• Used Electronics For Sale


       image from www.pcmag.com

    There is an alternative for technology-users who are:
    ---  trying to save money
    ---  dealing with the problem of a dead phone...and an insurance replacement cost of $150
    ---  wanting to try out an Android phone, but don't want to totally commit
    ---  thinking about the environment vis-a-vis electronics waste.

    The solution: a "gently used" and refurbished technology goods market. 

    There are already some firms in this business. GameStop buys and resells video games. Gazelle deals with all kinds of phones and computers with value in the resale market. Does "certified, pre-owned" have a familiar ring to it?  It can apply to electronic goods as well. Amazon also operates a resale store, and has reported increasing sales in this market. 

    If a company with a good reputation and a limited warranty is standing behind their used product, more people are willing to buy. Those concerned about environmental pollution and waste are particularly interested in purchasing goods in the secondary market. It also relieves the sustainability guilt of those who want the "latest thing" but who don't want to add their still-good device to the landfill. 

    By the way, does anyone want to buy my old Walkman?

    Source: "Taking the Stigma Out of Buying Used Electronics," by Brian X. Chen, New York Times: Personal Tech, April 27,2016.

    Follow up:
    ---   What are the pros and cons of buying used electronics to each of these stakeholders: consumers, businesses, and the general public?
    ---   What recycled products are likely to be most successful?
    ---   Discuss the economics of buying a new car versus a used car, particularly with respect to the rate of depreciation. Does this apply to electronics? Why or why not? What is different about the two product markets?

        ________________________________       __________________________________ 

  • Vacuum cleaner disruptor turns attention to hair dryers


       CBS This Morning covers introduction of the Supersonic Dyson Hair Dryer in Tokyo

    Sir James Dyson, the billionaire inventor, has spent over $72 million developing a revolutionary hair dryer. Hair dryer technology has not changed markedly for over 60 years, and Dyson's "zero based" approach to products has been applied to this popular personal-care appliance. Some of the innovations in the Supersonic Hair Dryer include:
    ---  the motor is in the handle, so it is not unbalanced and top-heavy
    ---  the hair dryer is much quieter, due to a longer silencer tube and machine noises out of the range of human hearing
    ---  the specialized motor allows for "high velocity flow but not pressure" which means fewer scalp burns
    ---  special heat sensors prevent damage to hair

    Is this hair dryer really likely to be cutting edge? What is Dyson's track record? Here is one observer's comment:

    “His inventions are disruptive — beautifully so,” said Terence Conran, the British restaurateur, retailer and furniture designer. “Who would have imagined that a bagless vacuum cleaner could become a highly covetable status symbol? He has made other businesses think differently about how to use design, creativity and innovation.”

    The hair dryer should be available in the U.S. in September, 2016...in plenty of time for the holidays.

    Source
    : "Dyson Wants to Create a Hair Dryer Revolution," by Elizabeth Paton, New York Times, April 27, 2016.

    Follow up
    ---   What innovations did Dyson introduce to vacuum cleaner product design?
    ---   What is "zero based budgeting"? How does the term apply to Dyson's approach to product development?
    ---   The "disruptive" hair dryer costs $399--about 10 times as much as most traditional hair dryers. What chance does it have of being successful? On what assumptions are you basing your answer?
    ---   What marketing themes, based on James Dyson's comments in the video, might be used to promote this product?

        ________________________________        __________________________________

     

  • Oligopoly in cable industry gets additional regulator support


      Bloomberg analysis of Charter/Time-Warner deal when agreement was first reached 11 months ago

    This week, federal anti-trust legislators approved the merger of Charter Communications and Time Warner. The deal for this merger was made in May 2015, but needed federal approval before moving forward. This merger makes the new company the second largest cable and communications provider in the country.  Federal officials had nixed the purchase of Time Warner by Comcast previously. [News flash: This morning, April 28, 2016, Comcast was successful in making a deal to purchase DreamWorks.]

    Other recent or pending cable industry mergers include the AT&T purchase of Direct TV in 2015, and the purchase of the cable and FIOS portions of Verizon in three states earlier this year by Frontier. These transitions have not been smooth for customers...or for investors

    Several factors make investing in cable companies risky at this point--even though the consolidation of the corporate entities is shrinking the number of providers. The risks to investors include users changing to a different provider, users "cutting the cord" completely from cable companies, and the possible entry of Alphabet (Google) and Sony into this marketplace. 

    In any event, for consumers, the selection of a cable and internet provider continues to be a baffling marketplace governed by the fine print and the lack of robust competition. 

