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Is this your shopping list: bread, milk, eggs and Viagra?

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Monday could be a big day for a lot of people.

Tesco, one of the leading UK supermarkets, will commence selling the erectile dysfunction drug Viagra.

Viagra has been a huge success for Pfizer. It’s one of their blockbuster drugs and millions of the little blue tablets have been sold over the last 10 years.

One of the drawbacks though for a lot of men that want the drug is where to get hold of it from. In the UK you generally need either a doctors prescription or to risk buying it from potentially suspect internet sites.

Tesco are one of the most successful supermarket chains in the world. In strategic Ansoff’s Matrix terminology they have done very well with market development (4,811 stores in 14 countries with an amazing 2,482 stores in the UK alone) together with product development (an estimated 40,000 product lines ranging from pizza to petrol to perfume).

Tesco are about to add another product line to their offerings and from next Monday shoppers will be able to pick up Viagra from over 300 Tesco stores.

As finance people we know all about the challenge of getting pricing decisions right.

Tesco are not the first mainstream chain of stores to stock Viagra. Last year, the high street chemist Boots became the first store in the UK to sell Viagra without a prescription. You can currently buy 4 of the blue pills from Boots for £55.

A price skimming or premium pricing strategy for Tesco wouldn’t really work as the Viagra market is a mature market. Tesco has instead undertaken a classic penetration pricing strategy whereby they price the product at an attractive price with the aim of growing its market share.

From Monday, you will be able to buy 8 of the blue pills at Tesco for £52.

Whilst the per tablet charge at Tesco is a lot lower than what can be found at Boots, £52 is still a significant amount of money. There’s a recession on and times are hard for a lot of people. Only time will tell whether Tesco made the correct pricing decision.

Has the Big 4 become the Big 3?

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Things have changed. You won’t be hearing much about PricewaterhouseCoopers any more.

Is this breaking news? Does this mean that we will be talking about the Big 3 rather than the Big 4?

Should PricewaterhouseCoopers partners and staff be rushing to recruitment consultants to get another job?

There’s no need to panic as all is well with the company. What they have done though is undertaken a rebranding exercise.

The company has commonly been referred to as PwC since it was established via a merger back in 1998 between Price Waterhouse and Coopers & Lybrand. With effect from Monday though they will now officially go by the name of pwc.

As part of a multi-million pound make over not only will the company be known as pwc but the corporate logo and corporate colours have changed.

The new logo incorporates the letters “pwc” in lower case along with a 6 rectangle symbol in shades of orange and red.

According to pwc, the brand was refreshed “in order to strengthen, and modernise how it represents its worldwide network to its clients, its people and the communities in which it operates.”

Global brand consultants Wolff Olins designed the logo in collaboration with PwC employees and clients. The complete rebranding process reportedly took two years.

From a personal point of view, I like the new logo and orange/red spectrum colours which I think are nice fresh, clean colours.

What about people from some of the other accounting firms? My guess is that they must be relieved. With KPMG having blue/white, Ernst & Young black/yellow and Deloitte navy/green it must have been a relief all round that pwc went for orange/red.

Forget the great Polish and Russian vodkas, the best vodka in the world is officially English. Now, go and open a packet of crisps to celebrate.

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At this year’s San Francisco World Spirits Competition the best Vodka in the world award was won by a small distillery based in rural England in Herefordshire. Chase Vodka beat off 115 other entries to win.

This is a superb achievement by them.

I’ve been lucky enough to try some of the vodka. It’s certainly very nice and I have to say I think their award was thoroughly deserved. I hasten to add though that I haven’t tasted the other 115 vodkas so can’t really give an unbiased view!

Chase vodka has got a rather unusual background. It was founded by local potato farmer William Chase. Now William certainly knows a thing or two about potatos. He was the person that founded the upmarket potato crisp company Tyrrells.

