Iterative Path

Growth

2010-02-02T05:48:00.001-08:00

Moved this blog to Wordpress

2009-03-04T18:45:00.000-08:00

Follow me at http://iterativepath.wordpress.com

Paying customers to get them on your mail list

2008-12-21T15:41:00.000-08:00

Last week I took my car to the dealer to attend to the recall. The service manager asked if I wanted to be on their mailing list, "No spam, we will jsu send you coupons and offers". I was hesitant then I asked if they can do the oil change at a $10 discount and he immediatly agreed. This led me to thinking: It is possible service manager is incented to signup as many customers as possible for the

School Market Research

2008-12-05T09:49:00.001-08:00

Results from our work with one of our clients.

Deflation is in the minds of customers, just like Inflation

2008-11-30T21:22:00.000-08:00

The New York Times story on Black Friday sales has this quote from a non-shopper, At Westfield Century City Shopping Center in California, Harper Mance, 31, said: “I’m looking around, thinking, ‘If there are discounts on everything now, what’s it going to be like after Christmas?’ You know it’s going to go down further.”

Innovation Crisis in US

2008-11-23T09:01:00.000-08:00

"The US system of public education must lay the foundation for developing a workforce that is literate in mathematics and science, among other subjects. It is the creative intellectual energy of our workforce that will drive successful innovation and create jobs for all citizens."

Is Business of Business Business

2008-11-18T21:12:00.001-08:00

Featured Google Presentations

2008-11-18T19:04:00.000-08:00

Market Share At Any Cost

2008-09-05T06:17:00.000-07:00

Going after market share with a low price strategy may look attractive in a competitive environment with no clear differentiation between the products. But when price is the only appealing factor, companies stand to lose value in a spiraling price war. The lure of market share is more prevalent in consumer products where companies are destroying value and commoditizing their premium brands with

Randy Pausch and Randy Komisar - Trade Money For Time

2008-09-01T11:46:00.000-07:00

This weekend I watched the time management lecture by Randy Pausch, (well known for his terminal condition and his book The Last Lecture). I also read a book by Randy Komisar, The Monk and The Riddle. The two Randys talked about exactly the same thing. Their core concept is the same, simple and profound - worry about the scarcest and non-reprehensible resource. Time and not money. Both goad us

Time Management Speech By Randy Pausch

2008-08-30T20:12:00.000-07:00

You can get the deck from the talk here. (PDF)Randy's book is The Last Lecture.

A Bottle of Ice Cold Coca Cola

2008-08-23T17:33:00.000-07:00

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.

Branding Transit System

2008-08-09T22:53:00.000-07:00

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

Marketers Love Parents With Daughters

2008-08-06T22:04:00.000-07:00

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?

2008-08-03T13:50:00.000-07:00

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",

Willingness To Pay

2008-08-03T09:51:00.000-07:00

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

The Economics of Giving

2008-07-31T21:22:00.000-07:00

I read a paper on The Economics Lives of Poor by two MIT professors of economics. I have mixed feelings. I understand the arguments at the end but I cannot roll with it.

What Worked For Coke Will Not Work For Dr.Pepper

2008-07-30T20:53:00.000-07:00

A product without the messaging does not have a market. But the two are not different and interchangeable. You can't lift a successful messaging that worked for one product and apply to another. For messaging to be successful it has to start at product inception and should evolve with it. The New York Times talks about Republicans applying the messaging that worked for Bush reelection campaign

Picking A MindMapping Tool

2008-07-27T22:15:00.000-07:00

Over the past few weeks I used Windows version of MindJet and web based MindMeister. My recommendation is to go with MindMeister.

Crocs Valuations Wearing Out Faster Than The Sandals

2008-07-26T14:37:00.000-07:00

For $6, you can buy a pair of sandals that looks identical to Crocs which retails for $30. You can now buy a share of CROX stock for less than $5. There may be differences in how these two feel, but it is not easy to find the differences in the look. How can Crocs expect to retain its market share at such price premium? It can't. No one can expect to defend their price premium when close

Influencing Consumer Decision With Deliberate Versioning

2008-07-26T12:50:00.000-07:00

Thanks to my friend Helen I learned about a lever for nudging consumer behavior called Asymmetric Dominance Effect also known as the Decoy Effect. Joel Huber, a marketing professor at Duke, explanined this effect in a Washington Post article (via Wikipedia entry): What the decoy effect basically shows is that when people cannot decide between two front-runners, they use the third candidate