    Source: "Anti-trust regulators on Monday cleared a mega-merger that will create the country's second-largest cable company," by Hope King and Brian Selzer, CNNmoney.com, April 26, 2016. 

    Follow up:
    ---   What is an oligopoly? What is the effect of an oligopoly on consumer prices? (consider the consolidation in the airline industry as well). Which is better for consumers--a monopoly whose prices are overseen by government regulators (water, electric and trash services, for instance), or an oligopoly?
    ---   Describe the pros and cons of your experience with your cable and internet provider. Have you "cut the cable cord"? If you have, include that experience in your description of the pros and cons. 

        _________________________________      ___________________________________

     

  • Product development and Production: Cotton Sourcing for t-shirts


      image from fast coexist.com

    NPR's Planet Money decided to make its own T-shirts. But instead of ordering them from a t-shirt maker online or the local computerized silk-screening business, they decided to produce the t-shirts themselves from the beginning of the production process to the distribution point. That meant:
    ---   
    funding the project
    ---   
    finding out where the cotton for those t-shirts would be grown
    ---   
    following the cotton to where it would be spun
    ---   
    following the spun cotton to where it would be made into fabric and sewn into t-shirts
    ---   
    following the finished t-shirts to the distribution points

    Planet Money did a series of podcasts following this process.  They were clueless about how to begin. Luckily, the Jockey Corporation had lots of experience in making cotton t-shirts and the people at Jockey were willing to connect Planet Money with the materials, labor, and logistics needed to make their product.

    But first Planet Money needed funding. They raised $590,807 via Kickstarter--from over 20,000 supporters who were promised a finished product. It turned out that for them, that was the easy part.

    The next step was sourcing out the cotton. It turns out that American cotton is the best cotton in the world--primarily because it is long, strong and consistent. Growing cotton is no longer labor-intensive. It is harvested by $600,000 computerized machines that are far more efficient than hand labor. These machines can harvest more cotton in a day than could be harvested in a lifetime if picked by hand.  

    The first stage of the t-shirt manufacturing--form the cotton growing to spinning it into t-shirt yarn is fascinating. Listen to the 20 minute podcast:

    Episode 496.

    Sources: "Episode 496: Where the Planet Money T-Shirt Began,"  by Robert Smith and Jess Jiang, NPR Planet Money, originally aired in 2013, rebroadcast August 12, 2015, transcript.

    "A Glimpse Into The Global Forces That Create A Simple T-Shirt," by Jessica Leber, fastcoexist.com, December 11, 2013.

    Follow up:
    ---  
    What are some of the qualities of cotton yarn? How much yarn is in one t-shirt?  What would the average person call t-shirt yarn?
    ---  
    Where is the cotton spun? Describe the product. How do cotton growers "cheat" in the global market?
    ---  
    Read what Adweek has to say about Planet Money's Kickstarter project. Discuss their findings from a marketing perspective.

                          

  • Up close and personal: an Etsy manager


         image from Etsy.com

    Consumers looking for one-of-a-kind crafted items probably know about EtsyAccording to Wikipedia, Etsy is:

    "a peer-to-peer (P2P) e-commerce website focused on handmade or vintage items and supplies, as well as unique factory-manufactured items. These items cover a wide range, including art, photography, clothing, jewelry, food, bath and beauty products, quilts, knick-knacks, and toys. Many sellers also sell craft supplies such as beads, wire and jewelry-making tools. All vintage items must be at least 20 years old."

    The New York Times recently did an article about Jaime DeLanghe, a 29-year old Etsy senior product manager. Since she started at Etsy six years ago, the company has grown from 100 to 800 employees. When asked how she achieved her current position, she answered:

    "Hard work. Many jobs here deal with technology, and I didn’t know anything about that or the Internet culture. I’m not happy if I don’t understand something, so I read books and took online classes. I taught myself to program in Python on my own time, and Etsy’s engineers helped me learn about website development. I was promoted to a product development group and helped develop tools for managing buyers’ and sellers’ policy violations, and eventually I was promoted to this role. My official title is senior product manager of search and discovery and ads."


    Source: "An Etsy product manager's do-it-yourself career path," by Patricia R. Olson, New York Times, April 23, 2016.

    Follow up:  What was Etsy's approximate gross revenue in 2014? Did it make a profit? What is its business structure? (see Wikipedia link).

