• What's new in "social" for 2014.

    image from vimeo of additional social media predictions from 2Factory

    Social media.  Who would have thought, ten years ago, that this would be a major focus for marketers? In 2013, young people tired of Facebook...but that is partly because of the newer products and trends on the horizon. One take on what is coming up:

    • Single purpose is better than multi-purpose. Apps are where it's at to deliver specific services. Want a social resale shopping experience? Try Poshmark. Do you want to do some free reading? Try Wattpad. Are you a Mormon...and do you need a marriage-minded date? Try Tinder.
    • Temporary is better than permanent...and its corollary: anonymity is newly popular. With all of the privacy issues and the realization that so much of one's internet life is permanently available, apps that let data disappear are appealing. Have a look at Snapchat.
    • "Swiping" is the short path to everything. Need a Christmas tree? A kitten? A few finger taps on your smartphone and you can have what you want. Delivered.
    • Video has begun a new leap forward. The mini-experience of Vine is just the beginning. As memory space becomes more compact and high definition cameras are even available on phones, the video universe will continue to open up.
    • "From zero to hero in record speed." Apps can come out of nowhere and go viral. "Hockey stick growth" (and its corresponding sudden decline) is becoming the new life cycle for social media products.

     Who knows what will grow in 2014...

    Source:   "5 things to expect in social in 2014," by Jennifer van Grove, CNet news, December 31, 2013.

    Follow up:

    • Watch the vimeo link from 2Factory (linked under the image at the top of this post). List and describe the additional trends in social media delineated in that presentation.
  • "Business Insider" shares Woody Guthrie's New Year's resolutions


    image from the Business Insider online

    New Year's resolutions are easily broken, but creating life-long intentions that one revisits and renews each year can help an individual achieve personal, financial and other goals. The Business Insider published Woody Guthrie's list as an inspiration.

    Source:   "Woody Guthrie Really Knew How To Do New Year's Resolutions," by Rob Wile, the Business Insider, December 27, 2013.

    Follow up:

    • Create your own list of life-enhancing intentions. What are among your own top ten?
    • If you do not know anything about Woody Guthrie, research his life. How may this list of intentions been particularly important for his life as it unfolded?
  • Microbead marketing "feature" now a "bug"

    image take by Liu Jin AFP/Getty images via Marketplace

    "Exfoliating your skin" has been marketed as a positive grooming behavior for several years. Companies have made this easy by putting microbeads--made of plastic--into their soaps. The problem is: these tiny beads make their way through processing plants into the ocean. There they have made changes to the ecosystem, according to several studies.

    Unilever has taken what it sees as a pro-active stance: they have made a commitment to eliminate these microbeads from all of their products by 2015. This environmentally sustainable stance is being incorporated into their marketing strategy. Peter Zuniac, an investment analyst for Liberum Capital, explains it this way: “They say if they achieve their sustainability targets, and no one else follows they will have failed. So their objective is that other organizations, nonprofits as well as the competition will eventually follow.”  He also said that, as a leader in this area, Unilever might be able to attract investment funds directed as sustainable business practices.

    Source:   "Unilever to dump microbeads from soap," by Peter O'Dowd, Marketplace American Public Media, December 28, 2013.

    Follow up:

    • Do you use products with microbeads? What are the advantage and disadvantages? What sustainable items can substitute?
    • What are the pros and cons of Unilever's marketing strategy?
  • Target tells a different story now: PINS were stolen

    image from kdwn.com

    It could happen almost anywhere these days: Target had a security breach. Its public relations announcement in reaction to the incident reassured customers that their PINS had not been stolen. Molly Snyder, a Target spokesperson said: We remain confident that PIN numbers are safe and secure. The PIN information was fully encrypted at the keypad, remained encrypted within our system, and remained encrypted when it was removed from our systems.

    However, that turned out not to be true.

    Crooks were already selling the data on the black market when Target had to make a second announcement that was more accurate: the PINS had been stolen as well. Major banks had already reacted as though this might have been the case--placing caps on withdrawals, for example.

    Was it a public relations mistake to give false reassurance at the outset? Possibly. It may have been more reassuring to customers if Target had over-compensated for the breach.  But it is also possible that customers are becoming jaded about breaches and do not expect honest information from corporate public relations announcements.

