View This Data (Ep. 7)

Prices For Gas Vs. Prints
Originally uploaded by brandlyyours

Look how marketing, PR and politics manage to obliterate basic economic facts.

Printing ink costs 514 times more than gasoline due to (at least in part) the low transparency of the printer industry.

More info here

See You in Cluj

For those of you interested in discussing the ten steps needed for a successful start-up, on 12-Nov-08 I'll be in Cluj at ZileleBiz.
Looking forward to seeing you.  

Flash News for Brands

The news: 2009 will show you just how successful your brand is.

Strong brands have lower price elasticity levels. This means that the stronger the brand is, the less share it loses when the company increases prices.

This theory has been around for quite a while: The Business of Brands

However, now it's a good time to see just how true the theory is.
Strong brands should lose less market share in the coming year. However, cross price elasticity within category and within substitutable goods will be tested as well.

Update from the New York Times

"

The price cutting could begin before Black Friday, the day after
Thanksgiving when stores offer one-day bargains. According to
DisplaySearch, a market research firm, prices could go as low as $400
for a 32-inch LCD, and $600 for a 42-inch plasma set — about $200 off
current prices.

While Stan Glasgow, president of Sony
Electronics, said his company will not match those prices, he said,
“those numbers do not shock me.”

"
Click for entire article

View this Data (ep. 6)

This interactive feature compares previous plans to help ailing economies to the currently debated one.

If you're not an economically inclined person, just think of this feature as a way to browse through history and get a bit of comfort from knowing that we've been in similar situations before. Ok, it might be a bigger issue now (at least money-wise) but we've dealt with stuff like this before.

Let's hope we do the right thing.

"Since Hank Paulson, the Treasury secretary, unveiled his $700bn plan to rescue the American financial system all manner of alternative models have been debated. Here we take you through some examples of past bailout structures, drawing from the US, Sweden and Japan."
(FT.com)

Follow the Money

Scenario 1:
Your company produces cars. As in automobiles :)

Question:

Where are your big profits coming from?
(a) Selling the plane cars
(b) Selling the customized cars (read: full option :) )
(c) Selling parts and accessories

Scenario 2:
Your company produces digital cameras. (DSLR)

Question:



Where are your big profits coming from?

(a) Selling cameras

(b) Selling accessories
(c) Selling printers and papers

Facts from the Romanian market:
A big high tech company has a dedicated outlet chain but one can not buy accessories for their cameras (read batteries :) ). They have call the Service division and ask them for a special order.
Well... my camera is not broken, so why should I call the service helpline?
And... their batteries can be bought in other electronics shops across Romania.
My personal question: What's the company's business strategy? Market skimming? :)



PS: If at least one of your answers is (a), please drop me a line so that I can convince you otherwise

This is Not Yet Another Caustic Verbal Attack on Apple

There are some voices telling us that Apple has "lost its mojo", that it screwed up with launching iPhone 3G and that it lied about mobileMe "push" technology.

"The handful of recent stumbles by Cupertino is just a temporary rough patch, right?" full story here

None of this is either wrong or vicious. I think there are many consumers and mavericks loosing hot steam about recent Apple glitches.

My 2 cents: Apple is playing a profitable but somewhat dangerous game of escaping the niche - player status.

Reasons why these are great times to do this include:
(1) Microsoft is having troubles with Vista --> good time to attack it
(2) Telecoms are trying to boost data revenues --> good time to push iPhone 3G
(3) PC manufacturers only offer incremental performance upgrades to existing form-factors --> good time for product innovation in personal computing

Things Apple should pay more attention to appear to be:
(1) Manufacturing

(1.1) Volumes --> better anticipate demand
(1.2) Product life cycle in reference to pricing policy --> expensive products should resist moral and technical obsolescence more than 6-9 months

(2) Global Distribution channels --> reviewing channel partners is recommended

PS: This post should be in no way considered a bitter man's scream. I've seen lots of these kind of articles and posts in the last 12 months. Apple is a business, a sound one. It has a great marketing approach but I think the time has come for this company to also do some internal work.

Thoughts on... Doing Business in Romania

As today's news regarding Mercedes plans to build a new car plant in Hungary and not in Romania shows,
Romania really needs to build its infrastructure if it still wants to be more than a consumption based economy.
By the way, retailers in Romania should soon see important pressures on their margins as road infrastructure will hinder their stock management strategy.

Tips for Price Increases via HBS Working Knowledge

The 7 steps seem intuitive, even too general at some point:
(1) Know thy customer
(2) Invest in Market Research
(3) Redefine Value
(4) Use Promotions
(5) Unbundle
(6) Monitor Trade Terms
(7) Increase Relevance

Now, 1 and 2 generate 3, 5 and 7 and are related to consumers because you know them you will be able to serve them and to convince them to keep their business with your company.

