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[13 comments]

Believe It Or Not - The Claims Manufacturers Make

October 6, 2011

Claims that Reebok's EasyTone or RunTone shoes could strengthen hamstrings, calves and buttocks "just by walking" have been ruled "unsubstantiated" by the Federal Trade Commission (FTC). As a result, thousands of customers may be in line to receive part of the $25 million fine imposed for false advertising.

The Guardian quoted the head of the FTC's consumer protection bureau, David Vladeck, who said, "There is no such thing as a no-work, no-sweat way to a fit and healthy body." It also pointed out that the U.K.'s Advertising Standards Authority (ASA) ruled against Reebok's ads in December 2010 because the company "had not provided 'robust, scientific evidence' to support claims."

The Daily Telegraph observes that claims for "leg-sculpting miracles" have been around for several years while The Guardian says Skechers, the other major footwear maker in the "toning" category, acknowledges the FTC is looking at ads for its Shape-ups and other toning shoes.

Reebok's owner, Adidas, in an e-mail, stood behind its claims, agreeing to the settlement solely (pun intended) to "avoid a protracted legal battle." The statement added, "We have received overwhelmingly enthusiastic feedback from thousands of EasyTone customers, and we remain committed to the further development of our EasyTone line of products. Our customers are our number one priority, and we will continue to deliver products that they trust and love."

Speaking to Adweek, attorney Jeffrey Greenbaum said the settlement, particularly the fine, "signals a major shift" for the FTC, "which is cracking down on national advertisers, forcing them to make restitution to consumers" if caught making claims they cannot prove.

The Washington Post reported, "Experts who track the industry say that while the FTC settlement may generate some skepticism among consumers, it won't bring down the product line. ... The promise of a better body from sneakers is analogous to beauty products, where people pay a premium price for hope in a jar."

Attorney Linda Goldstein added, "The old standards for proof were more fluid. ... For certain health claims, companies now have to have two double-blind studies."

Overseas, the European Food Standards Agency (EFSA) recently concluded a three-year assessment of manufacturers' claims and "rejected 80 percent of proposed food-related general health claims," reported just-food, which also gave background about some of the reasons.

Meanwhile, consumer choice comes down to "believe it or not."

FINANCIALS:     [ETR:ADS]

Discussion Questions:

Discussion Questions: Do you think health claims made by brands are more or less truthful than in the past? How much culpability do stores have for verifying product claims?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that the FTC will increasingly be cracking down on dubious health claims by either food or fitness-product makers?

Comments:

As well as Reebok, Nivea has recently been fined by the Canadian Government for weight loss claims. Rub some lotion on your thighs and watch them shrink! I can relate to a curious interaction I had with a certain sales rep of a major 'weight loss' product that was being sold in a certain pharmacy. While expanding the section, I asked the rep point blank if she felt these products worked and if she used them herself. With a snicker, she said that this stuff is as good as snake oil and quoting The Simpsons said 'any weight loss caused by this product is purely coincidental'. The inherent problem is that this stuff sells and consumers will always embrace a 'quick fix' to their problems. As long as there are bold warnings and caveats on the package, stores will continue to sell these products because of the margins involved. Are stores responsible? Of course they are. I'm amazed at how bigger brands like Reebok and Nivea are getting into the weight loss claim business. I guess it all boils down to dollars and cents (sense?). If the fine works out to less than the profit acquired, it makes business perfect business sense. Is it right? Of course not.

Doron Levy, President, TheMortgageMachine.ca

He who lives in a glass house shouldn't throw stones. Don't get me wrong, some manufacturers' claims are over the top. But visit just about any vendor's website and you are guaranteed the best results and the lowest total cost of ownership. At least with a shoe company you can go to a store and try on the shoe (for free) while some enterprise software vendors are long on promises but short on transparency (stamp-size screen shots, no free trial, etc.). Manufacturers and vendors need to do spend less time "selling" and more time putting their products in front of their customers. Gimmicks don't sell in the long run; relentless attention to detail and an inherently strong product does.

