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November 15, 2010

Wal-Mart Claims Savings on Candy, and Everything Else in Your Life

Filed under: Food/Groceries,Retail — Edgar (aka MrConsumer) @ 5:17 am

Wal-mart likes to make savings claims, and few people would quibble that the company is known for discounts.

Example 1:

Just before Halloween, Wal-mart advertised on TV that its Halloween candy was on average 20% cheaper than other retailers.

What’s their proof?

*MOUSE PRINT:

They said they surveyed national retailers’ regular price of just four specific candies (Snickers, Reese’s, Skittles, and Butterfingers), and on a per ounce basis, their prices were on average 20% less. Others’ sale prices were apparently ignored.

It probably would not stand up to legal or statistical scrutiny to make a broad general savings claim about candy just based on the prices of four products, and apparently not necessarily even comparing the same size bags. 

Example 2:

In television commercials, and in their October 31 circular, on the cover, the company claimed:

Huh? Merely because Wal-mart exists, the average family saves $2800 a year no matter where they shop? Mouse Print* asked Wal-mart’s PR department for an explanation. The company responded:

“Walmart helps families save an average of $2,800 a year, no matter where they shop, based on the company’s impact on the economy, according to a study by IHS Global Insight (updated in 2010, to reflect data through the end of 2009). The study includes jobs, wages, prices, consumer buying power, productivity and gross domestic product. It details how Walmart’s presence translates directly into savings for consumers.”

*MOUSE PRINT:

Reading the Global Insight statistical research (which appears to be written in a language resembling mumbo jumbo) and speaking to the report’s author clarified little other than based on the 2010 study, Wal-mart asserts that the average family benefits from a cumulative reduction in prices of 3.2% per year because Wal-mart is driving efficiencies throughout the economy. To come up with the $2800 claim, they had to take 3.2% of something, and that something works out to $88,000, that the researcher says the average family expends a year on goods and services.  This number seems much higher than what the true average is.

The 2010 study omits an important finding from their 2005 study, indicating that while prices may fall because of Wal-mart, so do wages:

“… lower inflation levels in the economy with Wal-Mart put downward pressure on nominal wages, … wage rates are only 2.2% lower overall .”

I certainly can understand that other retailers lower their prices when there is a Wal-mart in the area, so even if you never step into a Wal-mart you can save SOME money just because of their presence. But I don’t buy the proposition that what you pay for rent, movies, airfares, cars, utilities, restaurant meals, tuition, and every other service is affected by Wal-mart to the tune of being 3.2% less than they ordinarily would be. So, take their $2800 savings claim with a big grain of [Great Value] salt.

• • •

November 8, 2010

The Next Miracle Health Food: Cinnamon?

Filed under: Food/Groceries,Health — Edgar (aka MrConsumer) @ 5:52 am

To listen to the spice company, McCormick, you would think that cinnamon was the next great health food:

“Did you know that this ancient spice taken from the inner bark of tropical trees is an antioxidant powerhouse? Cinnamon has one of the highest antioxidant levels of any spice – and even more than many foods. You’ll find as many antioxidants in 1 teaspoon of cinnamon as a full cup of pomegranate juice or ½ cup of blueberries.” — McCormick website

Wow, sounds impressive… until you begin to think about it.

*MOUSE PRINT: From the cinnamon nutrition label on McCormick’s website…

This is a good example of a company hyping a nutritional benefit that has no practical significance because of the small amount of cinnamon that is actually in a typical portion of most foods flavored with the spice.

• • •

November 1, 2010

Spirit Airlines: They Believe in Full Disclosure?

Filed under: Travel — Edgar (aka MrConsumer) @ 5:00 am

Spirit Airlines advertised a $1 airfare sale a few months back. One dollar for a one-way flight? Two dollars roundtrip? Impossible!

Of course, the little asterisk indicates that taxes and fees are additional. How much extra? You have to look in three places on their website to find all the extra costs, which we consolidated in the chart below.

*MOUSE PRINT:

The quoted fare does not include the following taxes and fees that may apply to your air travel:

– September 11th Security Fee: A September 11th Security Fee of $2.50 applies per enplanement originating at a U.S. airport up to $10 per roundtrip.
– Domestic Segment Tax: A segment tax of $3.70 per U.S. domestic flight segment (a flight segment is defined as one takeoff and landing).
– Passenger Facility Charges (PFC): Up to $18 per round trip per passenger in local airport charges.
– Passenger Usage Fee: Passenger Usage Fee of $8 per traveling customer per one way travel applies to all reservations with the exception of those bookings created directly at Spirit Airlines’ airport locations.
– To view and obtain these fares you must be logged in as a member of the Spirit Airlines $9 Fare Club — if not already enrolled, please go to www.spiritair.com for details on how to become a member of the Spirit Airlines $9 Fare Club. [Membership costs $39.95]
– Overhead carry-on luggage checked at the gate: $45

So how much could a $2 roundtrip fare wind up costing, assuming non-stop flights in both directions, with one carry-on and no checked luggage? If you add up everything listed above, including the $9 club membership fee, the total is a whopping $178.35 for what was advertised as a $1 fare each way!