            ___________________________________________________________________

  • "Massaging the data" and "cooking the books"...AGAIN


          Cartoon by Roy Delgado, purchased from cartoonstock.com by T Bernstein

    How can companies get away with publishing misleading financial statements--especially after the Sarbanes-Oxley Act and Dodd-Frank? Even more puzzling--why do investors and investing advisors believe the statements with inflated net income reported? 

    The Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) require that companies follow accounting rules codified under GAAP. But companies sometimes present non-GAAP financial results that show their performance in a more positive light. Companies do this as part of the "supplemental data" they are allowed to present, but often it is accompanied by more clear, explanatory language than the official numbers.

     The Analyst's Accounting Observer has studied 380 companies (mostly energy companies) that operated between 2009 and 2015. It found that:
    ---  the non-GAAP financial data showed that income was up 6% between 2014 and 2015;
    ---  for the same period, the income reported according to GAAP rules showed a decline of 11%;
    ---  30 of those companies moved from net loss to net income by massaging the data their own way.

    But the SEC has expressed some concern about this presentation. According to the NYT, "the commission is in the midst of reviewing its corporate disclosure requirements and considering way to improve its rules 'for the benefit of both companies and investors'."

    Sounds pretty noncommittal to me. Your thoughts? 

    Source: "Fantasy Math Spins Losses Into Profits," by Gretchen Morgenson, New York Times, April 22, 2016.

    Follow up
    ---  Define "GAAP." Why is it important to the small investor?
    ---  What do "massaging the data," "cooking the books," or "fudging the numbers" mean? What might be some ways you might respond if your boss asked you to misrepresent financial data?
    ---  According to the article linked above, how did the companies who misrepresented their results do it?

        _______________________________      ________________________________

     

  • NIKE's aggressive marketing leadership


      clip from CBS NEWS piece linked below, via YouTube

    As Phil Knight steps down from his 50-year tenure as the CEO of NIKE, Inc., he was interviewed on CBS Morning Report by Lee Cowan. Knight reflected on his gratitude to his college running coach, Bill Bowerman, whose shoe designs for his collegiate runners inspired Knight to form the Nike shoe business. Ironically, Knight disliked advertising, but he knew the importance of a brand image.  He paid a college student $35 to develop the "swoosh" logo, which is widely associated with the NIKE brand. 

    Aside from being an innovator in shoe design (including the famous "waffle" sole), Knight was one of the first entrepreneurs to pursue celebrity endorsements for his products.  The first athletes signed were tennis players Ilie Nastase and John McEnroe. His most successful athlete endorsement contract was with Michael Jordan; Knight signed him while Jordan was still in college. 

    Because marketing has been such a significant part of NIKE's success, it was surprising to note that Knight did not mention any of his Global Marketing Vice Presidents in his CBS interview. One of them was Liz Dolan, who was with NIKE for ten years. While she was Corporate Vice President and head of Global Marketing, NIKE revenues more than doubled--from $4.2 billion to $9.1 billion. She resigned in 1997. 

    Knight did mention his corporate memoir, Shoe Dog, which is being published this week.

    Sources: "Nike's Fiercely Competitive Phil Knight," by Lee Cowan, CBS News, April 24, 2016.
    Liz Dolan, Linked In.

    Follow up:
    ---  What was the "swoosh" logo originally called, and by what other names is it known by? What was Phil Knight's initial reaction to the logo? How effective has this brand image turned out to be [LINK]? 
    ---  What were some problematic celebrity endorsement contracts made by Nike?

        ______________________________  _________________________________

     

  • Sustainability and the business of burials


       portion of a TED talk by Jae Rhim Lee on her Mushroom Burial Suit

    The entrepreneurial business advice to "build a better mousetrap" is venturing into the burial business. With sustainability as the driving force, new products and businesses are arising that address the process of burial in an innovative way. 

    The seed of this idea probably came from the natural cycles of birth and decay that occur in nature. Human practices of burial in coffins hinder the decay process. And burial in metal coffins or concrete burial vaults change the decay process entirely, and prevent the natural cycles from occurring at all.  

    Jae Rhim Lee, founder of Coeio, has developed a suit for burial that contains fibers that will produce mushrooms that will accelerate the natural decay process. It can be used without a coffin...if that type of burial is allowed in a given community. Surprisingly, in every state there are some situations where burial is allowed "in your own backyard." There are also green burial cemeteries.

    Another (less) green burial option is offered by Bios Urn, which has tested the effect on tree growth of plants fertilized by cremated remains buried in a biodegradable urn. The environmental problems with cremation are addressed in the video above.

