Recently I read a blog on Bloomberg’s Management Blog site that raised an important issue about the success of IPOs of social media firms like Twitter. In class we’ve discussed how the actual source of revenue for these firms is from advertisement deals. One would think that because Twitter is a social media site, advertisers are eager to strike up deals with them because of the amount of information on Twitter. However, this blog suggests that Twitter doesn’t actually have any advantage concerning the amount and quality of data unless it establishes data stewardship with its users. The term data stewardship refers to when users trust Twitter with their personal information to be used for a certain purpose. In order for this to be established Twitter needs to be transparent with its users and how they are using their personal information, otherwise they aren’t getting it. If this transparency isn’t established there really is no difference between advertising with Twitter and advertising with say a mobile application.

Personally, I don’t have Twitter but I have Facebook, which works in the same way. If I don’t give my information like what city I live in, where I went to school, etc., then Facebook has no value/advantage to offer its advertisers and that can greatly affect is revenue streams and value of its shares.

John Rose, “In Twitter We Trust…Maybe” The Management Blog, November 15, 2013, http://www.businessweek.com/articles/2013-11-15/in-twitter-we-trust-maybe

Image from: “Twitter Advertising Now Open to All U.S. Users,” Mashable, November 15, 2013 http://mashable.com/2013/04/30/twitter-advertising-open-to-all/

Shopper’s Drug Mart is testing out a new personalized promotional strategy that examines the buying trends of its its rewards program members to target them with discounts on specific products they may want. For example, if a rewards member frequently buys L’Oreal shampoo, Shopper’s uses that information to decide to send them an email with a promotion on L’Oreal conditioner.

Shopper’s isn’t the only business going more personal. I recently read Fraser Denton’s blog post about how Tesco is using surveillance cameras to figure out the age and gender of their customers to better target their promotions. I find it interesting how businesses are moving towards more personalized promotions. As competition heats up, businesses feel the pressure to narrow their marketing strategies specific to the customer, giving him/her a more convincing reason to by the product. However, these personalized strategies can be costly and time consuming. To be successful, huge amounts of data need to be tracked and sorted. In addition, narrower targeting also means that the business may end up ignoring other potential customers that are not in the targeted segment, perhaps leading to a decrease in sales.

Businesses are even personalizing pricing! Click here to find out more

***On a side note, after our class on performance evaluation I realized that the article on Shopper’s mentioned several examples of these evaluation measurements such as front-of-store-sales and consumer’s average basket. These tools will help Shopper’s evaluate whether this is the right promotional strategy and whether the benefits are outweighing the possible costs I mentioned above.

Hollie Shaw, “Shoppers Drug Mart profit rises in third quarter as retailer makes promotions push,” Financial Post, November 12, 2013, accessed November 14, 2013, http://business.financialpost.com/2013/11/12/shoppers-drug-mart-earnings/

Marina Strauss and Bertrand Marotte, “Shoppers reaps rewards of personalization,” The Globe and Mail, November 12, 2013, accessed November 14, 2013, http://www.theglobeandmail.com/report-on-business/shoppers-profit-climbs-on-prescription-sales-growth-long-term-care-gains/article15386322/

Image from: The Canadian Press, Graeme Roy

Traditionally Walmart has been known for its big box stores that sell anything from chips to bathmats to patio furniture! However, recently Walmart has been moving towards smaller stores that are better able to cater to a specific demographic and community. For example, in a dense Toronto suburb that is characterized by high-rise housing and large households from South Asia and other visible minorities, there is no demand for gardening tools and other outdoor equipment. Therefore, why carry it? Walmart has instead built a smaller store stocked with specific products, particularly groceries, which would appeal more to this demographic. In addition, smaller stores mean lower operating costs and less capital investment.

However, thinking back to our classes on operations, less stock also means less flexibility in catering to changes in demand. There is a higher turnover rate and these stores will need to be carefully monitored to ensure stock levels are maintained.

Nevertheless Walmart hasn’t given up on its big stores yet and is said to open 125 more of its supercenters this year. I believe its mix of large and small stores is strategic as it allows Walmart to cater to different markets and still realize economies of scale.

Leanne Delap, “Small-box Walmart tailors to urban cores,” The Globe and Mail, November 12, 2013, accessed November 14, 2013, http://www.theglobeandmail.com/report-on-business/industry-news/property-report/small-box-wal-marts-tailored-to-urban-cores/article5214080/

Lydia Dishman, “Why Walmart is Betting Big on Small Stores,” Forbes Magazine, June 3, 2013, accessed November 14, 2013, http://www.forbes.com/sites/lydiadishman/2013/03/06/why-walmart-is-betting-big-on-small-stores/

Images from:

“Wal-Mart, other big boxes try out smaller boxes,” NBC News, accessed November 14, 2013, http://www.nbcnews.com/id/43414111/#.UoUZxaWPS5c

“Walmart Supercentre,” Ensign North Central Internet News, accessed November 14, 2013, http://www.ftlcomm.com/ensign/business/walmart/index.html

I recently read Liz Costas blog “Overrated” about how offices are becoming outdated as technological advances allow people to work almost anywhere. In some ways, I agree with Liz that technology has opened up many options other than offices that allow for flexibility in the workplace, like telecommuting (working from home).