Books On Bart This Week

2008-07-25T17:55:00.000-07:00

Murder at Bertram's Bower Monster - a biography of LA murderer Mrs Perfect Unaccostomed Earth - Jhumpa Lahiri Musicophilia Reconstructing Clothes for Dummies The Scream Safe and Sustainable World The Yellow Rose Trilogy You Can Heal Your Life Rich Dad Poor Dad Intuition The Judas Strain The 13th Juror Devils Web The Connection Mortgage Free For Life Fade Away The Tenth Circle

The Gap

2008-07-23T06:21:00.000-07:00

What happened to all the speculators driving up oil prices?

2008-07-22T20:35:00.000-07:00

Speculators were an easy target for the Congress that wanted to show the people that they are doing something about the oil prices. A simple explanation of demand and supply was not enough, it was too complex for most to comprehend. Every story needs a villain, a damsel in distress and a knight in shining armor. Arguably, the speculator are the real knights but they are not up for reelection

NYTimes Reports Increase in Online Shopping

2008-07-19T22:15:00.000-07:00

Greg Manikw, the author of my favorite Macroeconomics book, writes in his blog a series on Cross-Price Elasticity of Demand. The New York Times reports that shoppers are doing more online shopping than driving to the stores. While the demand for the products has not shifted to their substitutions, the channels through which people buy has. Online shopping is gaining at a time when simply

Judging the Book just by the reviews

2008-07-19T08:20:00.000-07:00

I am less inclined these days to buy the recent crop of books despite their compelling case for remarkable concepts. There are many books on business, economics, and marketing topics written for the general public. A common pattern is that they take a seemingly plausible concept and fill the book with examples and experiments in which the concept was found to be true. The concept is also repeated

Books on Bart This week

2008-07-18T17:20:00.001-07:00

Feather Crowns Black Friday - James Patterson Under World - don deLillo A Passage To India Principles of Water Rates Fees and Charges Inspired - How To Create Products Customers Love Pride and Prejudice Certain Girls The Din In The Head Shopaholic Takes Manhatten Curse of the Spellmans Belt Preventive Maintenance Manual For Edgar Echoes of an Alien Sky Principles Of Marketing The Shakespeare

Quote of the century

2008-07-18T07:47:00.001-07:00

"If all you have is a squirt gun, you may have to use it. But if carried a bazooka, people know and you don't have to take it out.". - Hank Paulson--------------------------------------Deliver now! Improve iteratively!www.IterativePath.com

Buy, Beg, Borrow, Today's Wall Street Journal

2008-07-16T06:29:00.000-07:00

If you do not subscribe to the WSJ, the print or online version, head over to the newstand near you and buy today's paper. The cost of $1-$1.50 you pay is a bargain considering the value you will get from the articles on the credit criss, Bernanke's warning, why we use measuring cups and not kitchen scales, the European recession.

The Problem With Increasing Oil Supply Now

2008-07-16T06:12:00.000-07:00

There is bound to be a bigger push on the Congress and the President to do something about the high oil prices. On an election year, the candidates wanting to show they care, get in the fray with their own recommendations like Gas Tax Holiday.A common theme across all these plans is they either seek to increase supply or reduce total price.The supply increase is recommended through, more drilling

Dynamic Pricing Under Scarcity

2008-07-15T21:31:00.000-07:00

I came across an online made to order T-Shirt shop, which is a very legitimate and decent site despite its name 200nipples.com. It is different from any other made to order shop, like Cafepress.com. This is not a site for you and I to sell T-shirts They make custom print on T-shirts, graphics done by designers they hire on 10% commission They sell only 1 design at a time There are only 100

Product Placment in News Media

2008-07-15T06:10:00.000-07:00

Suppose you read this in the Wall Street Journal or any other newspaper, "Hank Paulson, stopped to take a sip of the ice cold Coke and replaced it under his lectern as he addressed the reporters on the Freddie and Fannie crisis" As people use time-shifting and Ad skipping methods like TiVo to watch TV, the advertisers, entertainment content producers and distributors are resorting to product

You have the option of not standing in line

2008-07-14T06:04:00.000-07:00

When I was walking by the Apple Store in Emeryville on the Saturday after the iPhone 3G release, I saw a line about 100 deep. Everyone in the line seemed happy "just to be there". It was surprising to me because, iPhone 3G is not that big a change from the version released an year ago and it was the day after the release.The people who were standing most probably wanted to and liked standing in