Fabien Tiburce, CEO, Compliantia, Retail Audit & Task Management Software

Since the past includes a time when snake oil salesmen promised to cure everything that ailed you, I'd have to say it's a pretty low bar.

Frightening an exercise as it is, turn on late night television and you'll find an endless number of brands promising everything from joint relief to ... um ... male enhancement.

The bottom line (in this case an apt phrase) is that they are all accompanied by almost translucent text at the bottom of the screen mentioning the fact that none of the claims have been verified by the FDA or other similar agencies.

Snake oil or Entenz -- the choice of which is more or less truthful is all yours.

As to retailers' responsibility, there are two schools of thought. The traditional caveat emptor -- if there's a demand, I'll stock and if it doesn't work, it's not my problem and the retailer as curator concept that says you build your retail brand by ensuring your customers can trust everything you sell to do what it says.

There's a lot to be said for integrity, but there's still a pile of money in selling snake oil.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

If you put on these shoes and go walking, it will help tone your legs, etc. True, you could on any pair of shoes or no shoes at all, and walking will help tone your legs. Take the magic diet pill, don't eat, and exercise. Is it the pill that makes you lose weight? Come on, that's just good salesmanship. If we cannot fool consumers, how does the FTC expect us to make money? There is a difference between lying and simple salesmanship.

If consumers did not have unrealistic expectations of products, then what would be left to sell? I'm still mad that I wasn't able to fly after getting my Superman suit when I was 5. So I ran around like an idiot with my arms stretched out. Today I see adults doing the adult version of that with various other products. In the grocery store we see it all the time with labels saying low fat, low sugar, no cholesterol, lite, new and improved, etc. Suckers buy it right up. And if they didn't we'd go broke.

David Livingston, Principal, DJL Research

If the FTC was the deciding factor in what innovations were brought to this planet we'd still be chipping sharp edges on our stone arrowheads. Since when is 'walking' not an exercise and a way to get fit? Has FTC's David Vladeck never worked up a sweat on a swift walk? If these shoes cause people to get out and walk more, why exactly do we need the all-wise FTC to put it down?

Of course product claims can get ridiculous like those X-Ray binoculars I bought when I was 14 -- a terrible disappointment! In this case no one is claiming to cure cancer -- though heaven help the innovation that actually does, you can bet the FTC will put a stop to that! Maybe it's time to stop spending so much time, energy and money looking for ways things 'don't ' work and start looking for ways they do.

BTW -- My wife's walking group swears by those shoes!

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Ian Percy, President, The Ian Percy Corporation

Claims are a bit more truthful today, out of fear of such fines and publicity. But R&D budgets are down, so it's harder to establish good substantiation for claims, and if the FTC can start collecting some serious cash here for our bankrupt government, it might just wind up with more staffing. As for retailer responsibility, Ryan nailed it. And David, I can't shake that image of you in the Superman suit trying to fly, but of course I spent a couple years in a Davy Crockett suit 'rassling imaginary grizzlies and saying "I reckon."

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Warren Thayer, Editor & Managing Partner, Frozen & Refrigerated Buyer

I lean towards 'less hyped', which is another way of saying not as untruthful. One thing which has drastically changed in the recent past is the increased ability of the public to start a questioning campaign, mainly via the internet. How often have we seen over the last few years a few individuals start harping about a product, be it a health claim or other aspect, and have it steamroll into a 'big story' with lots of national publicity. Just the threat of this possibility is making manufacturers give a second thought to what they are claiming.

What does make me a bit leery though is the FTC's ability (or some other government agency) to validate or invalidate certain claims which are often pretty generic. I know a number of people who are 'fit and healthy' and whose only form of exercise is walking and which includes none of the 'working' and 'sweating' which the FTC's David Vladik suggests is required. I'm not very convinced of Reebok's claim, but it is also not exactly infomercial outrageous either.