It seems if any company really believed in full disclosure, they would not advertise come-on fares that bear no relationship to the actual charges the customer will face.

• • •

October 25, 2010

Don’t Let the Juxtaposition of Deals Fool You – Part 2

Filed under: Retail — Edgar (aka MrConsumer) @ 5:31 am

Last week, we demonstrated how two claims placed side-by-side — “four times faster Internet” and a $35 monthly price tag — had nothing to do with one another.

This week, we look at an offer from Sleepy’s:

Wow, pay a little as $99 for a mattress, and when you buy the set, you get a free HDTV.

Not so fast.

*MOUSE PRINT:

According to a salesperson contacted at a local Sleepy’s store, you cannot get the free TV with the advertised $99 mattress even if a boxspring is purchased with it. The fine print in the ad limits the offer to queen and king-size models of certain brands only, and apparently not including sale items.

Retailers and regulators literally and figuratively need to a draw a line when adjacent offers have nothing to do with one another.

• • •

October 18, 2010

Don’t Let the Juxtaposition of Deals Fool You – Part 1

Filed under: Internet — Edgar (aka MrConsumer) @ 5:06 am

Some advertisers make you think you are getting a better deal than you really are by clever (or unfortunate) juxtaposition of the price with a statement of benefits.

Example 1: Clear Internet Service

A flyer in the paper recently promoted “4x faster internet” for as little as $35 a month:

This deal certainly is designed to attract attention by seemingly combining a fast speed with a low price. Immediately, MrConsumer wondered “4x faster than what” because the tiny dagger after the claim was not explained on the front of the flyer.

The back explained the comparison:

So the Internet they are selling for $35 is 4G Internet, which they say is four times faster than 3G. Let’s put aside for the moment what speed they are actually selling, which is not disclosed anywhere in the flyer.

When visiting the Clear website using the link provided in the advertisement, and you click on the $35 logo found there, you are taken to a page only showing a $45 offer! Clicking an inconspicuous tab labeled “Base Home” reveals the real $35 offer.

*MOUSE PRINT::

The download speed is stated as “up to 1.5 Mbps” — which is more in the range of what 3G speeds are, not four times 3G, and certainly not full 4G speed. A 13-city study of carriers’ 3G speeds by PC World published earlier this year showed that AT&T averaged 1.4Mbps, while Sprint, Verizon, and T-Mobile averaged 800-900Kpbs (1000Kbps = 1Mbps).

So how can Clear advertise “4x faster Internet” for $35? The juxtaposition of the $35 price on the flyer above likely has nothing to do with the “4x faster” claim. Their $35 service, which the company says is 4G, really appears to be 4G ramped down to 3G-like speeds. My guess is that the four times faster claim actually refers to their more expensive $45 service, which does in fact appear to be full 4G speed.

But what reasonable consumer would understand there is no connection between the “4x faster” claim and the adjacent $35 price?

To add insult to injury, when visiting the Clear the website to find out exactly what speed they are selling on their 4G network, claimed to be four times faster, you find this for their $45 service:

*MOUSE PRINT:

What? Unlimited download speed? The sky is the limit? Of course not.

*MOUSE PRINT:

Buried in the FAQ: “CLEAR supports average download speeds up to 3-6 Mbps and upload speeds up to 1Mbps.”

Mouse Print* asked the company why they don’t advertise (in the print ad) the actual speed they are selling to avoid confusion, why they juxtapose the four times faster claim right next to the $35 price, and whether now that the potentially misleading nature of the ad was pointed out to them, would they consider modifying it.

A spokesperson for the company from their PR agency said, in part:

ON SPEED: “The speeds are detailed on our website, and the information is readily available. Many consumers may not understand technical terms pertaining to Mbps, so many of our ads in print, radio, and TV tend to put the language in simpler terms.”

ON JUXTAPOSITION: “The ad simply indicates that home plans start at $35, which is accurate. We use the term 4X faster as a general comparison to 3G wireless plans offered by conventional cellular carriers.”

ON CLARIFLYING THE AD: “I’ll look into this, but I do not believe that we have plans to change the ads at this time. “

Additional follow-up questions posed to the company related to the fact that their 4G $35 plan really was offering speeds only in the 3G range went unresponded to.

For a company with the name “Clear”, they certainly have chosen to make their advertising anything but.

——–
Stay tuned for another example of “Don’t Let the Juxtaposition of Deals Fool You”.

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