Roll Your Own Digg Like Site

2008-07-13T11:52:00.000-07:00

coRank allows you to build your own Digg like site with public sharing, voting and commenting. Anyone can create their own site for free and with very simple steps. Such a service can be applied to any generic purpose that requires voting and user collaboration but coRank is somewhat narrow in its focus and restrictive. It has modeled everything about it to be a Digg clone, to share web link

How Does Kindle Fit In Amazon's Strategy

2008-07-12T16:17:00.000-07:00

Amazon.com sells its Kindle books below costs, at a flat $9.99 even though the publishers charge amazon.com the same price for their hardcover books. While the devices are still not priced for the mass market, probably due to high costs, amazon.com is trying to encourage higher adoption for its eBooks. It is my theory that Amazon may not want to be in the Kindle business. There are several

Will you feel unhappy about picking up the whole tab?

2008-07-12T13:34:00.000-07:00

Last week a big group of us went to eat at a Dim Sum place in the City. The group was so big that they had to sit us in two round tables, 10 in each. I did not understand how the Dim Sum pricing works. I admit, I consider price before ordering. But we never got to see a menu, there were Dim Sum carts coming by and they kept serving. When it came time to pay, it was $230 for the table. The

Books On BART This Week

2008-07-11T16:01:00.001-07:00

Only Revolutions How will we feed ourselves Simple Genius The Wheel of Darkness Sisters & Lovers For Whom The Bell Tolls Marathon for Dummies If you liked school you'll love work Separation Anxiety and Anger Second Sight - charles mccarry Atonement Positioning Made to stick Presentation Zen Night Shift - Stephen King The Taking Washinton Square The Art of Doubles Tell me Lies The Bourne

MindMap for the Book List Idea

2008-07-09T07:08:00.000-07:00

This is the mind map I created with the web-based mindmapping tool, MindMeister. The idea is the Public Transit Book List I talked about in a previous post. I like the ease of use and how fast I can flesh out the idea. I wish MindMeister will allow an easy way to publish the images instead of downloading to my Mac and uploading to Blogger. Click on the image for a better view. I have also

Mind Mapping Tools For Organizing Your Ideas

2008-07-08T04:52:00.000-07:00

I was introduced to MindMapping tool by a colleague. I keep my ideas, plans and TODO lists in Google notes and Blackberry. I store articles I find interesting in Google Notes ad tag these appropriately to connect these to the ideas I have. The promise of a visual organizing tool that promises to encourage non-linear thinking, collaboration, scheduling, prioritization and progress tracking,

On its fast lane, India hits a rough patch

2008-07-06T17:08:00.000-07:00

Last March I had to answer an analysis question on whether or not India can keep up its 8.5-10% growth. With inflation then raching 7.5%, its deficit 6% of GDP, its national debt close to 80% of GDP, the Government's lack of infrastructure spending, excessive transfer payments for populist schemes and with a vast majority of the population earning less than $2 a day, I took a stand that the

Now that is a Score ... GMAT Cheat Sheet Scandal

2008-07-06T12:51:00.000-07:00

Last week GMAC won a lawsuit against ScoreTop on copyright violation. GMAC administers the GMAT test, a requirement for MBA admission in top schools. All the schools will say that GMAT score is not a criteria. It is true except when your score is low. GMAT is a gruelling 4 hour test, with 2 half hour essays, 1 quantitative skills section and 1 verbal and logic session. In this Computer Adaptive

GM Sowed Its Own Seeds Of Failure

2008-07-06T07:01:00.000-07:00

(draft version, will be edited continuously)On Wednesday July 2nd 2008 GM shares hit the levels seen only in the 1950s. Almost six decades of value creation wiped out, serving as a counterexample for the buy and hold thesis of investment. GM is losing money on every vehicle it makes and with current high gas prices there are no takers for its gas guzzlng SUVs. It is an easy answer to blame it

Ads that make you stop and look for more than a few seconds

2008-07-04T17:22:00.000-07:00

AT&T has covered the walls of the Embarcadero BART station in San Francisco with extremely well done hand art Ads. This is something different from the, historicall conservative, at&t. There is one major thing to take note in these artistically pleasant Ads: the phone features is a Samsung phone and not the crown jewel, iPhone. This is not just because iPhone is not available in all the