4 is the all-time favourite pain killer for inflation and price increases. I remember that a few years ago soft drinks in Romania used to hide price increases by organizing a promotion. So, by counting the number of promotions for cola, I was able to estimate whether the Leu is doing better or worse than it used to do a year before. I know, it's not a scientifically sound method but it worked. :)

While 1-5 are focused on defending top-lines, 6 and 7 are aimed at profits. Brands and bundles are profit generating vectors.

Letting aside all these musings regarding the steps described above, I think that the end of the article is really funny. Especially because it's very unorthodox. I would not apologize for price increases... and I have never heard of a company apologizing for charging more.

"The key here is to educate the consumer, apologize for the uncontrollable price increases, give price-sensitive consumers some promotional options, and reemphasize product benefits."
Seven Tips for Managing Price Increases

Where's the content?

Apple announced the 3G iPhone for July 2008.
My question now: What will be the source of content loaded on iPhones all over the world?
The iTunes store is currently present in 22 countries but, coming this year, the iPhone will be present in 71.
Hardware is great. But where's the content?


Data sources used: Apple's site and Wikipedia

Later edit: This article from Time, takes a look at Apple's business model for the iPhone 3G: Steve Jobs Bets the Apple Farm

Uncluttering OS X Naming Architecture

The Apple Blog wonders:

So is dropping the “Mac” from OS X a sign of things to come? Or is it just to unify the marketing between the Mac OS and iPhone OS? Stay tuned.

I'll stay tuned. But is Apple ready to become a mainly-software shop? No, I'll put it this way:

Are the software developers ready to port Windows software?
Are the enterprise customers ready to switch massively?
Are the Apple customers ready to give up some of Apple's can't-touch-this glamor?
Are you sure, Steve Jobs is ready for this? :D

On the same topic. I'm still waiting for that biiig 'Ipohone' ("Imagine this..." from last year)

Local Perspectives

Every time I travel by train to Sibiu I tell myself that I have to write something on this blog.

It's just a personal idea, something often mentioned by smarter people. However, every time I'm in Sibiu (or any other location outside Bucharest) I notice differences in people's behaviour.

For example, people in Sibiu have totally different shopping baskets. The combination of fmcg goods is considerably different from the one I'm seeing in Bucharest. Two of the possible reasons identified are:

• distribution. i.e. there are important meat producers simply not present on the supermarket shelves in Sibiu
• buying behaviour. i.e. people in Sibiu seem to behave differently with respect to certain fmcg categories: relying more on taste and promotional package than on brand

Now, simply looking at some shopping baskets is not representative in terms of market research but it sure ads colour to market share and consumer reports. So, as just mentioned, smarter people urged marketers before, and I also recommend that every marketing - and brand manager takes time to visit cities across Romania.

The only 'new' part of this piece of advice is that - now that regional development starts gaining momentum, Romania might be ready for a marketing strategy customized in terms of geographic differences. Simply put: local perspectives could make or brake brands and marketing initiatives.

3 Pictures from Tirana

Should you have the money and business experience, now is the time to invest in Albania. Here are some pictures taken in February 2008.

Thoughts on... Reference Points

Apple leads Q1 sales in premium priced PCs (pardon the term :) ).
Now that's a shift of perspective.

"Apple's retail market share is 14 percent, and two-thirds for PCs costing $1,000 or more."

Restaurants in Romania: €1.22bn

A little bit of self-promo.

Visionwise Consulting, the company I am currently with, has just presented an overview on the Romanian restaurant market. (occasion: Food Service Industry Forum 2008)

The 3 bullet summary on Romanian restaurants

• Market estimated at €1.22bn in 2007 and set to reach €2bn by 2010
  
• In 2006 only 55% of the 5267 active companies were profitable
  
• Most common consumption occasion is "meeting with friends" (67.1%) and top 2 things appreciated by clients are food - and service quality

Happy eating!

Later Edit: Tim Harford's "Dear Economist..." column tackles the issue of "service" being added to restaurant bills. Well, in Romania restaurants don't add service to bills and the average tip is around 2 Euros.

3 bullets on an uncountable noun

It's
*unique = 1 signal from 1 source to 1 recipient delivered at 1 moment in time
*a gift if delivered and received properly = open mindness needed from both giver and receiver
*something that nourishes growth and improvement processes = literary feeds the business

It's feedback.

PS: I hope, I'm not the only one having trouble giving and receiving it :)