    Forty million customers were affected.

    Source:   "Target’s Nightmare Goes On: Encrypted PIN Data Stolen" by Nicole Perlroth, New York Times, December 27, 2013.

    Follow up:

    • What do you think? Would you rather have the whole story of a possible breach in an announcement, or would you rather be reassured about your data, even if the reassurance was false? Explain.
    • Describe an situation that is parallel  (or that could occur) in your personal life, where a third party either gives accurate or falsely reassuring information after an unfortunate event.
  • Hobby magazines niche

    image from the NYT

    Many magazines are struggling or failing (Time, Newsweek) . But the niche magazines for hobbies and special interests are still doing well.
    Here are some examples:

    • Model Railroad
    • Trains
    • Classic Trains
    • Wine Spectator
    • Cigar Aficionado
    • Whisky Advocate
    • Cycle World
    • Hot Bike
    • Web Wholesaler
    • Vintage Camper Trailers
    • Quilter
    • Knives
    • Knitting
    • Shotgun News
    • Vintage Truck
    • Saveur
    • Bon Appetit

    Even slightly-off-the-mainstream niche magazines like "Real Simple" and "The New Yorker," seem to be holding their own.  Passionate communities make the difference.

    Here are some of the magazines around my house:


    Source:   "Loyal Subscribers Keep Hobby Magazines Afloat," by Christine Haughney, New York Times, December 27, 2013.

    Follow up:

    • What do you know about niche marketing? How is it different from mass marketing?
    • Do you have any hobbies or special interests? Quilting? Collies? Fraud audits? How do these interests influence your purchases?
  • Clawbacks: should individuals have to pay for financial wrongdoing?

    image from compliancex.com

    The SEC filed a case again Cincinnati's Fifth Third Bank and its former CFO, Daniel T. Poston early in December 2013. The SEC asserted that Poston delayed the write-off of $1.5 billion in bad loans in 2008, violating generally accepted accounting principles (GAAP).

    Both the bank and Poston settled the case straightaway (without admitting guilt).  The bank paid $6.5 million and Poston paid $100,000 out of his own pocket. The fact that the SEC got Poston to pay out of his own pocket is significant in terms of enforcement options. However...the fine was far short of the "executive pay clawback" provisions of the Sarbanes-Oxley Act (SOX). The SEC's unwillingness to pursue the additional penalty is indicative of the difficulties of that level of prosecution and punishment.

    SOX section 304 delineated a reasonable penalty: if there were earnings misrepresentations that resulted in stock, bonus and other compensation to a responsible executive, then the executive should have to pay that compensation back. Easier said than done. In the Fifth Third Bank case, there was a misstatement that led to about $350,000 in extra compensation to Poston. But there was a technicality--the timing of the compensation determination vis-a-vis the write-off.

    In fact, there are three requirements that must be met to bring forward a successful suit under SOX:

    • there must be a restatement of earnings due to accounting errors
    • the errors must have been reckless or intentional
    • there must be "recoverable executive compensation" earned within the next year

    Management can claim that the inflated values were appropriate, delaying or avoiding an official write-down, and making clawback prosecution impossible.  However, the SEC received 557 whistle-blower complaints in 2013...and some of these might force more timely write-offs, which then might lead to clawback prosecutions.

    Source:   "Clawbacks? They’re Still a Rare Breed," by Gretchen Morgenson, New York Times, December 28, 2013.

    Follow up:

    • What was the purpose of SOX (the Sarbanes-Oxley Act)?
    • Do you think the clawback provision of SOX is fair? Why or why not?
  • Apple needs new core products for 2014

    image from www.PatentlyApple.com

    "Without compelling new products in big new markets next year, worries will grow that Apple's days as a hot growth company are over, limiting future gains for the shares," asserts Alistair Barr in an analysis of information technology companies at the end of 2013.  "2014 is the year he [Tim Cook, Apple CEO] has to deliver, according to investors and analysts."

    What might be included in a new product line for Apple?  According to Tony Sacconaghi, an analyst at Sanford C. Bernstein, possible products include:

    • an "iWatch" that might produce a 1% to 2% increase in sales
    • an "iTV" that could produce $10 billion in sales (a 6% increase)--if it could parallel in video what the iPod did for audio.