Books

2008-07-03T16:59:00.001-07:00

Queen of Broken HeartsThe Inheritance of LossCall To Action - secret formlas to selling90 Minutes in HeavenRetributionFirestorm - book fiveThe Dogs of RigaThe FamilyDevil's HighwayThe Purpose driven LifeWhat is the WhatLiving to Tell the TalePredictably Irrational ( I strongly recommend)Biotechnology at a turning Point (or is it Hidden Connections ?)Almost MoonWe Can Build YouMemoirs of an

When I can't stop to take notes of what I am listening

2008-07-03T06:43:00.000-07:00

There has to be a way to "clip" what you are listening in your iPod/iPhone and be able to organize it and retrieve it. I need a way to clip, without stopping the flow, what is being played starting with the past 30, 60 or 90 seconds.Now if I can have this, then I also need a way to send this clip to a memo taking service like Jott, that will transcribe this for me and send the text as email or

If you want the Economy to move, put it on a train

2008-07-02T19:52:00.000-07:00

Larry Summers believes we could possibly at the most dangerous moment since the financial crisis began. There are calls from others for another stimulus package. I do not like another stimulus package because it a transfer payment that is just a band-aid. Larry, calls for several options, one of which is makes for propping up the economy through infrastructure investment. The idea is that it

Data Wags The Long Tail Theory

2008-07-01T21:17:00.000-07:00

Harvard Business School Professor looks at the data and finds that The Long Tail theory does not hold good. Read the article before HBR yanks the link. Lee Gomes of WSJ has this to say on the Long Tail theory. "The Long Tail" seems to have followed the template of many Wired articles: take a partly true, modestly interesting, tech-friendly idea and puff it up to Second Coming proportions.

More books This Week

2008-07-01T17:33:00.001-07:00

One - jane evanovichThe appeal - john grishamMichael CaboneHelping. Beth lisBiancaThe RuinsLittle EarthquakesThe Plot Against AmericaArmageddon In RetrospectGenghis Khan and the Making of the Modern WorldBecoming a Critical ThinkerPresent Danger - suan andersonThe StumpStormBig Sur and the oranges of ...Welcome to thw Great MysteriousStill left with crowsHannah's storyAmerican babylonThe Rain

Follow up on two short sells I recommended

2008-06-29T15:31:00.000-07:00

It is not difficult to make predictions in a down market. In May I made calls on two stocks, CROCs Footwear and Ruby Tuesday Restaurants. They both had just released their Q1 earnings and I made a call by spending some time with their 10-K and their proposed strategy. While 3 months is a short time to check back, a quick view of their current market prices justify the short call. RT is now

Capitalism Is Still the Right Approach To Address Poverty

2008-06-29T13:53:00.000-07:00

Who will have the bigger impact on addressing global hunger poverty? A philanthropist who writes checks or the captilast responding to market forces? What will add value to those at the bottom of the pyramid? Charity or Business Operations? If you have $100 discretionary income for charity budget, what would you do with it? Subsidize someone volunteering their time in a 3rd world country or

Gas Station owners are not raking in the dollars

2008-06-26T21:24:00.000-07:00

Sometime back I wrote about the gas prices and the gas station owners. From a simple math I did, I computed a margin of less than 5 cents a gallon that cost $3.50. If the customer paid in cash, the gas station earned additional 7 cents per gallon. The Marketplace reports that the situation just got worse for gas station owners with gas now selling for $4.50-$5.00 a gallon. The credit card

How Can I Create a Public Book List

2008-06-24T21:31:00.000-07:00

I want to create a simple crowd-sourced book list. I do not want to write code, define User Interfaces or design the schema. I want all this to be hosted and be free to me. Here is what I want to do with it:When you go to the website, it will display top 10 books and recently added booksFor each book it will show the title, author, the link to Buy, a count of number of people reading it, used

Kindled My Interest

2008-06-24T21:11:00.000-07:00

Finally I saw amazon.com's Kindle in use today. I still did not get to touch it or play with it. I saw some someone reading it on BART. This is also the first time I ever saw anyone using Kindle in public. I was a little surprised by it size, I shouldn't be. It is almost the size of a paperback. While the amazon.com gives its specifications and posted many pictures it somehow did not stick

Books On BART Monday

2008-06-24T10:11:00.000-07:00

Inside The minds: The Insurance Business (I am reading this)Insurance For Dummies (I was not reading but someone else was)The Story Of BPhantom in the nightThe SerialEat Pray Love - Elizabeth GilbertFive Quarters of the OrangeA Village AffairUnnatural ExposureThe TerrorMontessori Today