    An advantage to consumers of these products is their affordability. An advantage to the planet is less waste and less toxicity. An advantage to the business community is the growth of new businesses. 

    The business hurdle that is exists is the reluctance that people have to confront death and decay, as well as family or cultural traditions surrounding funerals and burial.  

    Source: "Mushroom Suits, Biodegradable Urns and Death's Green Frontier," by Katie Rogers, New York Times, April 22, 2016.

    Follow up:
    ---  What problems can occur with burial vaults? What "problems" are they designed to solve? 
    ---  What are the advantages and disadvantages of a "green burial"?  (These are more fully addressed in the video.) Would you consider this option for a pet or for yourself? Why or why not?
         ________________________________     _________________________________

     

  • Prince the Businessman


       clip of Prince's solo on "While My Guitar Gently Weeps" via PBS NewsHour

    From his first album, Prince (who passed away this week at 57) took a strong entrepreneurial approach to his career.
    He established complete creative control with his first album, "For You," when he was 18.
    He produced and performed in several albums, including the #1 "Purple Rain," while signed with Warner Brothers Records.
    In 1993 (after 15 years) he had a public show-down with Warner Brothers, and appeared with the word "slave" written on his cheek to represent the business model of indentured servitude that he experienced under his contract with them.

    Prince then changed his name to a symbol, "to mess with [Warner Brothers]" according to Rolling Stone. Others then referred to him as "The Artist Formerly Known As Prince," for the next seven years. At that point the contract with Warner expired, and he returned to calling himself "Prince." 

    His next bold move against an established recording label came in July 2007, when he was briefly under contract with Columbia. Without their permission, Prince decided to give away his album with copies of the Mail (print newspaper) during a concert booking in London. 

    His third bold statement against the marketing norms occurred with the internet distributions of songs. Because of pirating and companies like Apple making money from internet streaming (taking away from sales-based royalties), Prince believed that the internet was not a viable long-term distribution channel by which musicians could make money. He pulled his music from all internet distribution except Tidal.  The International Federation of the Phonographic Industry (almost always referred to now as IFPI) did a recent study concerning the "value gap" between the royalty-based artist payment model on YouTube and the subscriber-to-a-service-provider (Apple, Spotify). Their study supports Prince's position.  Other major artists, such as Adele, Taylor Swift, and Beyonce are also breaking away from the downloading subscription services, at least for certain albums.

    So, in addition to being a talented and innovative performer, he was a leader with respect to music business models.

    Source: "Prince the Businessman: a Trailblazer Who Bent the Music Industry to his Will," by Eamonn Forde, The Guardian, April 22, 2016.

    Follow up
    ---  Read the article: What happened to record sales at Warner Brothers after Prince changed his name? What could have been possible factors?
    ---  What album did Prince give way with copies of a newspaper in 2007? What was Columbia's reaction to Prince's give-away? What might have been the positive and negative consequences of each of these actions?
    ---  Do you think Prince was right about the internet vis-a-vis the music recording industry? Why or why not?  
          _________________________________       ___________________________________

  • Chip card delays


      image from krebsonsecurity.com

    If you pay for in-store purchases with credit cards, you may have noticed that over the last few months, it takes longer to check out with retailers who have switched over to the chip-reading technology.  The current card-readers also have magnetic stripe capability (the ubiquitous-in -the-U.S. older technology), so in any case you can use your old card.

    Regardless of whether your card has a chip or not, you can't run it through any time during your transaction as you could before--even if you are using the old-school magnetic stripe. You have to wait until all of your items have been rung up and totaled.  Then you have to follow instructions on the reader, which include leaving your chip card in place for several seconds without touching it. If your card doesn't have a chip, you need to follow even slower instructions regarding the magnetic stripe. 

    In either case, you must wait several seconds longer than you did before these new readers were installed. Visa has announced a new plan to reduce the time these transactions take.

    Meanwhile, delays are not just happening at point-of-purchase: retailers have been slow to install the new machinery--perhaps hoping that the bugs will be worked out of the system by the early adopters. Some just wanted to get through the busy holiday season without having to deal with slowness on checkout lines and the learning curve of chip technology usage. 

    Many card users and retailers still are not satisfied the transactions are secure. But some care little because they do most of their purchases online. But bank card issuers are already getting what they wanted from this change--they can now charge back fraudulent usage costs that occurs at point of purchase to the retailers, instead of absorbing all the fraudulent usage costs themselves. 

