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Paying for Convenience


Making more money by making things easier for customers is... easy.


I was surprised, at first glance, to find an EZ-Pass device attached to the windshield of an Avis (CAR) rental car I traveled in this weekend.

Upon further consideration, it actually wasn't all that surprising- people like convenience, and companies like making money.

Avis charges customers $1.50 per day for the service, and all tolls are charged to the renter's credit card.

Cendant Car Rental Group, the parent company of Avis and Budget, rolled out the program in March of 2006.

In a press release at the time, Scott Deaver, executive vice president of marketing for Cendant Car Rental Group, said:

"It is clear that this is a service our customers find valuable, and we are delighted to be the first to roll it out. Electronic toll collection provides our customers with a great time-saving device that will make their travels smoother and more stress-free."

The Avis Budget Group annual report says the EZ-Pass program, along with other add-ons like GPS navigation systems, offer "opportunities for us to generate additional revenues, profits and customer loyalty from our nearly 30 million annual rental transactions."

With 103.2 million car rental days (1 day = 8 hours) in 2006 and 4.6 million truck rental days, that's a lot of added revenue- especially when you consider that the EZ-Pass discount is not passed on. (Tags give drivers a 10% discount on New York State tolls and a $1 discount on Port Authority bridges during peak hours and a $2 discount during off-peak hours.)

Hershey (HSY) seems to be angling for sales in rather interesting ways, too.

I picked up a bunch of bananas in the supermarket on Saturday and, as usual, one of them wore a Chiquita (CQB) sticker.

As you can see, Chiquita is doing quite nicely:

But Hershey could use some help:

Lo and behold, attached to a second banana in the bunch, was a sticker with a Reese's logo that read "Toppings Section".

Apparently, Hershey would like banana buyers to consider making a banana split with their fruit. So, maybe all people need is a wee suggestion to head over to the toppings section for some Reese's syrup.

Which I did.

(Note: There were no Häagen-Dazs stickers reading "Ice Cream Section" on the Reese's syrup bottles. Nor were there Cool Whip stickers that said "Dairy-ish Section" on the Häagen-Dazs containers.)

Bain & Company research shows that the food industry's growth is hovering around 3% and margins continue to tail downward, which is why companies constantly need to innovate to keep up.

Over the weekend, Jeremy Peters of The New York Times took a look at the way certain snack-food manufacturers are keeping up:

100-calorie packs.

Over the past three years, sales of 100-calorie packs have passed the $20-million-a-year mark, with sales growing 30% in 2006.

It's gangbusters for the companies, because they can charge much more per ounce.

A 6.6-ounce bag of Pepperidge Farm (Campbell's (CPB)) Goldfish costs $1.99.

A box of five 0.75-ounce 100-calorie packs costs $2.99.

As it would take 8.8 100-calorie bags to equal the amount of Goldfish in a 6.6-ounce, $1.99 bag, consumers are paying $5.26 for the same amount of product.

In the article, one shopper says she doesn't mind paying a "convenience surcharge" for the more expensive 100-calorie packs because the portion control is done for her and she knows when to stop eating.

It's a good point. A lot of people overeat, which is why, according to the World Health Organization, over one bln people worldwide are overweight and that if current trends continue, that number will increase to 1.5 bln by 2015.

However, if there were no obesity in the world, there would be no need for companies like the Great John Toilet Company of Laredo, Texas.

"The obese now represent the most populous group of people in the U.S.," says Bruno Kordic, marketing and sales director for Great John.

Fortunately, Great John toilets (which won "Best New Bath Product" at the 2004 Chicago Kitchen & Bath Show) are rated up to 2,000 pounds-substantially more than the 350 pounds a standard toilet can handle.

Great John's website tells us that "the size of the average person has increased dramatically over the last century" and that "our goal was to create the most comfortable and safe toilet for Large-Size people on the market."

Comfort, okay. But, safety?


A British study shows that almost 47% of severely obese persons have dislodged a toilet from the floor and 19% of them have had the toilet break under them.

Miles Allen, owner of Ray Allen Plumbing in Tyler, Texas, told Contractor Magazine that he has a number of obese customers who, when they sit on the toilet, end up falling the last six inches or so.

"With that type of mass and acceleration, they're hitting that toilet with more than just their body weight-for some people, maybe up to 1,000 pounds of pressure."

Here's how Great John's website describes their thrones:

"For STABILITY, we designed a super wide base. To insure STURDINESS, we also added reinforcements into the base. To eliminate the problem of the SEAT SLIDING, we provide "Anti-Slide" fins for safety. This also prevents pinching. Finally, GJ has added a second SET OF ANCHORS at the front sides of the base to increase protection against movement of the unit from the floor."

That's one sturdy toilet…

Y'know, maybe that banana split wasn't such a great idea after all.

No positions in stocks mentioned.
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