    But, according to Brian Marshall, an analyst at ISI Group,"We need something revolutionary from Apple that will move the needle and iWatch and iTV won't do it."

    Another analyst, Adnaan Ahmad of Berenberg Bank, suggested in October that Apple acquire Tesla Motors to get back into the forefront of innovation.  Tesla is run by Elon Musk--a known innovator and visionary thinker [PayPal and SpaceX as well as Tesla]. Because the potential sales in the auto industry--$1.6 trillion annually--are much bigger than the revenue pool in the crowded phone and TV markets, Ahmad also suggested that a path for Apple might better be directed toward the iCar...especially since the auto market is growing in the hybrid and electric markets.

    Where will Apple be at this time next year?

    Source:   "2014: Apple's crunch year to prove innovation chops," by Alistair Barr, USA Today, December 23, 2013.

    Follow up:

    • How do you think Apple can integrate its products into the automobile market? If you are already a user of Apple products, how could Apple integrate into your automobile experience?
    • What tech products do you use every day? How much time do you spend with each? How could your experience be improved?
  • Bitcoin Explained

    The five-year birthday for Bitcoin is January 3rd, 2014. Bitcoin's "daddy" is a group of hackers named "Satoshi Nakamoto." Five years ago "Nakamoto" set up the currency to be outside of any government's control. Bitcoin's software is set up to allow anonymous currency transactions. According to the explanatory essay that accompanied the currency's launch, bitcoin's purposes included:

    • a protest against the government-controlled currency values that could be undercut by the issuance of an unlimited number of currency units
    • easing the transfer of funds globally, directly from individual to individual
    • empowering smaller economies
    • avoiding transfer fees from near-monopolies like Western Union, or bank wire transfer fees
    • allowing private transactions--sometimes involving products that are normally regulated by governments, such as weapons and drugs.

    Many libertarians were attracted to the independent-of-government aspects of bitcoin. And some financiers have invested in bitcoin as they might hedge investments in any "foreign" currency. But to bitcoin enthusiasts, such as Elizabeth Ploshay, bitcoin not just money, it's "a movement." Tradehill co-founder Ryan Singer has opined that just as email supplanted snail-mail...bitcoin will supplant traditional banking.

    One source of information for those wishing to keep up with this rapidly changing currency platform is Bitcoin magazine, which has the stated mission to be “the most accurate and up-to-date source of information, news and commentary about bitcoin.” 

    Source:   "The Bitcoin Ideology," by Alan Feuer, the New York Times, December 14, 2013.

    Follow up:

    • Have you been involved in a bitcoin transaction? Do you have an account? What do you see as the plusses and minuses of this online currency?
    • Would you consider "investing" in bitcoin? Why or why not?
    • What does "P2P" mean?
  • Pepsi taking over the snack world

    Image from www.thrillist.com

    Pepsi has reached a deal to be the soda and snack food supplier to the rapidly growing Buffalo Wild Wings restaurant chain. This caught my eye for several reasons--not the least of which was that my alma mater, the University of Michigan, is playing in the Buffalo Wild Wings BCS Bowl game this holiday season (against Kansas State).

    This new deal means that Pepsi products--the colas, and Mountain Dew--will be supplanting any Coca Cola products in the restaurant from here forward. In addition, other Pepsi brands, such as Doritos corn chips, will be incorporated into the menu items at Buffalo Wild Wings, just as Doritos have been incorporated into the menu at Taco Bell.

    What will we see in the future? A "Dorito-encrusted wing" or a "Mountain Dew cocktail"? Hmm.

    Spokespersons for Buffalo Wild Wings (Sally J. Smith) and PepsiCo (Kirk Tanner) said that they look forward to taking advantage of Pepsi's relationships with entertainers and sports players as well as increasing the tie-ins with fantasy football. PepsiCo’s chief executive, Indra K. Nooyi, agrees with pursuing these strategies. The new partnership will be following some of the marketing synergies that have worked between Pepsi and Taco Bell.

    Source:   "Pepsi Deal Underscores An Emphasis On Snacks," by Stephanie Strom, New York Times, December 11, 2013.