    Source: "Are chip cards worth the wait at the checkout line?" by Marketplace staff, Your Money; American Public Media, April 19, 2016.

    Follow up

    ---   Describe Visa's plan to speed things up in the checkout line.
    ---   Read the linked article and the texts that are attached to it. What security features (that have not been implemented) are mentioned?  How are things done in countries other than the U.S.?

          _________________________________  $ ___________________________________

  • If you didn't have these skills at 18, it's time to develop them now...

    Julie Lythcott-Haims (former Stanford dean and author of "How to Raise An Adult...") cites eight skills that young people need to know by the time they are 18 years old. They are skills that a person in the working world need as well. These skills are:

    I can imagine a college dean--to ease the tension of  dealing with myriad freshman problems--would find relief in jotting down notes from which to later distill this advice. A student body without these skills could make a college dean's life pretty tough. (...Not to mention the work life of a corporate manager who might assume these skills were part of every college graduate's repertoire.)

    But few 18-years olds are proficient at these "soft skills." Parents unwittingly undermine these skills in several ways. In warning young people not to talk to strangers, parents don't teach how to differentiate between those who are trustable and those who are untrustworthy. Schlepping kids around in the minivan doesn't teach a young person how to navigate public transportation. Over-supervising schoolwork and deadlines during high school can leave a student without time-management skills when they are going off to college. And managing a teenager's stress levels by making sure they aren't pressured by home-maintenance chores or troublesome classmates can also strand a young person in a skill-free zone of incompetence.

    Managing money--and learning the hard way what can happen when one runs out of it...or taking a risk and coping with a failure can help a person develop the trait of equanimity, which is very much valued in the business world (even if is not overtly mentioned in the preferred qualifications section of a job announcement). Building skills to manage difficulties without falling apart can ameliorate difficult work situations that will inevitably arise.

    Of course, to teach these skills, the young person's parents ALSO have to have mature skills in terms of handling stress and time pressures. They need to be able to model self acceptance and managing difficulties without panic and blame. But if a person doesn't learn these skills in their family of origin...it is never too late. These skills (and others) can be refined as an adult through self-education, workshops or even therapy. These are skills of emotional maturity that are needed to convey to others one's competence, and to inspire trust.

    Source: "Former Stanford dean shares the 8 skills everyone should have by age 18," by Julie Lythcott-Haims, Businessinsider.com, April 18, 2016.

    Follow up
    ---   At which of these skills were you proficient at 18?  How about now? How do they work for you?
    ---   Add to this list. What other life skills or business skills do you value as you move through your working life?
    ---   Were your parents guilty of undermining these skills?  How will you gain these skills for yourself at this point? (it's not too late)


          _________________________________     ___________________________________

  • Don't file your taxes from Coachella...


       image from exclaim.ca

    Megan Hampton, who runs the postal concession stand at Coachella, is warning festival goers not to try to mail their taxes from the Coachella address. The postal concession stand is not really a post office--it is an intermediary between festival goers and the real post office. It is a profit-oriented concession that derives its revenue from selling postcards that can be stamped with a Coachella origination stamp. These items are not really mailed until they are transported to a real post office. Apparently ten taxpayers tried to mail their returns on Friday, April 15th from the Coachella concession. But that would not produce a "timely" filing of the tax return, since it must be in the USPS transit system in order to be counted as "mailed." 

    Actually, some private delivery services (such as FedEx) can also be used to satisfy the timeliness requirement--as long as "Priority overnight" is chosen instead of "FedEx Ground."

    And on the subject of timeliness: How did April 18th get to be the filing deadline for taxes in 2016, anyway?  Isn't the tax filing day April 15th? Two public policy practices dovetailed to make this happen. First, Emancipation Day is a holiday in Washington D.C. It is celebrated on April 16th--except in years when April 16th falls on a Saturday. So April 15th became the holiday this year--no filing deadline on a legal holiday according to IRS regulations.  Since the IRS usually moves a weekend filing deadline to the following Monday, this also was applied in 2016--so Monday, April 18th, is the filing deadline this year.  

    In Massachusetts and Maine--states that celebrate Patriot's Day, the third Monday in April--taxpayers are given one more extra day to file--till Tuesday, April 19th. 

    Source: "Coachella 2016: Don't file your taxes from festival's post office, authorities warn," by Jason Henry, Press Enterprise, April 16, 2016, via Marketplace, American Public Media, April 18, 2016. 

    Follow up:
    ---   What, according to the article, are other popular items to mail from the Coachella post office?
    ---   Have you filed your taxes this year? Do you get it done early, or do you procrastinate? Explain your reasons. 
      