'cleveyoung'

I read that Power balance got in trouble for false claims in Germany. Relying on a hologram and a silicon wristband to improve your balance, seriously? I'm not sure that manufacturers are that concerned with stretching these products' life cycle. Powerbalance and other miraculous products lose traction pretty fast. Although how many wristbands will have Powerbalance sold by then? What could the margin be on a silicon wristband that retails at $30? Even more so than with any other ad campaign, the emotional benefit of 'feel good' products outweighs their functional aspect, enabling brands to enjoy higher margins.

Dr. Emmanuel Probst, Vice President, Retail, Empathica

I advise my branded clients to be proactive, proud, even evangelistic about their brands. Give your brand the right name, the right advertising and public relations, and make any and all claims that are true. But I am not too big on making claims that are difficult to substantiate, not only because it's unethical to do so, more even more so because once exposed the brand will lose its most important value to consumers; credibility.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

Does anyone remember the Earth Shoes of the 70s? No? Here's a link: http://earthbeach.com/Library/info/back_from_past.htm. They had a negative heel like today's "health shoes," a large toe box for comfort, and were a little pricey. Seen from the bottom, they were triangle-shaped, narrowest at the heel, and ugly. My wife and I wore them as long as we could stand it, but finally gave them away. It was like walking uphill all day. But the promises were compelling - toning and strengthening wearer's calves.

Since then there have been many shoes in this particular marketing space, including so-called "jumping shoes." None has ever been proven to work, but we still fall for them in sufficient numbers to maintain sales until a new generation of consumers figures out the scam.

I have long advocated that our largest retailers -- such as Walmart -- form testing facilities to prevent over-leaded and similarly toxic and dangerous products from China and elsewhere from reaching their shelves. And listeria on Colorado cantaloupes. But those would be preventative health measures, not claims-testing measures. In my view, claims-testing and claims-proof are the purview of manufacturers alone. The retailers' responsibility, then, is to demand the manufacturers' claims-proofs before retailing the products.

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

I don't think things have changed. Every marketing endeavor lives in the land of gray -- somewhere between the unmotivating starkness of the most conservative statement of absolute truth and the wild exaggerations (lies) of Reebok and others. (Consumer Reports has a book of the most egregious marketing exaggerations -- it's quite a good read. And they're all from big brands -- not just late night.)

Stores should have some culpability, but finding a way to define and enforce that is probably impossible. Even the best testing lab fails often to find problems or must be so conservative in its standards that all product innovation is killed.

But we mustn't get silly about it. I heard on NPR the other night ... a crook can open a safe using a drill made by a major brand. Should that brand be liable for the crook's actions?

Doug Garnett, Founder & CEO, Atomic Direct

Are claims more or less truthful than in the past? They are the same, although in some cases the disclaimers are longer than the message. Consumers are willing to try a new product that "sheds the pounds" and dismiss the disclaimer stating "and in some cases death."

Wordsmithing has always been and continues to be part of marketing communications -- simply look back at past marketing efforts of iconic brands for reference.

I believe the difference today is that the current obesity crisis makes consumers more susceptible to incredible claims and innuendo in marketing of health and fitness products. The consumer wants miracle devices and foods that will restore their health and make them beautiful and there will always be snake-oil salesmen making money from them.

Retailers bear responsibility -- NOT culpability -- in selling safe products, but in a competitive environment retailers also use the actions of regulatory agencies to make buying decisions. It's a double edge sword, and unfortunately consumers don't rewards retailers for ethical decisions.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

Most health claims are dubious at best. There are too many factors to consider in health claims, and since they do not have to pass the same strict requirements as products which fall under FDA requirements, most manufacturers abuse the freedom which they have. This means that consumers are misled and eventually pay for this in unsubstantiated benefits claimed by the manufacturer.

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Kai Clarke, President, Kowa Optimed, Inc.

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