BART Writes Back

2008-06-24T06:19:00.000-07:00

I sent BART the suggestion to I made in a previous post on user generated book lists. I used their simple contact form. I was surprised that someone read it and sent in a more than a canned response like " we will consider".it sounds to me like it's a user-generated BART best seller list of sorts? it would be cool to tie-in with a local, independent bookstore to keep itBay Area. We're actually

Here is an Idea For Borders Bookstores

2008-06-22T22:37:00.000-07:00

Since May I have been commuting on BART, the Bay Area Rapid Transit system. One thing that struck me is the readership on BART. I am surprised by the number of people who read and by the titles. As you might have noticed I started posting the titles I see from my Blackberry, mostly as a note to self.But this is a great opportunity for two entities, BART and Borders.As the ridership increases,

Customers Dont See It As Their Job To Ensure You Make A Profit

2008-06-22T18:01:00.001-07:00

There is an interesting 40 year old Harvard Business School Case on selling contact lens to chickens. The key question in that case is how would you price it? The lens cost pennies for pairs of 1000s. Anyone who did not consider the value to the chicken farmers was taken to task by the professor. While the cost is relevant, the right way to price is based on the value creation to the customers

Trying To Stand Out Among The Airlines

2008-06-22T14:57:00.000-07:00

Jay Leno, in his monologue, scoffed at Airline unbundled pricing.At the rate they are going, in an emergency they will ask us to swipe a credit card before the oxygen mask drops out. Oh listen to this, a SouthWest airline plane landed in Phoenix with one its wheels on fire. If they are going to bill us for every little thing under the sun, may be they should give us some discount, like when

More books

2008-06-20T17:38:00.001-07:00

KilljoyEllen FosterGeek LoveWork and Life StrategiesThree cups of TeaCreating the Perfect Life MentallySaving Fish From DrowningThe Cornerstone of the GospelThe Time Machine and The Invisible Man - H.G. WellsThe Amazing Power of Deliberate Intent--------------------------------------Deliver now! Improve iteratively!www.IterativePath.com

Books on BART Friday

2008-06-20T07:29:00.000-07:00

Power downA book by Orson Scott Card, starts with XCluster - Piers AnthonyThe Bourne BetrayalI Left My Back Door OpenThe United States Of ArugulaWhat God Hath Joined TogetherFugitives--------------------------------------Deliver now! Improve iteratively!www.IterativePath.com

Books on BART today

2008-06-20T05:27:00.001-07:00

Bitch ReloadedThe Last PromiseThe Amber SpyglassSpanish to English Pocket Dictionary--------------------------------------Deliver now! Improve iteratively!www.IterativePath.com

Books: What People Are Reading In BART

2008-06-19T06:13:00.000-07:00

Simple geniusPsychology of selling - brian tracyStrategy and the fat smokerWhen We were OrphansHarry Porter and Prisoner of AzkabanThe Acquitaine Progression - Robert LudlumI created a simple list on Squidoo. Go head and add your selection there.

A Very Simple Primer On Short Sales

2008-06-18T06:51:00.000-07:00

This is a work in progress. So far I showed very simple transactions involving short sales and their impact on your balance sheet. Give me any feedback.

Pricing Your Air Travel

2008-06-17T22:23:00.000-07:00

The Dallas Morning News gives us the run down of the different charges Airlines make these due to their increasing costs: FEE SPREE Airlines are adding fees and charges aggressively as they grapple with rising fuel costs. AMERICAN AIRLINES $5 to redeem a frequent-flier award online, up from $0 $6 for a sandwich or liquor

Unbundling Airfares

2008-06-17T06:18:00.000-07:00

Southwest Airlines took a full page Ad in WSJ to air travelers about the added costs of all other airlines. The side by side comparison shows Southwest charing $178 flat and the other airline charging extras over over the same $178. The Dallas MorningNews reports: The message is that "Southwest is not going to do that to their customers," said Melanie Mahaffey, senior manager at Southwest's

Selling Kindle Books Below Cost

2008-06-08T19:17:00.000-07:00

The New York Times reports on the eBook for Kindle pricing by Amazon.com. Most books go for $9.99 According to the report, most books are sold below cost, because the publishers sell the books at the same cost of print books.Amazon sells most Kindle books for $9.99 or less. Publishers say that they generally sell electronic books to Amazon for the same price as physical books, or about 45 percent

Revised but not Rejuvenated

2008-05-31T10:39:00.000-07:00

The GDP numbers for 08Q1 was revised to show a 0.8% growth instead of the 0.6% growth. But the growth components still do not show healthy growth. We are not in a recession by the NBER definition, but the higher expectation among consumers for a faster price increase and the anemic growth point to a worser condition, stagflation.