  • "Mr. Robot" helps with re-branding a network


      Trailer for the first season of "Mr. Robot"

    The Marketing Vice President of the USA Network, Alexandra Shapiro, is heading up an effort to address the "grittier" and "darker" preferences of the sought-after audience demographic: millennials.

    Old tagline: "Characters Welcome"
    New tagline: "We the Bold"


      from the article linked below, and seen on some of the USA promos


    Leading off the re-branding campaign is the actor playing the very edgy hacker character, Elliot Alderson, from Mr. Robot. The second season of the series will begin this summer. The first season established itself with its anti-big business themes and its lonely, jittery, and brilliant anti-hero, played by Rami Malek. The character's actions personify the new tagline: "We the Bold."

    Source: "USA network revamps brand image, tagline for Mr. Robot ," by Cynthia Littleton, Variety, April 14, 2016.

    Follow up:
    ---  Think of some other television shows that have helped cable channels (or even network channels) brand themselves, or re-brand themselves. What were the shows and what did they accomplish? (think--Thursday night half-hour shows; Fox young adult dramas the premiered in 1990 and 2003; signature shows for HBO?; or what channel(s) would you turn to for horror).
    ---  Do you think this re-branding is timely? Will it be effective? From what you have read, or your own viewing experience, do you that Mr. Robot signals a shift in popular viewing?  Explain. 

                   --------------------------------------------------------------------------------------------------------

              

  • "Still Too Big To Fail"


         Bloomberg Business came to the same conclusion a few months ago in the video above,
         Bloomberg also has a more complete update online

    Federal regulators from the Fed (Federal Reserve) and the FDIC (Federal Deposit Insurance Corporation) just announced their conclusions about the effectiveness of banks in developing plans to avert a financial meltdown if another monetary crisis occurs. The regulators found that, of the eight big banks that had to be bailed out by the federal government in 2008, five of them still have not developed a substantive response plan.

    The banks who are still too big include: Bank of America, JP Morgan Chase, Wells Fargo, Bank of New York Mellon and State Street. 

    The break-up of large investment banks is a point of contention in the current presidential primary campaigns. What do you think?

    Source: "Regulators Warn 5 Top Banks They Are Still Too Big To Fail," by Nathaniel Popper and Peter Eavis, New York Times DealBook, April 13, 2016.

    Follow up
    ---  What are the dangers of banks that are too big? 
    ---  What is the difference between an Investment bank and a commercial bank? What is the business model of a commercial bank, and why might small businesses prefer dealing with them?
    ---  What does the term "living will" mean when applied to these large banks? [Read the Bloomberg print item linked right below the video]

                -------------------------------------------------------$$$--------------------------------------------------------------

  • Nestle Rx: developing food products that are really medicines

    Nestle SA (a company based in Lausanne, Switzerland) is now in the business of developing foods to treat chronic diseases. These will mainly be powders and drinks that are actually prescription medicines that are food-based. These products are estimated to be a $15 billion per year business and the products are being developed by Nestle to improve sales growth. As the world population ages (see the chart in the article linked below), the market for easy-to-swallow long-term medication is likely to grow.

    Nestle is already in the business of making Boost, which is a nutrition-enhanced canned milkshake-like product. Even though Nestle has had some public relations problems involving certain marketing campaigns, many consumers world-wide are loyal to their products: Kit-Kat bars, Nesquik for chocolate milk, Haagen-Dazs ice cream, Hot Pockets, Lean Cuisine and hundreds more. 

    These new Rx foods are highly specialized. The medicine is NOT being added to the foods--actual foods are being used to create the medicinal effect. From the article:

    "The products have active ingredients derived from food products or dietary ingredients that are generally recognized as safe by the U.S. Food and Drug Administration...Machines costing nearly $1 million each analyze human DNA to develop personalized programs for conditions like epilepsy and intestinal disorders that are tailored to specific genetic profiles. Armed with this knowledge, the scientists will develop medical foods containing natural compounds extracted from foodstuffs like tomatoes, coffee and grapes."


    We'll see which diseases are most effectively treated with this new form of medicine as the research and testing continues. 

    Source: "Nestle Develops Foods to Treat Diseases," by John Revill, Wall Street Journal, April 12, 2016.

    Follow up
    Nestle sometimes gets some bad press...including a campaign involving baby formula. Describe Nestle as a company, vis a vis the ethics of some of the business decisions that have made headlines.

