supply.” Parent said because quoted oil prices are usually for shipments due the next month, drivers should not expect an immediate effect on gasoline prices.

There is good news, however, with Parent saying the combination of lower demand for fuel and slumping prices on oil due for delivery next month likely bringing about lower pump prices in the fall. He declined to speculate how far gas prices would fall, but said it would likely be too optimistic to expect the average Canadian rate to fall to $1 a litre or less.

Tom Kloza of the U.S.-based Oil Price Information Service said gasoline prices will probably hit bottom by November and then climb.

“The rest of the world’s appetite for oil is growing,” Kloza said. “Notwithstanding what we are seeing now, the chances for a very robust winter-spring price increase are very high.”

BCBusiness, August 1, 2011

Online retail and downloading are slowly killing our traditional movie and music stores. And as with friends, virtual video stores just aren’t the same as the real thing.

Particular time periods can often be identified by their trappings and technology. See a photograph with a zeppelin and you know it was taken between the two world wars. A movie with a rotary-dial phone was likely set pre-1990. A Pacer or a Gremlin signifies the malaise era. The Berlin Wall marks the period from 1961-1989. A mullet should suggest you are in costume for an ’80s night, although unfortunately this is not always the case.

We are nearing the point where video stores will become the new zeppelins. The movie rental era that began in the 1980s with a proliferation of new storefront video shops, some of them surely located in former AMC dealerships, may now be coming to a close. The possible Berlin Wall moment for retail movie rental shops arrived in May when the Canadian arm of Blockbuster Video Inc., that monolith, went into receivership.

Not many locals got weepy over that development. Blockbuster stores were the 7-Elevens of the rental world – character-free franchise outlets that added nothing to a neighbourhood save convenience (and sometimes offered edited movies to boot). But tears were surely shed for other announcements, notably the pending demise of Videomatica, Vancouver’s primary repository of hard-to-find film and television. At press time business partners Graham Peat and Brian Bosworth estimated that their West Fourth Ave. movie rental store would soldier on for a few more months until the steady decline in business resulted in its final closing. Not long before that, Happy Bats, a distinctive video-rental shop on Main, unexpectedly shut its doors. Downloading, it seems, has killed the video store.

The Internet meteor strike has been blamed for more than one retail extinction. Online competition certainly explains the relative dearth of porn theatres in B.C. these days – when it comes to that product line, the Internet is what you might call handy. But before you raise a toast to the web for an inadvertent bit of urban renewal, consider the victims that followed. Just as Videomatica was announcing its pending demise, Ardea Books and Art shut its doors just up the street, the latest Vancouver independent bookseller to drop out of that ever-shrinking retail category. Music shops are not yet completely gone, but if you scan the business page archives for years back, you won’t find any start-ups in that particular line either.

Netflix, iTunes, Amazon and SmuttyJoe’sStripperama.com may never have had urban redevelopment in mind. But the web, the invisible landscape that exists everywhere and nowhere, has reshaped our neighbourhoods. From A&B Sound to Duthie Books to Videomatica, online competition has at least hastened the downfall of many a Vancouver business landmark.

But those tears I mentioned are a very localized precipitation. The rise of Netflix et al. has been a boon for smaller communities. Lonely movie buffs in Castlegar and Prince Rupert couldn’t care less about the fate of Videomatica. They just know that given an Internet connection, they have pretty much the same access to movies and books as anybody in Kitsilano. The demise of bricks-and-mortar shops has been a triumph for retail democracy. Living in small towns simply doesn’t come with the same cultural penalties in the 21st century.

Still, I will shed tears for Videomatica, Castlegar be damned. Its demise will leave a gap and it doesn’t seem to me that the gap has been filled by online sources quite yet. Plus, I still resent the constant technological demands of the new online retailing realities. Those who don’t constantly upgrade equipment suffer for it.

And I had friends at Ardea Books and Videomatica. Not Facebook friends, either. Kits won’t be the same without them.

BCBusiness, August 1, 2011

Some 10 years ago, word of mouth emerged as a form of guerrilla marketing to help cash-strapped small businesses get noticed in the marketplace. Word-of-mouth marketing aims to generate buzz about a business, with the hope that it will eventually reach those who actually need whatever the business is selling. One Vancouver company has raised word-of-mouth marketing to new levels as it has expanded over the past decade. And it’s doing it in an industry that hasn’t changed substantially in 100 years.

The Problem
Nurse Next Door Professional Homecare began as a home-care business that wanted to shake up an industry that has operated in the same way for more than a century: caregivers provide nursing services in the homes of clients instead of in hospitals. But how would Nurse Next Door, which uses franchisees to deliver its services, let potential customers know it was disrupting this traditional industry?

The Solution
Brand Defense: John DeHart chooses blogging over litigation after a perceived slight

Co-founders Ken Sim and John DeHart decided to avoid traditional marketing altogether, opting instead for a guerrilla approach. Following a technique postulated by the writer Seth Godin, they relied almost exclusively on word-of-mouth marketing to build their business.

Sim and DeHart outfitted their six initial caregivers with pink cars and encouraged them to park them in their driveways and at strategic locations around the city. The cars were instantly recognizable and created curiosity in passersby, who mentioned them to friends who needed such a service. The pink cars have now become a staple marketing method for the company.

Believing that a recommendation from a friend, neighbour or authority is the ultimate form of marketing, Sim and DeHart also worked diligently to build relationships with doctors and hospital workers. Their only conventional marketing material was a brochure.

Nurse Next Door didn’t advertise, didn’t go to trade shows and didn’t do any of the other kinds of marketing done by other home-care providers or franchise businesses. Today, the company has 43 franchises in Canada and one new franchise in the U.S., where it hopes to expand further.

Even today, the company has no traditional marketing materials. However, it does recognize that new technology such as social media can greatly amplify its word-of-mouth technique. Claiming to be the “loudest” and “boldest” operation in the industry, it uses Twitter as a brand builder.

This recognition of the power of social media stood the company in good stead earlier this year when a more traditional competitor slagged it on a website. Nurse Next Door linked to the website, and answered with a description of its model. Then it spread the word on the Internet, and asked everyone to pass it on.

The campaign earned Nurse Next Door publicity in a Wall Street Journal blog and Inc. magazine. This coverage in turn became fodder for more word-of-mouth marketing.

Lessons
• Be choosy. Marketing today, especially for smaller businesses, is about talking with not just anyone, but with those who appreciate your approach and style.

• Think in real time. Keep an eye on events, and when you find one that might fit your philosophy and style, act fast. Do what’s needed to get people talking about you.

• Replace money with creativity. In word-of-mouth marketing, talk about you flows from the bottom to the top and covers all points in between. Using it is much more cost-effective than trying to sell to people directly from the top down.