    Follow up:

    • How much has Buffalo Wild Wings grown over the last three years?  What has happened to Pepsi sales over the same time period? What does this say about Pepsi's decision-making strategy for the future?
  • What to ask before starting your own business

    image from momstownblog

    Toward the end of the year, many people resolve to do in the upcoming year what they have put off before. For the entrepreneurial person, that might mean deciding to start a new business.  Forbes Magazine's Entrepreneurs Group recently published an article listing seven questions any would-be entrepreneur should ask themselves before starting up:

    • Why am I doing this? It is important to know what is motivating you...no matter what the motivation is. The need to be your own boss? To do what you are doing better than its being done at your current job? Because you have a new idea?
    • Is this a good time? Timing is very important with respect to outside economic forces.  Is a competitor going out of business, creating an opportunity, for example?  What about the time constraints of your personal life? The best business idea launched at the wrong time will have difficulty succeeding.
    • How much money will I need?  Under-capitalization (not enough money) is a big factor in business failures. You need to make projections of cash inflows and outflows under a range of scenarios--especially "worst-case."
    • Where will I get the money?  Most entrepreneurs need to tap various sources to fund their new business. Make sure you have firm commitments and solid money sources.
    • What other people do I need? Even if you intend to be a one-person operation, you will still need contacts and consultants--for legal help, marketing and website help, and accounting and financial advice. Cover all the bases in your business plan.
    • How do I handle setbacks? Know your own personality--can you handle setbacks? Entrepreneurs need to have tenacity and resilience.  If these aren't part of your personality profile, how will you weather any problems?
    • What's my endgame? Know your exit strategy...What would make you leave the business? Do you intend to run it for your lifetime? Are you starting it up with the intention of being bought out? Many of the decisions you make on a day-to-day basis will be influenced by whether you are intending to be part of the business for the short term or the long term.

    Read the linked article for more details on these topics.

    Source:   "7 Questions To Ask Before Starting Your Own Business," by Entrepreneurs group, Forbes, December 9, 2013.

    Follow up:

    • Have you every tried something (whether it was a business or another activity) that was attempted at the wrong time?  (Even a visit to an amusement park is influenced by weather and who is available to go with you.)...Did you attempt your activity again, when the timing was "right"? Describe your experiences.
    • How can you apply these questions to your own career goals? Do you have a business plan for yourself?
  • NSA spying hurts businesses

    image from www.businessinsider.com

    The global scandal resulting from the National Security Agency's (NSA) indiscriminate surveillance of individual and corporate communications and data could be a major factor in declining business performance.

    In particular, Cisco Systems, IBM, Microsoft, and Hewlett-Packard have seen their business decline in China and other Asian countries. Cisco Systems saw Sales in its top five emerging markets decline between 18% and 30% from last year to this year, as of the end of September. Cisco had been rolling out new routing and switching platforms when the NSA spying scandal struck.

    Cisco's decline occurred just as there was an 8% increase in China's economy for the third quarter. And IBM has seen a 22% decline in its China sales.

    Trust is an essential component in business relationships. It remains to be seen whether the U.S. can rebuild business relationships moving forward.

    Source:   "NSA spying hurts business of large U.S. hardware makers," by John Shinai, USA Today, December 9, 2013.

    Follow up:

    • If you are interested in this subject, read this linked paper, on U.S.-Asian business relationships and trust.
    • What do you think the U.S. should do to rebuild its reputation regarding surveillance?  Is it possible? 
    • On a person-to-person basis, or thinking about relationships you have individually with businesses--is trust an issue that would affect your future purchases?
  • Is preferential hiring a form of Bribery?

    image from bloomberg.com

    JPMorgan Chase is in trouble again...this time involving the preferential hiring of relatives of Chinese officials.

    image from democracychronicles.com

    The Securities and Exchange Commission (SEC) is investigating these JPMorgan Chase actions:

    • Hiring the son of the former #2 Chinese bank regulator (and currently the chief of a financial conglomerate controlled by the government); and
    • Hiring the daughter of the Chine Railway Group (also government-controlled)

    Were these relatives the most qualified applicants for a posted job? Or did JPMorgan Chase hire these young adults to gain access to business connections and the public offering of the China Railway Group stock?