Tyrrell’s crisps were only launched 8 years ago in 2002. In classic strategy terminology they were very much promoted on the differentiated manner as being of a better class of crisp, being hand crafted and a top quality product. His passion for potatos paid off and in 2008 he sold 75% of the crisp brand for a rather tasty £40 million.

Not content with sailing the world on his personal yacht or buying a private island to retire to he built on his core competencies and developed his love of potatos into another upmarket brand but this time to be enjoyed by adults only.

Again, using strategy speak the chase vodka business is nicely vertically integrated with the potatos being grown on the farm as well as the distillery and the bottling process being in the same location.

It’s not cheap – retailing at £32.95 it is over 3 times as expensive as the supermarket own brands but it’s hand crafted by a small team of workers and each bottle is reportedly made out of 250 top quality potatos. Comparing this with the mass market vodkas made out of left over grain then you can see why the pricing is different.

Using Ansoff’s matrix terminology they have also undertaken rather nice product development and launched a limited edition Marmalade Vodka.

Now, for me a lovely breakfast is a fresh pot of tea with some nice toast and marmalade. Should I be rethinking things though so that I opt for Marmalade Vodka instead?

PwC in the UK have just released their results. So how much did each partner make?

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PricewaterhouseCoopers is a great company. It’s one of the top companies in the world and it’s also a truly global company. The latest reported figures show over 160,000 PwC people working around the world including 8,500 partners.

On Monday PwC released their UK results for the year ended June 2010.

So, how did they do?

First of all the good news. Their turnover in the UK rose 4% to £2.33 billion.

Their profit before tax in the UK however fell 3% to £665 million.

This fall in profit was put down to some significant investment during the year including recruiting 1,750 staff, appointing 57 new partners and moving into a new environmentally friendly office in London (incidentally, there’s a previous blog entry on the proximity of a PwC office to a Ernst & Young office here).

As maybe a positive sign on their view as to which direction the economy is heading they also stated that they were planning on creating 800 new jobs in the UK over the next year as well as continuing with their significant graduate recruitment by taking on 1,200 new graduate level joiners.

Now onto the exciting bit that I’m sure lots of people are interested in and that is what is the average payout for each of the 820 PwC UK partners?

Although it was down by 2% on the previous year it was still a healthy average figure of £759,000 per partner.

PwC’s UK chairman, Ian Powell, was reported as receiving £3.6 million.

Look out for two prostitutes, £3.7 million of stolen cash and a 58 year old accountant at your local Toys R Us store.

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Toys R Us is one of the largest toy store chains in the world.

It’s very successful and has nearly 1,300 stores around the world. What it didn’t have though was a strong internal control system in their UK purchase ledger department.

Between 2006 and 2008, married father of two and accounts payable manager Paul Hopes made over 20 illegal payments ranging from £100,000 to £300,000 to bank accounts of fictitious toy suppliers in the Far East which he had set up himself.

The £3.7 million of illicit money was then spent on various items. One of Mr Hopes favourite methods of spending the money was on Wednesday nights when he would regularly entertain 2 prostitutes at luxury hotel suites.

As well as paying for their time and energy he also bought them a string of luxury cars including a Bentley, Toyota Land Cruiser and a BMW M3 (incidentally, his wife was at the time driving the family Ford Mondeo).

In total he spent nearly £2.5 million on the two prostitutes.

It all came to a sticky ending for Mr Hopes though as he was sentenced to 7 years in jail.

What is interesting about the sentencing is that under the Proceeds of Crime Act the Judge ordered Mr Hopes to repay £3.4 million of the £3.7 million stolen. If he fails to repay the £3.4 million then an additional 10 years will be added to his 7 year sentence. At the end of the 17 year sentence he will still be obliged to repay the £3.4 million.

Now, remember that Mr Hopes is an Accountant so I’m sure he’s an expert in double entry but even the best bookkeeping skills won’t be able to make “income” of £3.7 million minus “expenses” of £2.5 million equal a balance of £3.4 million.

I guess he’s hoping that these two particular ladies are now desperately trying to find him every Wednesday evening to give him the money back.