Budget Hero

2008-05-26T09:43:00.000-07:00

Budget Hero is a Flash based interactive game from American Public Media (the MarketPlace people).The game lets you play with the multiple levers the Federal Government has and see how the national debt performs. Are you for big Government? big defense spending? tax cuts?Play the game and see.I left all the Bush tax cuts alone and played the cards like Cap and Limit Greenhouse gases and increase

Economics or Emotions

2008-05-17T19:50:00.000-07:00

Professor Robert Shiller of Yale, wrote for The New York Times on the human side of foreclosures and supporting Rep. Barney Frank's plan. He argues:It’s easy to take a stern view of this spectacle....This stern view may, in fact, be winning the battle of public opinion....But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It

Conflicting Interests - Environmentalists Oppose Clean Air Plan

2008-05-15T20:18:00.000-07:00

There was an interesting story on multi-party negotiations in the WSJ, "Environmentalists Oppose Clean Air Plan". It is not that they are against clean air but object to a plan that disallowed big trucking companies and instead encouraged owner-operators. On the surface it would look like the environmentalists support the big trucking companies, but it is only because the workers of these

Will the Oil Shock Lead to Unbundled Services?

2008-05-14T12:18:00.000-07:00

When I was visiting Sweden I found it shocking that they charged me 4 Kroner for a 8oz glass of tap water. As I traveled a bit more in Europe I found this common practice of restaurants charging extra for things that in US we take for granted. Sitting at a table has a surcharge, bread has a surcharge, water too. I compare this to a sign that I saw outside a Hot Dog stand near UC Berkeley, "All

Amazon Prime Numbers

2008-05-11T12:31:00.000-07:00

amazon.com offers Prime, a shipping program that offers unlimited second day shipping for a cost of $79 a year. This plan, like Costco membership is considered to increase the sales, as customers enticed by the free second day shipping, shift more of their purchases to amazon and buy more often than they would normally.How much revenue do these subscribers bring to amazon.com from their annual

Unlike an Economist

2008-05-11T07:44:00.001-07:00

An economist is trained to assign value (in measurable units too) to every action we undertake and everything we buy. There are always trade-offs and costs including opportunity cost of not picking the next best option. If an option does not offer positive expected net present value it is not worth undertaking. If there are multiple options, then you pick the one that offers the maximum

Principal-Cut is not attractive, yet

2008-05-09T11:10:00.001-07:00

As I wrote in my last post about the housing-market legislation pushed by Rep. Barney Frank, the deal is not yet attractive to the mortgage firms. Today the WSJ says just that. Mortgage companies are more likely to participate in the write-down program if they expect home prices to continue to decline steeply, he notes, increasing the chances of larger losses.These firms have a variety of options

Bailing Out the Homeowner under water

2008-05-08T23:14:00.001-07:00

Representative Barney Frank proposed a plan to the lenders to recover most of their mortgages and to help homeowners avoid foreclosures:Agree to cut the mortgage to 90% of present value of the housePay additional 5% to FHA, for a total loss of 15%FHA will take over the mortgage from the lenderIf the homeowner sells the house at a later time for a higher price, they agree to pay "some profits".

Why can't telecom providers be a house of brands?

2008-05-08T09:35:00.000-07:00

Proctor and Gamble is a house of brands. Each brand is run like a business with its own P&L. There is no attempt to bring together all the brands nor is there a need to do so. When they acquired Gillette, a company by itself, it came as another brand under P&G. There were no integration hassles or costs. What can't a telecom company be like P&G?When AT&T acquired Cingular Wireless, the network

I am only taking the crumbs - Niche Strategy

2008-05-07T21:22:00.000-07:00

How do you enter a market with large incumbents without being crushed by them? Market entry lesson from a hair stylist, Arrojo: (via WSJ)WSJ: You sell and use P&G's Wella brand in your studio and represent the brand at beauty shows. Why isn't P&G upset about you launching your own competing brand of Arrojo product? MR. ARROJO: I talked candidly with the P&G folks. They want market share of the

Just don't say the R word

2008-05-07T20:42:00.000-07:00

There is really no useful definition for recession. It is decided by the economists at NBER by looking at the GDP numbers for the past two quarters. If the GDP shrank for two consecutive quarters, the NBER declares we were in recession. By this definition, we can only look back and say we were in recession, we cannot say whether we are in a recession or will enter into recession.So what it

Think! Don't Feel!