    The U.S. business community in China has been surprised by this investigation. Many think this type of preferential hiring is "business as usual"--an expected practice if U.S. businesses expect to gain access to Chinese business markets. Perhaps the person's "qualification" for the job would be political connections (ethically iffy, but not illegal). But if the salary amounts to de facto payments to officials by way of the offspring's paycheck, there would be a difficult-to-prove legal issue.  More demonstrably illegal would be verbal or written "quid pro quo" agreements.  We will see what this SEC investigation turns up.

    Hiring relatives in exchange for business favors would amount to bribery under the Foreign Corrupt Practices Act (FCPA). And it appears that, recently, the federal government is pursuing these cases more vigorously.  According to Jack Massey, a partner at Sutherland, Asbill & Brennan:

    The biggest FCPA prosecutions have involved energy, defense and engineering firms, because they operate globally, they put a lot of people on the ground in the developing world, and they have to deal with corrupt sovereigns. In the new era, however, as more firms do business abroad, the government is turning its sights to the likes of Wal-Mart, JPMorgan and Hollywood studios, demonstrating its increased commitment to enforcement.”

    Source: "Did JPMorgan commit bribery by hiring the kids of Chinese politicians? ", by Neil Irwin, The Washington Post, August 19, 2013.

    Follow up:

    • Do you think preferential hiring is "bribery"? Why or why not?
    • Why is bribery a business ethics issue anyway?  Should the FCPA involve itself in U.S. business practices in other countries? Why or why not?
    • Look up the Latin legal terms used above.  How do they translate and what do they mean?
  • Business tool: Naps

    image from www.citytowninfo.com

    Brian Halligan is the CEO of HubSpot, an "inbound marketing software platform." His experience is that all of his brilliant ideas arise either when he is falling asleep or just waking up. Even though these epiphanies arise only once or twice a month, it is important to him to nap on a regular basis, and he encourages his workers to do the same.

    Much of his workforce is part of "Generation Y." He has rethought the business culture and his management style in terms of what motivates and nourishes those in this generation. Some of the preferences Halligan tries to cater to include:

    • workers wanting to work wherever they can work
    • workers wanting freedom, but who are also willing to take on huge responsibilities
    • workers wanting to change jobs about every six months (so he changes routines and assignments frequently)
    • workers being motivated more by learning than by money.

    Halligan's philosophy about Human Resource management seems radical, but he seems to have been willing to adapt with the times--an important attribute in an information-technology-based company.

    Source:   "Brian Halligan, Chief of HubSpot, on the Value of Naps," by Adam Bryant, The New York Times, December 5, 2013.

    Follow up:

    • What is an "inbound marketing software platform"?
    • What is a "seam head"? What is "VORP"?
    • Do naps work for you in the same way they work for Halligan? How do your own sleeping patterns either help or hinder your working life?
    • Do Halligan's views about the "Gen-Y" worker ring true to you? Why or why not?
  • What professions are perceived as honest?

    image from nursingcrib.com

    According to a recent Gallup poll, advertising professionals and stockbrokers are thought to be just slightly more honest than politicians and car salespersons. One probably wouldn't expect that businesspeople of any type would be ranked very highly. At best, a business transaction is "quid pro quo." There is what is perceived to be an equal exchange of value: $130 to a retailer in exchange for a cashmere sweater, for example. There is no altruism or charity involved--it is an even trade. In accounting terms, debits = credits.

    If one side of the business transaction decides to misrepresent things--with a phony $20 as part of the cash tendered--or a 30% orlon sweater sold as 100% cashmere--then we are in the realm of dishonesty. And some businesspeople seem to be in the business of misrepresenting their products.

    Here are the results of the survey:

    What would it take for advertisers and car salespeople to be perceived as more honest?

    Source:   "Congress Retains Low Honesty Rating," by Frank Newport, Gallup Politics, December 3, 2013.