However, I also think businesses shouldn’t abandon the office concept entirely. In fact, I recently read that Yahoo is now requiring all their employees to work in the office. The reason? To establish a corporate culture. When employees work together in offices it can foster teamwork and collaboration, which in turn can lead to innovation and higher productivity. In class we’ve discussed how the corporate culture is an important part of a business and can enhance the quality of the product a business provides, like we saw with the Zappos call centres. By having people work together in an office, this positive corporate culture and company identity can be created. This is especially important for a large complex company like Yahoo whose competitor, Google, has already reaped the benefits of a strong corporate culture.

So I wouldn’t say good-bye to offices just yet! They might be around for a while.

Doug Guthrie, “Marissa Mayer: Choosing Corporate Culture over Worker Independence,” Forbes Magazine, March 8, 2013, accessed November 11, 2013, http://www.forbes.com/sites/dougguthrie/2013/03/08/marissa-mayer-choosing-corporate-culture-over-worker-independence/

Omar El Akkad and Suzanne Bowness, “Telework or teamwork? Yahoo and the evolution of the office,” The Globe and Mail, February 26, 2013, accessed November 11, 2013, http://www.theglobeandmail.com/report-on-business/careers/the-future-of-work/telework-or-teamwork-yahoo-and-the-evolution-of-the-office/article9099573/

Image from: “Micro-bloggin can help build your organizational culture,” Dan Pontefract, accessed November 13, 2013, http://www.danpontefract.com/micro-blogging-can-help-build-your-organisational-culture/

Recently I came across a blog about online grocery shopping and it reminded me of how last week Amazon.com announced it would be adding non-refrigerated groceries and gourmet food to its online offerings. Initially when I heard this I was skeptical whether there would be adequate demand. Consumers may not be willing to buy groceries online. They want to check expiry dates and may still have to go to the supermarkets to purchase fresh groceries like fruit and vegetables. While they are there it is more convenient to buy their snacks and breakfast foods then and save on shipping costs. Online purchasing is only a more convenient supply chain for consumers if it saves time or provides greater variety.

Although the author touches on some of those points, she also mentioned how online grocery shopping can actually help customers make healthier choices as it eliminates impulse buying. If you want chocolate you actually have to search for it, not just grab it as you’re waiting at the checkout. In addition, another blogger commented how the service can help seniors who are less mobile. There is an opportunity for Amazon.com as there is a growing aging population of baby boomers. However, whether this limited market segment is large enough to sustain the venture is still to be determined.

A video I found interesting detailing Amazon’s online grocery offerings

“The good bad and gross of online grocery shopping,” Digital Lab Blog, accessed November 15, 2013, http://digitallabblog.com/digital-lab-blog/a-digital-life-the-good-bad-and-gross-of-online-grocery-shopping/

“Amazon launches its online grocery store in Canada,” Shaw Connect Blogs, accessed November 15, 2013, http://blogs.shawconnect.ca/money/amazon-launches-its-online-grocery-store-in-canada/

Fixed pricing is out the window and dynamic pricing is in as e-commerce businesses have begun to take advantage of the new opportunities technology has presented. Dynamic pricing is a strategy where businesses change the price of their good depending on the level of demand, type of customer or their competitor’s pricing. By using IT systems, businesses are able to collect real-time information about consumer behavior and preferences like their “click stream”, past purchases and previous product views. This information is then used to determine pricing strategies and whether a business can possibly raise price for a certain segment or time period and thereby maximize its profit.

How do consumers feel about this? Some consumers could be charged more than others; which is exactly what happened with Amazon.ca’s DVD pricing. As soon as consumers got wind of this pricing discrepancy they complained and Amazon.ca had to refund these customers, losing $21,366.60. Therefore, although dynamic pricing provides an opportunity for businesses to quickly adjust pricing strategies in order to have a competitive advantage and maximize profits, they have to be cautious. The benefits of this strategy could be outweighed by the costs from consumer reactions to these changes and privacy concerns.

Read these articles for more info:

Stacey Smith, “The brave new world of dynamic pricing,” MarketPlace, December 19, 2012, accessed November 11, 2013, http://www.marketplace.org/topics/business/brave-new-world-dynamic-pricing.

Michael Martinez, “Amazon Error May End ‘Dynamic Pricing,’ ABC News, September 29, 2013, accessed November 11, 2013, http://abcnews.go.com/Technology/story?id=119399.

Image from: “Choosing the best dynamic pricing techniques for your online business” Angel Investment, accessed November 11, 2013, http://www.angelinvestmentnetwork.net/2013-01/choosing-the-best-dynamic-pricing-techniques-for-your-online-business