2008-05-07T10:03:00.001-07:00

In the Star Wars Episode One, Liam Neeson character tells young Skywalker, just moments before the big pod race, " Feel, don't think!".It is common sense that directing someone to feel makes no sense in business.(Note: if you are doing Negotiations in your coursework the link below has the spoiler for the Texoil Case)A new study done (link via The Economist) by Kelloggs School of Management on

The Long and the Short of Lifetime Value of Customer

2008-05-06T21:46:00.000-07:00

Zappos takes pride in describing itself as a great customer service business that happens to sell shoes. I had to return a pair of shoes. As it had been said very eloquently by many, it was the easiest task I have ever done online. Zappos knows they have not lost me and that I sure will buy more shoes from them.On the other hand, I went to the local UPS store to drop off the package. I asked the

If it isn't positive NPV

2008-05-06T12:21:00.001-07:00

Southwest Airlines CEO Gary Kelley on acquiring other airlines (via NYTimes):The thought of simply acquiring outright another airline that isdestined to lose money this year just doesn’t seem like a goodopportunity.This is it! No consideration of possible synergies and savings from them. If the target is not generating positive cash flow it does not matter.

Economists Against Gas Tax Holiday

2008-05-05T23:34:00.001-07:00

The economists are using social media to show their objection to the gas tax holiday. The Brookings Institution has created a simple blog gastax08.blogspot.com and published exactly one post, the open letter opposing the proposals for a Gas tax Holiday and the names of economists who oppose the gas tax. So far 248 scientists have signed the letter and counting.There is not one economist

Why the current GDP growth is bad

2008-05-05T06:26:00.001-07:00

US economy (measured by real GDP) grew by 0.6% in the Q1 of 2008. With all the dire predictions about slowing economy and recessions, the growth officially indicates that the economy is not in recession. (NBER defines recession as two successive quarters of negative growth).But the current growth is not good news if you look at the components. My favorite book on Macroeconomics by Mankiw

Unbundling the Brand

2008-05-04T21:08:00.000-07:00

In the CPG market the brands are unbundled from the corporation. You buy Pantene brand shampoo not P&G. There is some brand extension like using the Pantene brand for all hair care products. But most customers do not know or care about who makes Pantene. This level of unbundling was part of the strategy and not something forced on P&G or Lipton by the environment.In the case of media companies

Substitutions

2008-05-04T15:30:00.001-07:00

Never underestimate the power of substitutions. FT.com reportsFarmers in the Indian state of Rajasthan are rediscovering the humble camel. As the cost of running gas-guzzling tractors soars, even-toed ungulates are making a comeback, raising hopes that afall in the population of the desert state’s signature animal can be reversed.

Sizing up the Customer

2008-05-04T14:29:00.000-07:00

Coke and Pepsi bottlers make the most margin from their sales at vending machines and convenience stores. These channels target the customers who are willing to trade in high price for convenience and immediacy in satisfying their want. The most common packaging option sold at convenience stores is the 20 Oz bottle sold at $1.29, more expensive that the 2 liter bottle pricing for the same brand

Results from the Business Plan

2008-05-03T15:14:00.001-07:00

The results from the Berkeley Business Plan finals are in.Congratulations to the winners of this year's UC Berkeley Business Plan Competition! Implicit Interfaces and Titan Medical tied for 1st place. Omniox won 3rd place. Glycometrix received the People's Choice Award.I did place my bets on Ominox, Glycometrix and Titan Medical, the three non-internet startups.I was wrong in predicting Implicit

Stick to the Narratives

2008-05-02T16:01:00.000-07:00

Yet another example of the use of narratives in marketing, "Gas Tax Holiday". The hard numbers take time to explain and most people do not have the patience to understand. By repeating the story and by creating a strong, albeit non-existent, relation to the prices we pay at the pump, the two presidential candidates managed to grab attention.The problem is that the Government needs to fund the