    What are some of the pros and cons of the food-as-medicine products, as discussed in this article? 

              -------------------------------------------------   ----------------------------------------------------- 

  • Good for the environment AND good for the economy

        

      

    Old school wisdom, based on historical facts from the 18th, 19th, and 20th centuries, held that, from the Industrial Revolution onward, economic growth was correlated with increased pollution--first from coal-fueled engines to gasoline, diesel and jet fuels.

    However, recent studies have found that economic growth levels have exceed the growth in pollution, as measured by carbon emissions.

    Some of the studies that support these findings:

    International Energy Agency, 2014
    International Energy Agency, 2015
    World Resources Institute, 2016


    The findings do not tell the whole story, however. As you can see from the graph, carbon emissions are still increasing. 

    Source: "Can Economies Rise as Emissions Fall?" by Carla Davenport, New York Times, April 5, 2016.

    Follow up
    Read the article. Define "decoupling."

    What have been some unintended and unfortunate results correlated with the decline in carbon emissions? Will these trends continue? Why or why not?

    How many countries have achieved "decoupling" and how many have not? What does this mean in terms of conclusions that can be drawn from these studies?

              -----------------------------------------------------------------------------------------------------------------

  • American Idol's talent-marketing machine ends its run


      Kelly Clarkson sings "A Moment Like This" on American Idol eight years ago.

    American Idol's final episode was Thursday, April 7th. Has it really been 15 seasons? So much has changed since it began. Its popularity has spun several other shows with parallel formats, both in music and in other performing arts. Ironically, Simon Cowell, whose persona as a difficult-to-please judge became an icon for the show, created several similar shows. 

    American Idol was a marketing vehicle for several outstanding talents--Idol winners, Idol runner-ups, and Idol also-rans: Kelly ClarksonCarrie UnderwoodJennifer HudsonAdam Lambert and (in a different way) Ryan Seacrest are a few of the talents whose careers were launched by American Idol. These individuals (and many others) were the successful "products" of the show, developed and produced on the air. American Idol was one of the few shows over the last several years that was important to watch in "real time." It grew as texting grew--Ryan Seacrest even taught people on screen how to text in their votes to determine the winning artist. 

    Source: "How 'American Idol' changed music and TV," by Sarah Menendez, Tony Wagner, and Sarah Hill,  Marketplace, American Public Media, April 6, 2016.

    Follow up:
    What shows have copied American Idol, and in what ways? How have the copy-cats been different?
    What shows were created by American Idol's own Simon Cowell?

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  • Sean Parker, the poster boy for Disruption


       Business Insider's take on Sean Parker's Screening Room project

    Sean Parker knows how to "disrupt": Napster (he was a co-founder) offered peer-to-peer free sharing of music, which became a catalyst for changing the way people listened to music, and the way the industry monetized their product. Parker was an early investor in Facebook. Now he is proposing a new business, Screening Room. The set-up? Pay $50 to be able to screen a movie in your home...the day it opens in the theaters. 

    Parker is currently lobbying producers and studios to promote his plan. He is offering them $20 a download...40% of the take. Observers estimate that over the financial lifetime of a film, about 50% of the revenues end up going to the studios. Parker's plan would not cut into the potential revenue from  DVDs, broadcast, cable and streaming services like Netflix, so the no-cost revenue from Screening Room downloads might make sense to studios. The service would, however, probably cut into sales at movie theaters. 

    Some consumers (who wouldn't venture out to a movie theater anyway--due to the distance, the hassle, or their personal temperaments) might end up buying the Screening Room viewing and adding to profits. Since first-run movie tickets in theaters cost $13-$15 dollars now, it would be worthwhile if 4 friends got together and shared the download. But some movie-goers might opt to stay home as well. 

    If this service succeeds, the outcome for movie theater venues doesn't seem very good...but the industry may find a way to adapt. 

    Source: "Will Napster co-founder Sean Parker's Screening Room disrupt the film industry?" by Daniel Miller, Los Angeles Times, April 7, 2016. 

    Follow up
    ---  Would you pay $50 to see a movie at home on the night it opened?  Why or why not?
    ---  If Screening Room succeeds, what impact might it have on the multiplex theatre industry?  How might that industry adapt?
    ---  What is "disruptive innovation," in terms of modern product development and marketing?

