Last weekend, as I purchased a pair of pants in a department store, a display full of premium-grade chocolate bars in shiny gold wrappers sat on the checkout counter.
Chocolate bars in the men's clothing checkout? An ever-vigilant consumer, I deduced this was more than an opportunity for the store to make easy money on impulse purchases.
The first step
It was the first step in a conspiracy:
You buy a chocolate bar in the men's department. Seems innocent enough.
Your desire for chocolate ignited, you buy and eat more chocolate bars after leaving the store.
You become hooked on premium chocolate bars, which become an important part of your life.
After you gain weight from all the calories associated with your chocolate addiction, you return to the store to buy larger pairs of pants to accommodate your expanding waistline. This vicious consumption cycle could be endless.
Of course, it is not all that unusual for companies to reach outside their usual income channels to try to improve profits.
In 1981, Prudential Insurance Co. purchased Bache Securities in what was considered a financial services marriage made in heaven. Shortly afterward, I did an interview with the enthusiastic George L. Ball, then chief executive of Prudential-Bache Securities Inc.
Despite his admiration for financial cross-pollination, Ball acknowledged challenges in a decision-making process that brought together insurance executives given to careful study of new initiatives and brokerage executives who thrived on quick action.
Ball wanted to build a global investment bank, but nothing went right. Doomed in his ambitions, he was sent packing more than a decade ago. The recent closing of Prudential's stock research operation as the company focuses on its profitable insurance and asset-management businesses marks a final chapter in an ill-advised adventure.
Recently, beleaguered Krispy Kreme Doughnuts Inc., which saw its fiscal first-quarter loss increase, announced it is adding new products.
Ice cream, to be sold in cups, cones and shakes, is being tested in Krispy Kreme stores. Also on the menu: a doughnut sundae. Apparently management has determined that profits cannot rise from doughnuts alone.
No end in sight
It will also increase its stores to more than 500 in three or four years, from 296. Companies under financial pressure often accelerate expansion because, well, they have to try something. Hope springs eternal.
Chocolate bars in men's clothing departments. Ice cream in Krispy Kreme stores. They already sell music CDs in Starbucks coffee shops. No one knows where product diversification will end.
Pizza at Jiffy Lube? Power mowers in Apple Computer stores? Dance classes at Home Depot? Hair stylists at Chuck E. Cheese's? Toothpaste at Tiffany's?
Close your eyes. Synergy can be a painful thing to watch.
Andrew Leckey writes for Tribune Media Services.