Hair today, gone tomorrow? It’s certainly a risk for Procter & Gamble.

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As one of the best known and most successful companies in the world Proctor & Gamble certainly know a thing or two about branding. It also seems that they are pretty switched on when it comes to risk.

Over in the States, American Football is huge. One of the most well known players is Pittsburgh Steelers player Troy Polamalu.

Anyone that has watched a game that he has played in will instantly recognise him. He has very distinctive hair.

He is of Samoan descent and has not cut his hair for 7 years. Far from being in bad condition though his hair is in excellent condition and his flowing locks would no doubt make many a woman jealous.

P&G make the famous Head & Shoulders shampoo and when deciding on a suitable person to promote the product settled on Polamalu. If you’re interested you can even play a Polamalinator game here.

No details have been disclosed of how much he’s been paid for the sponsorship deal but it’s no doubt a significant amount.

Successful, healthy, sporty and a sex symbol to a lot of women in America meant that he was the ideal person for promoting Head & Shoulders and the return was no doubt there.

“Risk and Return” is an issue that is involved in all major decisions within business. Whilst the return is there with Polamalu what about the risk?

P&G seem to think that one of the risks is in the loss or damage to his famous hair. They announced earlier this week that they had just insured his hair for $1 million. Apparently if Polamalu loses 66% or more of his hair during the next 7 months then Lloyds of London insurance will pay out $1 million.

So, the branding works well. Risk seems to be covered but what about the legal aspects? Did anyone check the small print to the contract as to whether a haircut is allowed during the next 7 months? I hope so otherwise it could very well be the most expensive haircut in history.

I take my hat off to Bethany Hare, Charlie Chaplin and Mendelow’s Matrix but should I be smiling?

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Bethany Hare is a remarkable young lady. She’s only 10 years old and wanted to raise money for a local children’s hospice.

She came up with the idea of dressing up as Charlie Chaplin, singing the song “Smile” (the theme from Chaplin’s 1936 film “Modern Times”) and then posting it on a charity website.

She was aiming to raise £5,500 and it all started well with people appreciating the effort she had put in and making donations.

She was then contacted by New York based Bourne Music Publishers, who own the rights to the song. Several discussions between Bethany’s mum and the Publishers later and the end result was that Bethany was told that she must either remove the song or pay a license fee of $2,000 to keep it online for one year plus a further $250 every time she performs it in public.

This is a lot of money for a little girl of 10 years old to pay to a big music publisher especially when she’s trying to raise £5,500 for terminally ill children. Bethany removed the song from her video and in true Chaplin style ran it as a “silent movie”.

A lot of people will question the approach taken by Bourne Music.

Mendelow’s Matrix is a method of analysing stakeholders in a business. According to this model the stakeholders that management should really look after are the “key players” (high interest / high power). Bethany falls within the low interest / low power quadrant of Bourne Music’s matrix and hence the theory goes that they can employ “minimal effort” to this category.

Some would argue that they had a duty to protect the song and obtain all the royalties they could from it but it seemed obvious that Bethany was never going to pay that sort of money.

This story has however got a happy ending. Ben Model from Silent Clowns in New York wrote a piano score especially for Bethany to use and she has now reached her money raising target. Bethany’s performance can be seen here.

I’ll leave it up to you to decide who you think are the good guys and the bad guys in this story. My view is that the title of the song in debate was “Smile” and I’m pretty certain that not a lot of people were smiling when they heard the approach taken by the Publishers.

The ACCA exam results are out today. If you’ve been successful then maybe head to the vending machine.

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It’s ACCA exam results day today and congratulations to those of you that have passed. All your hard work has paid off and it’s now time to celebrate.

I’ve often wondered whether the results day should be a Friday so you can celebrate on Friday night and Saturday night or whether it’s a good excuse to annoy everyone else in the office on the Monday with your shouts of happiness all day.

If by any chance you’re in Pennsylvania in America and want to have a little drink to celebrate your success then there is now a novel way of doing so.

