Time Management Speech By Randy Pausch

You can get the deck from the talk here. (PDF)


Randy's book is The Last Lecture.

A Bottle of Ice Cold Coca Cola

I was reading a book on Coca Cola, "The Real Thing" by Constance Hays. I realized I have not had a Coca Cola, the real thing not the diet type, for as far as I can remember. As I read about the mystique surrounding the flavor, the stories Coke built behind the flavor, and the public outcry about the new Coke I felt something missing from the story without the experience of enjoying Coca Cola.

The story about the Coke bottle, the reason for creating something is recognizable as Coke even from its fragments shows the essence of branding and  capturing customer's imagination.

I now have an uncontrollable desire to drink ice cold coke, not from fountain, not from a can, not from a plastic bottle but from the original thick bottomed glass bottle.  From the stories Hays tells us I feel there is something magical about this brand. Yes, it is sugar water and I would not want to drink one everyday, but I now have to taste it.

I have not had a Pepsi either for the same duration. I do want to try that as well and take the Pepsi challenge.

Branding Transit System

In the Nokia World 2007 (Webcast), Chris Anderson of Wired gave a keynote speech on "Free". He described a scenario in which an entire subway line is made free through corporate sponsorship. Corporate sponsorship has enered public transit system, in Dubai. The WSJ talks about the city state auctioning off naming rights of the train lines and the stations.

This isn't going to be free but the Ad revenue will go on to subsidize otherwise expensive tickets. It is a clever move by the Dubai transit authorities this isn't guaranteed to work for two reasons:

1. When you base your profit on sponsorship revenues even though your service adds value to your customers you destroying this value add. Your customers will end up valuing your service lower than they would have otherwise. 
2. If there are any changes in your Ad revenue you will need to compensate with increase in fees paid by travelers. As studies showed, moving from fee to free and increasing fees for an Ad subsidized service  causes customer dissatisfaction. The recent example is the failed attempt by The New York Times to charge for their Op-Ed pieces through Times Select.

In the end it still makes sense to determine your costs correctly and price it based on what your customers will value it. 

Marketers Love Parents With Daughters

From the Wall Street Journal interview with CEO of Six Flags:

studies show that young girls influence their parents' spending habits more than young boys do

I am one data point for this study.

Can Brands Make You Break Out In Hives?

Brands are like people, they have personalities. Well not quite, we as consumers tend to attribute human like personalities to brand. If we are allergic to certain human personalities, can we be allergic to brands too?

MarketPlace.org Beach Reads recommends a 2003 novel, Pattern Recognition. It was described as "the most finely observed and entertaining text on branding that's ever been written", by the reviewer Karrie Jacobs. Karrie describes the novels heroine Cayce Pollard to be "literally allergic to logos. The Michelin Man for example makes her physically ill".

While this level of brand sensitivity and reaction reads like hyperbole, there is certain truth to the emotional response. In her 1997 paper in the Journal of Marketing Research, Prof. Jennifer Aaker described five dimensions of brand personalities:

1. Sincerity
2. Excitement
3. Competence
4. Sophistication
5. Ruggedness 

If a brand's personality dimensions are not aligned with those you require of a brand, the brand is bound to cause a negative response.

Willingness To Pay

Imagine a store, not just any store, one that sells just Aquafina brand of standard size bottled water.
Suppose there are no price lists, no price postings anywhere in the store.  You walk in to the store and pickup a bottle and walk to the cashier, who instead of scanning the barcode on the bottle scans your forehead. A LCD display flashes the price, $1.09. You pay that amount and enjoy the bottle of water.

It is you again and the same store, but a different day. You have just run 10K, practicing for Bolder Boulder race. As you walk to the cashier with the bottle, the LCD now reads $2.25.  You pay as indicated.

This scenario is  described as the Monopolist Dream, the Holy Grail of First Order Price Discrimination.  The price that flashes on the LCD display is your Willingness To Pay. The price is not only different for different customers, but is different to you as well based on your need.

Willingness to Pay is exactly that, how much you value the product. Priced exactly at your WTP, you are indifferent to keeping the money vs paying for it. Priced even a penny above you will not buy, and anything less you get a price rent or more commonly defined as "Consumer Surplus".

For the business owner, both situations are sub-optimal, they either let you walk out with too much surplus or lose out on sales. Every business would love to get the exact WTP of every customer who walks into their store.  But that is not possible, hence we need the multiple pricing models, customer segmentation and all the research that goes with it

Next time you walk into Chipotle, think why the Vegetarian Burrito is priced at $5.29? How much surplus are you getting at that price?

Source: My class notes from Microeconomics by Professor Steven Tadelis.