              --------------------------------------------------- ----------------------------------------------------

  • Alaska Airlines buys Virgin America


      from the Associated Press

    The deal has been brewing for some time (Jet Blue was also looking at the purchase), but Alaska Air Group has sealed the deal: $2.6 billion will be paid to buy Virgin America. Assuming the Justice Department approves the merger, the merged company will be the fifth largest airline. 

    I am sad to hear this news: I am a loyal Virgin America flyer. I have a Virgin VISA card. I enjoy the perks (frequent flier miles and no-cost flight changes). I love the way Virgin treats its passengers. They never crash

    Nevertheless, the merger makes good business sense for both Alaska Airlines and Virgin America. Virgin has been struggling with losses, as it has tried to maximize services and still offer competitive pricing. Alaska Airlines needs to broaden its service area by acquiring Virgin's routes...as well as Virgin's loyal customers. 

    The merger will make Virgin's stockholders happy--especially Virgin America founder Richard Branson, who owns 30% of the stock.

    Sources:  YouTube video above, via Reuters
    "
    Alaska Air Sees Virgin America as Key to West Coast," by Michael J. de la Merced and Chad Bray, New York Times, April 4, 2016.

    Follow up:
    ---   Do you think fewer, bigger airlines hurt or help consumers?
    ---   Do you fly Virgin America?  Are you a Virgin America stockholder? How do you feel about this merger?

              _________________________________________________________________    

  • Tesla Model 3: the electric car for the masses?

    Orders for the Tesla Model 3--which has yet to be put into production--have now hit over 276,000. Future buyers have to put down $1000 to reserve their car, which may not be available until 2018 or later. That's one way for Tesla to raise for almost $3,000,000 in cash. 

    Selling stock is another way to raise operating or research-and-development cash. But the accounting for this is different than the accounting for selling stock. The company still gets the cash (debit cash) but instead of equity increasing, a special kind of liability called a "Deferred Revenue" is recorded. This means that Tesla will either have to deliver the car...or refund the money. With a stock investment, there is no legal expectation that the money paid up front is guaranteed to be recoverable. 

    Here is what the Tesla Model 3 promises:

    ----  "affordability": a $35,000 price (instead of double that or more)

    ----  a 200 mile range per electric charge...or 300 miles if one purchases the upgraded battery

    ----  the possibility that many middle class Americans will be able to buy and enjoy the advantages of an electric car. 

    What Tesla isn't promising is a production schedule that will produce a car by a guaranteed delivery date. Hmmm. Maybe wanna-be electric vehicle buyers will opt for the comparable and sooner-available Chevy Bolt  (that's the all-electric Bolt not the electric-with-gas-back-up Volt). 

    Source: "Tesla Model 3 preorders climb to 276,000," Kai Ryssdal, Marketplace, American Public Media, April 4, 2016 (site includes the photo above).

    Follow up

    ----  "Crowdfunding" also depends upon pre-orders. Betabrand is one direct-to-consumer manufacturer that introduces new products using this model. What are the advantages for the manufacturer? Check out Betabrand's website. What does that company offer those who pre-order their new products?

    ----  What about the Tesla Model 3 appeals to you, and what doesn't? Consider both quantitative factors ($ related) and qualitative factors (feeling, subjective or intangible).

                                                                                              

  • April Fools' Day! (It sometimes backfires...)


       Fox News on some April Fools' Day pranks

    It is April 1st, and the temptation to play jokes is everywhere:

    --  Our local newspaper, Santa Monica Daily Press is a complete parody of city news--which is their usual format for April 1. 
    --  My nephew texted his working wife to tell her that their charming and intelligent four-year-old daughter had been suspended from pre-school for two weeks...for bad behavior.
    --  Both Virgin Atlantic entrepreneur Richard Branson and Burger King have fun in the video above.
    --  Google had a major April Fools' Day FAIL today...and has already issued an apology.

    The essence of the April Fools' Day joke is "Gotcha!" The joke tries to take advantage of the gullibility of another person--or the trust that person has in the prankster--so that the joke is on the trusting person when the prankster reveals the falsehood.  As you might imagine, people have different reactions to this type of humor. So an April Fools' Day joke in a business setting has to be mindfully considered for possible unintended consequences. 

    The Google fail today took advantage of peoples' trust. And the joke back-fired.

    Sources: As linked above

    Follow up:

    --  Watch the Fox News video following the first video on pranks of the past. What April Fool joke does Mike Huckabee play on Maria Bartiromo?
    --  Have you played an April Fool joke at work or school? Describe the set-up and the results. Did it have any long-term effect on your reputation? Positive or negative?
    --  What works as a prank and what fails in a business situation?