Monthly Archives: November 2012

Amazon.com, or “Earth’s Biggest Selection,” is a company that I immensely respect. Founded in 1994 by CEO Jeff Bezos, Amazon.com was unprofitable for many years. Only in the fourth quarter of 2001 did Amazon.com report a profit (a modest profit of 5 million dollars or an increase in 1 cent a share). It must have been hard to struggle through the years where the company was operating at a loss, but the company’s perseverance was clearly worth it; Amazon.com reported assets of over $25 billion in 2011 and is the world’s 10th most visited site.

Amazon.com, like any other entity, is not in all ways respectable. One topic that we have covered in COMM 295, or Managerial Economics, is price discrimination. One example of individual price discrimination covered in class relates to Amazon. According to a 2005 CNN article, a consumer deleted Internet cookies that identified him as a regular Amazon customer. Soon afterwards, he observed the price of a DVD offered to him drop from $26.24 to $22.74. The company said the price difference was the result of a random price test.

This issue had many legal concerns. Amazon’s differential pricing strategy possibly violated the Robinson-Patman Act, which aims to outlaw price discrimination. The act, however, is an anti-competitive law, and Amazon’s individual price discrimination was unlikely to be anti-competitive; the market itself is already highly competitive. Amazon also seemed to navigate carefully throughout this sensitive issue; the company vowed to never price test on customer demographics and offered to refund customers who paid higher prices.

Price discrimination is often legal; a common example would be in the automobile market where cars are not often sold at the MSRP. Amazon’s price discrimination may or may not be legal, but regardless, I believe it was a good choice for Amazon to stop price discriminating. In addition to improving its PR, Amazon likely improved the quality of transaction information in its data warehouses. If I was buying a product on Amazon while I knew differential pricing was in effect, I would probably not use an account that had a regular purchase history. Instead, I would make a new account and possibly buy items at a lower price. This would skew regular purchase behaviour, which companies greatly value when predicting consumer behaviour.

It just goes to show that being ethical often does more than solely improving a brand image.

(Sorry if this entry was a little long but that was only because I thoroughly enjoyed writing it. I’d also like to say that I enjoyed the whole blog assignment! It gave me a chance to express myself. Thank you Tamar!)

It would be timely to reply to Yen Fung Wong’s blog on the iPad mini as it has been nearly two weeks since the iPad mini’s release.

Apple sold 3 million iPads (the mini and the fourth gen) over the first three days following the release of these two products on November 2nd. Though the numbers regarding the sales of each tablet were not disclosed, Apple CEO Tim Cook said that Apple Inc. set “a new weekend [sales] record and practically sold out of iPad minis.”

Nexus 7 sales are approaching 1 million a month, and life Amazon Kindle Fire lifetime sales, though not publicly disclosed, are estimated to be 5 million. Information on Kindle Fire HD sales is limited .

The iPad mini is at heart similar to the dated iPad 2 (same processor, resolution and RAM). The mini is newer than its Amazon and Google counterparts and its specs are in many ways worse than the two, yet its price is over 50% higher. The mini lacks retina display unlike many new Apple products. So why is the mini showing signs of early success?

Some possible reasons are that there is not another well-known tablet at the same price point. ($329  for the entry-level iPad mini and $199 for the basic Kindle Fire HD and Nexus 7). A higher price often entails a perception of higher quality. Consumers also buy products for their benefits and not their features; obviously, many Apple patrons buy Apple products so they can be associated with the stylish brand. These consumers are likely to have a relatively inelastic demand (which is good for sellers); the lower-priced Kindle and Nexus serve those who are more utilitarian and more price sensitive.

It seems that relative to the competition, the mini is doing well, so I would disagree with Yen Fung’s idea that Apple should not focus on diversifying into the e-reader/tablet market. The fact that Google and Amazon are roughly breaking even with their tablets while selling a lower volume than Apple is likely a source of a sustainable competitive advantage for the promising iPad mini.

Ladies, are you tired of struggling to write with pens that are simply too large for your small and delicate hands? Have you found yourself upset at the lack of pink and glitter in stationary? You’re in luck! Bic is here to fill this gap with its line of Bic Cristal For Her Ballpoint Pens!

Designed just for her, the pen “features a thin barrel designed to fit a women’s hand” and “has a diamond engraved barrel for an elegant and unique feminine style.”

Many reviews on Amazon.com hint that Bic was a little clueless on this one. Here are two of the most popular reviews:

So why would Bic make a gender-defined pen that would obviously be the subject to satire? According to a reply on a blog about Bic’s gendered marketing, Bic found out that a sizeable number of their consumers were women. Bic also hired consultants who determined that one of the most important things to pen users is smooth writing. These factors, along with a lack of courage to challenge questionable decisions, gave rise to the development of these ill-fated pens.

Perhaps Bic thought they could successfully introduce a product that would attract attention. After all, female-target pens? However, the product is mostly likely still in the “introduction” stage of the PLC. These pens are priced significantly higher than regular ballpoint pens. Also, a person who uses these pens would portray an image of conforming to (or ridiculing) gender norms. These points make it likely for demand to be low.

Regardless, I doubt that Bic’s “For Her” pens will heavily affect the companies bottom line. Most people buy pens on impulse, with few conducting some online research. However, it is unfortunate that these pens, along with many other products, are labelled “For Her.” For every girl who is drawn to these unique-looking pens, a boy will be repelled. Is including this statement the best business decision?