Oreo by any other name

2008-05-02T12:18:00.000-07:00

WSJ reports the reformulation of Oreo cookies in China:So in China in 2006 Kraft remade the Oreo itself, introducing for the first time an Oreo that looked almost nothing like the original. The new Chinese Oreo consisted of four layers of crispy wafer filled with vanilla and chocolate cream, coated in chocolate.When you create a new sub-category cookie it helps to differentiate by branding it and

Corporations, Societies, Responsibilities

2008-05-02T10:22:00.000-07:00

Milton Friedman said, "the business of business is business". He described the primary responsibility of the executive officers is to enrich the stakeholders by employing the capital in profitable ways. He further argued that the discussions on the need for social responsibility are "loose and lack the rigor".I chose the case of Unocal (now part of Chevron) in Burma for my Ethics paper. I am

Inelastic part of Demand and Supply Curve

2008-04-30T12:08:00.000-07:00

The proposed oil tax holiday does nothing to demand and supply! Other links: Greg Mankiw

Berkeley Business Plan Competition Finalists

2008-04-30T09:25:00.001-07:00

The Berkeley Business Plan Competition finals is Thursday May 1st 2008. There are eight finalists, three are in the biotech-biomed area. My bets are on one of these three. Here is the list with my annotations and odds of winning the competition and in the market place.

Gas Tax Vacation Savings per person

2008-04-29T20:51:00.000-07:00

The total cost to the Federal Government was estimated to be about $6.6 billion from 18.4 cents per gallon on 400 million gallons sold per day.The per capita gasoline consumption per year varies from 215.3 gallons in Washington D.C to 615 gallons in Wyoming, for a US average of 464 gallons.For the 100 day (rounded) holiday period, the savings work out to $11 to $31 with more than 95% of people

Restaurants on a Downward Spiral

2008-04-29T09:42:00.000-07:00

I listened to J. Carlo Cannell of Cannell Capital LLC speak about his Investing Strategy, "Selling Short: Controversial Black Magic". He agreed to let me share some of the broad themes from his lecture.His thesis is,"it is more difficult to pick a stock and go long than it is to pick an absolute loser. What do any one analyst or stock picker know more than the rest combined? On the other hand

Web2.0 does not obviate Strategy

2008-04-29T05:02:00.000-07:00

I attended a two day class on Web2.0 marketing taught by Andreas Weigand. There is nothing new that came about. I do see generalizations of certain concepts, like free is the next business model. One important impact of Web2.0 that gets lost in the hyperboles is the ease, speed and scale of the customer conversations. Customers were always talking to each other, tinkering with the product, and

Corporations and Human Rights

2008-04-28T11:03:00.000-07:00

What is a corporation's role in dealing with countries whose Governments have questionable human rights? Should a corporation be singularly focused on generating shareholder value and spend its precious capital on non-core and non profit generating activities?Is the economy that generates so much of wealth in the developed countries applicable to even countries that have no democracies or rules

Branding and Pricing effects on Consumer Behavior

2008-04-26T23:14:00.000-07:00

I regret not doing the Consumer Behavior course this semester. I see a whole bunch of experiments being conducted by my classmates for their final projects. I served as a willing subject for many such experiments, from tasting organic vs. non-organic vegetables and wines to deciding whether or not I will bet on an outcome with same expected payout but different entry costs. There was one study

It's a Text Book case of Market forces

2008-04-26T15:57:00.000-07:00

Text books are expensive. I paid about $120 on the average for my new text books and did not have good experience buying used books online. The New York Times wrote an editorial on the high price of college textbooks calling it "outrageous pricing". I do appreciate the Congressional bill that will allow unbundled pricing. But more than this I do not see a need for any actions for setting

CO2 Share of Wine and Beer Revisited

2008-04-26T06:52:00.000-07:00

In a previous post I calculated the approximate CO2 footprint of a bottle of beer to be 125 grams. The calculation did not look at the CO2 share of raw materials (cultivation, storage, transportation) and used the average CO2 output of the entire brewery (New Belgium Brewery) instead of calculating for individual process steps.The New York Times has a nice calculation for a bottle of wine,

Ideas Marketplace

2008-04-25T07:22:00.000-07:00

Eureka Ranch Technology is launching an ideas marketplace, Planet Eureka for brining together individuals with ideas and small businesses and big corporations looking for ideas. As the WSJ says, it is meant to help "small businesses looking to find a hot idea -- or trying to sell a hot idea to big company"Their site says, "Research indicates Small Business start-ups are 10 times more successful