We blogged last year about the use of vending machines in Germany for selling local fruit and vegetables but in Pennsylvania they are now piloting a new type of “outbound logistics” (using Porter’s Value Chain Analysis terminology).

You can now buy bottles of wine from vending machines. In order to buy the wine customers have to firstly prove they are old enough by swiping their ID and a credit card. They then have to prove they are sober enough to buy the wine by using a breathalyzer.

Wine aficionados may well be aghast at the thought of buying wine from a vending machine but if you’re the type of person that just doesn’t want to stand in a queue and talk to the shop assistant when you’re buying the wine then this could be for you.

Then again, if you’re buying it to celebrate passing your exams I would recommend that you buy it from the shop assistant so that you can tell them and the rest of the people in the queue the reason you’re buying it.

Things are getting more expensive in China but is this good news for McDonalds?

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A report issued by Credit Suisse this week highlighted the fact that costs of manufacturing in China are on the increase.

Average salaries for example have increased from $1,000 per annum in 2000 to nearly $4,000 in 2010. This increase, together with the cost of transporting goods to Europe and America, means that the cost base has increased significantly and importantly is likely to continue to increase.

A number of companies have invested in China principally on the basis of their low cost base.  The rising cost base though is causing concern for a number of companies.

Will they be able to switch production to other low cost locations such as Bangladesh or Vietnam? They probably will be able to but it could be costly.

Will they be able to pass on these cost increases to the end consumer by way of price increases? Given that we are only just starting to come out of recession my guess is that this will be challenging to say the least.

But does all of this really come as a surprise? With the explosion of globalisation over the last couple of decades and companies manufacturing in cheaper location or “off shoring” services then surely it’s simply a case of supply and demand.

If companies set up offshore operations in a certain territory which is renowned for having, for example, good quality cheap IT skills then when other companies join them there will be a surge in demand for these individuals and wages will increase.

It will take a number of years or even generations but some people’s view is that eventually there will be very similar wage levels wherever you are in the world.

Back to the increase in wages in China though and whilst this will be bad news for a number of companies there will also be companies that will benefit from the increase in local spending power. McDonalds for example are no doubt licking their lips in anticipation at all the Big Macs that could well be sold in China in the near future.

It’s a rather nice TV and a “bargain” at £6,999 but you’ll have to wait until 1 October to get the most out of it.

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If you are one of those people that keep on losing the TV remote control then you’re going to have fun when you need to keep track of your 3D glasses as well.

We blogged earlier this year about the launch of 3D televisions and their position within the product life cycle.

When it comes to the marketing mix (the 4Ps) there are certain characteristics that are found at the introduction stage.

Witness for example the high prices that are currently being charged for 3D televisions – a Samsung UE55C900 52 inch 3D TV was today for sale at the John Lewis shop in Oxford Street in London for £6,999 plus £139.95 for two pairs of 3D Active Glasses (this in itself provides an interesting example of pricing given that one pair of 3D Active Glasses costs £59.95 – if you need a calculator to spot the significance then maybe a career in finance isn’t for you!).

The lack of 3D content however was always going to be a problem at the initial stages. After all, a top of the range 3D TV isn’t that good if there aren’t a lot of 3D programmes to watch.

Sky TV in the UK though is about to come to the rescue. They announced today that they will be launching a dedicated 3D TV channel on 1 October. Some highlights of the launch weekend include coverage of golf’s Ryder Cup as well as the film Monster vs. Alien.

The good news for Sky subscribers with the latest Sky+ HD set top box is that they won’t need any additional Sky equipment to watch the 3D content. They “only” need one of the latest 3D TVs.

If you’re in the UK you can look forward to a rush of “P – Promotion” for 3D TVs in the autumn. We’ll report back in a years time but expect by then the “P-Price” to have fallen, the “P-Product” to have developed, the “P-Place” for purchasing to have increased and the “P-Promotion” to have…..