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

There was an article in the Globe and Mail that revealed how one of Gap’s suppliers in Bangladesh, the Next Collections Limited factory, had been committing serious labour abuse. Workers were being forced to work extremely over time, in poor working conditions, and were often fired for unsubstantiated reasons.

What stood out to me was how although operations overseas can be beneficial cost-wise, there are some major concerns to be considered as well. These days many companies are shifting their supply operations to places like China and India where labour is cheap and they can reduce costs. However, by moving parts of its supply chain far away from home, companies lose control over their production process. Inspections over these factories are rare and time-consuming, leading to overlooked issues. When these problems surface they can have a damaging effect on a business’ reputation, even if they themselves are not abusing their workers. I would suggest that businesses undertake more thorough inspections of their overseas production factories in order to avoid this problem. The article stated that Gap had only spent a mere 20 minutes at the factory before leaving to talk with management.

Tu Thanh Ha, “Gap supplier hid labour abuse in secret books: report,” The Globe and Mail, October 4, 2013, accessed October 5, 2013, http://www.theglobeandmail.com/news/world/gap-supplier-hid-labour-abuse-in-secret-books-report/article14703128/

JetBlue, a single-class commercial airline company, is planning on launching its first premium class, “Mint”. JetBlue plans to make this change to its coast-to-coast flights in an attempt to enter the competitive market for premium fliers who pay the highest for luxury seats on those common cross-country routes. However, by including a premium class, JetBlue seems to be abandoning its belief in passenger equity that has defined its brand. According to the article we read this week one of the “pitfalls of brand positioning” ¹ is that companies can become too focused on responding to competition that they abandon their previously established positions, causing them to lose their existing customers. To address this concern JetBlue announced it would improve its non-premium seats also. However, JetBlue’s single-class beliefs are still compromised because there would still be a difference between the economy and premium classes. Nevertheless, I would recommend JetBlue still launch “Mint” because it seems that consumers are placing more value in having a luxury class option than having equal seating. JetBlue needs to adapt to these consumer attitudes. In addition, Jet Blue has already been slowly compromising its equality promise by offering passengers the option of upgrades for extra legroom.

Article source: Charisse Jones, “JetBlue launches premium brand called Mint,” USA Today, September 30, 2013, accessed October 1, 2013, http://www.usatoday.com/story/travel/flights/2013/09/30/jetblue-corporate-fliers/2792863/

Image from: “JetBlue,” accessed October 2, 2013, http://l1011.homestead.com/jetblue.html

Under their new CEO Marc Caira, Tim Hortons is looking at a range of growth options from the inclusion of dinner menu items to taking Tim Horton’s products outside of the restaurant. However, what caught my eye was the suggestion to expand Tim Horton’s products into vending machines. By making its products available through vending machines Tim Horton’s opens up an entirely new distribution channel with which to reach their customers. A large portion of their customer base consists of business professionals and the convenience of Tim Horton’s right in their office would appeal to them. Overall this strategy would help boost Tim Horton’s sales.

However, although I believe that Tim Horton’s should consider new creative strategies to differentiate themselves from their competitors, I’m not sure vending machines are the way to go. The risk with this strategy is that Tim Horton’s would need to spend a lot of money to repackage and preserve its products so that they are prepared for the longer shelf life required of vending machine products. In the end, there is no guarantee that these costs could be paid off by the revenues earned from the sale of its vending machine products.

Article from: “Dinner at Tim Horton’s? CEO dishes on menu plans, vending machines and the ‘must-win’ battle for the U.S.,” Financial Post, accessed September 17, 2013, http://business.financialpost.com/2013/09/17/tim-hortons-ceo-dinner-plans/

Image from: “Should Tim Horton’s exit the US?” Financial Post, accessed September 18, 2013, http://business.financialpost.com/2013/04/24/should-tim-hortons-exit-the-u-s/

Awhile back the Vancouver Sun published an article about the Surrey Council’s proposal to build a casino, hotel and convention centre trio in South Surrey. Would it be ethical to build this casino? One could argue that it would create local jobs and provide huge revenue for the city. However, a casino would encourage gambling, and that type of lifestyle can cause severe financial issues, pressure to pay debts illegally and put strains on families. My immediate reaction after reading the article was to not build the casino because I don’t believe in the negative lifestyle of gambling. I feel that putting a casino there would only encourage more crime, debt and poverty in that area as people waste their money on gambling.

However, I realized that there are many kinds of businesses existing today that in order to make profit must sell products or provide a service that is bad for the customer, like cigarettes. If a casino shouldn’t be built in Surrey due to ethical issues and the negative lifestyle it encourages, then are these other businesses acting unethically by existing?

Hager, Mike, and Kelly Sinoski. “Surrey Council Rejects Controversial Resort Casino.” The Vancouver Sun, January 25, 2013. Accessed September 11, 2013. http://www.vancouversun.com/Surrey+council+rejects+controversial+resort+casino/7841956/story.html

Image by Ian Lindsay, PNG. Found at: Vancouver Sun. “Surrey Council Rejects Controversial Resort Casino.” Accessed September 11, 2013. http://www.vancouversun.com/Surrey+council+rejects+controversial+resort+casino/7841956/story.html