    Follow up:

    • How would you rate Medical Doctors, Engineers, College teachers, Business executives, Stockbrokers, Advertising practitioners and Lawyers?  Give your reasons for your rankings.
    • What would it take for advertisers and car salespeople to be perceived as more honest?
    • What does "quid pro quo" mean?
  • Business expands to space

    image by Roberto Gonzales for Getty Images, via Marketplace website

    The image above depicts SpaceX's Dragon spacecraft. It is on top of a Falcon 9 rocket that is lifting off from Cape Canaveral Air Force Station in Florida. This commercial space launch is not providing any new science, but SpaceX is showing up as a viable competitor because it is offering its launch "product" at a significantly lower price.

    Its competitors are European and Russian launch companies. But SpaceX is trying to build a good track record so that it can become a launch supplier to the U.S. military's billion+ dollar contracts. At the present time only the United Launch Alliance is approved for launching military satellites.

    Source:   "SpaceX heads to the stars," interview with John Logsdon by Ben Johnson, Marketplace, American Public Media, December 4, 2013.

    Follow up:

    • What rockets are the main launch vehicles for the European and Russian launch companies?
    • What is the United Launch Alliance? What products has it recently launched? 
  • Subscription craze now includes socks

    image from Sock of the Month Club

    Lately "subscribing" seems to be all the rage in marketing. Gym memberships have long been marketed as a monthly cost, and "book of the month" clubs and "wine of the month" clubs preceded internet marketing. Lately, even non-profits want you to give on a monthly basis.  I wrote a few months ago about a shaving club subscription model.

    The convenience seems to appeal to consumers, and the regularity of the revenue stream appeals to the sellers.

    Sock-of-the-month clubs are now in vogue.  I was a little disappointed when I first saw this article, because the sock clubs first addressed were for men--for example Soxiety, Sock Panda and Ankle Swagger. Men's online sock sales have risen 29% (and store sales have risen 4%) over the last year! As it turns out, women's sock clubs have helped increase sales even more.  One interesting marketing tidbit in this arena is that women buy more when there are abundant choices, and men buy more when there are fewer choices.

    There are now so many different sock club subscription services, it will be interesting to see how they differentiate themselves as competition increases.

    Source:   "Sock-of-the-Month Clubs Rise Online, Bringing Subscriptions to Feet," by Andrew Adam Newman, The New York Times, December 3, 2013.

    Follow up:

    • Would you subscribe to a sock club? Would anyone on your holiday gift list like a subscription?
    • What opportunities are arising in logistics because of the rising popularity of subscription product services?
  • "The Wolf of Wall Street": riveting or risky?

    image from wallstcheatsheet.com: Leonardo DiCaprio as Jordan Belfort 

    Here's a movie that might be of interest to business majors: "The Wolf of Wall Street" directed by Martin Scorcese. It is a story of the real-life Jordan Belfort, who did prison time for defrauding investors in a 1990's Wall Street and corporate banking scam.

    Not only is the subject matter of the movie finance-related, the circumstances under which it is being released are also interesting in terms of risk and marketing.

    The movie, produced by Paramount Pictures, was finished last Wednesday, but they still plan to release it on Christmas Day, which would make it eligible for the 2013 Oscar season. In some years, big studios go for the big dollars, and let the independent films soak up most of the Oscar honors. But it looks as if the end-of-the-year-release-in-time-for-awards-competition is producing a crowded movie marketplace this holiday season.

    There are some other issues with this movie that make it a risky release for the holidays:

    • The film is rated R for “strong sexual content, graphic nudity, drug use and language throughout, and for some violence.” Not exactly in the spirit of the season...
    • There are no moralistic lessons, such as those offered in other movies about high finance--"Margin Call" or "Too Big to Fail" for example. According to the NYT article, "This is a New York-based story about scammers scamming scammers."
    • The movie is 2 hours and 59 minutes long!

    The writers of the article pose a question which is probably in the minds of Paramount studio executives as well, "Will the picture...do for crooked stock traders what Mr. Scorsese’s 'Goodfellas' did for the mob?"

    We'll see...

    Source:   "A Scorsese Film Gets In Under the Oscar Wire," by Michael Cieply and Brooks Barnes, The New York Times, December 1, 2013.

    Follow up:

    • Does this movie appeal to you? Why or why not?
    • What do you see as the marketing challenges for this film? How would you overcome them? Think globally...