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Orbitz was the brand name of a fruit-flavored beverage that was originally created by  “Clearly Canadian.” These unique beverages resembled lava lamps where the edible balls were able to float or “defy gravity” because they had a similar density to the surrounding liquid. Although the beverage was unique, poor sales caused this company to go out of business. This reminds me of the importance of brand positioning which was recently discussed in class. Brand positioning focuses on getting into the consumer’s mind first as it has been stated that it is easier to remember who is first but much more difficult to remember who is second. Orbitz came up with this creative new idea that consumers had never seen before; however, they were unsuccessful because they were up against dominant established brands such as Coca-Cola. At the time and up till now, Coca-Cola has always maintained strong advertising abilities as they spend millions of dollars each year trying to get their brand out to the public. Orbitz was unsuccessful in that they could not compete against a global market leader such as Coca-Cola which has been around since 1955. In order to stand the test of time, startup companies need to emphasize the importance of brand positioning by perhaps using celebrity endorsements or other forms of creative advertising to ensure its longevity.

Here are some past Orbitz Commercials!

To stimulate sales in America, Wal-Mart marked down prices before the Memorial Day Holiday, which triggered a price war between Wal-Mart and other rival retailers. To grab consumer’s attention, Wal-Mart is taking a bold move by offering average savings of 30% on popular items. Wal-Mart’s motive for instigating a price war is essentially trying to win consumers to purchase from their store rather than from their competitors. According to the article, several Wal-Mart stores have sold out of certain items such as pop since the overall price of carbonated drinks is approximately 20% cheaper than it was a year ago.  There is a correlation to the readings and in class discussion we had on Lieber Light. One of the primary issues that revolved around the Lieber Light case was competition resulting in price wars. Vancouver Light began stealing big customers from Lieber Light by offering considerably lower priced skylights which forced Lieber Light to decide whether or not they wanted to engage in a price war by lowering the price of their products as well in order to stay competitive. Wal-Mart is essentially utilizing the same strategy Vancouver Lights was using. By reducing the overall cost of their products, Wal-Mart was able to steal customers from other retailers to escalate their sales. Wal-Mart figured out that in order for sales to increase in times of recession or an economic downturn, they had to be willing to offer low prices to win consumers.

This is one example of Wal-Mart engaging in a price war with a competitor such as Amazon.

Link: http://www.msnbc.msn.com/id/37436455/ns/business-retail/

BMO Retirement Institute’s survey results reveal that “52% of Canadians aged 55 year and older had not planned or discussed their post-retirement income strategies with a financial advisor” (Financial Post). In fact, it has been determined that Canadians spend more time choosing their vehicles instead of contemplating their future retirement finances. Results also point out that only a mere one-third of the older generations residing in Ottawa have “considered the possibility that they might out-live their savings” (Financial Post). This is clearly problematic as older generations who are getting close to retiring still have not taken the initiative to determine where their retirement money is going to come from. The article in the Financial Post claims that it is understandable for younger generations to have not yet considered looking into their RRSP’s (Registered Retirement Savings Plan); however, it’s an entirely different issue when individuals reaching their retirement in a matter of years still do not understand how retirement funds work. I agree with Ms. Di Vito, head of BMO Retirement Institute that it’s crucial for people to prepare in advance for their retirement so they know how much money they are receiving and how long that money is going to last them. If a financial advisor deems that there is insufficient funds to sustain the client’s lifestyle, then at least the client is given a strategy to better prepare for his/her retirement in order to maintain a similar lifestyle he/she is accustomed to.

Link:http://www.financialpost.com/personal-finance/family/Older+Canadians+prepared+retirement/3136286/story.html

Ling, Philip. Older Canadians not prepared for retirement. Financial Post, 10 June 2010. Web.26    Sept. 2010. <http://www.financialpost.com/personal-finance/family/Older+Canadians+prepared+retirement/3136286/story.html>.

This particular YouTube Video reveals the importance of planning ahead for retirement. The expert featured in this video briefly go over the various investment vehicles.

Other Links:

Article from Globe and Mail (Stresses the importance of “planning for your future, and beyond”):http://v1.theglobeandmail.com/partners/free/rbc_ic08/personalinvesting/articles/planning.html

Many high schools today focus on the core subjects such as mathematics, sciences, languages and history; however, they fail to teach  students a fundamental life skill of managing their personal finances. According to the U.S. Census Bureau, “an average U.S. Household owed $8,249 in credit-card debt” and “college students were $3,262” in debt upon graduation which, is astounding considering most credit card companies charge a monthly interest rate of 19.5%. Banks are essentially robbing their clients’ money at the interest rate they are charging; therefore, it is crucial that high schools integrate money management classes into their curriculum to educate students before they leave high school. In addition, to make profit, the Student Loan Industry engaged in unethical business practices by lending students large amounts of money based on what college the student planned to attend rather than on their “credit worthiness.” To protect students from being victimized by the Student Loan Industry, New York passed the Student Lending Accountability, Transparency and Enforcement Act back in 2007.

To reiterate the importance of teaching money management, I was shocked to discover that in the year 2006 “there were a total of 597, 965 non-business bankruptcy filings” according to the U.S. Courts Bankruptcy Statistics. In my opinion, this illustrates the point  that people don’t fully understand how to manage their personal finances and may be living from paycheck to paycheck while paying high interest rates to the banks etc. when they should be looking into investing their money in order to  receive compound interest. Individuals investing 10% of their monthly paycheck into these savings accounts can benefit greatly in the long run as money has the capability to grow exponentially if invested wisely.

This YouTube video reveals how high school students have already started to pile on debt. In response to this, Ohio students will eventually have to take mandatory money management classes in order for them to graduate. This is an exceptional idea, as it will teach students how to properly invest their money and PROTECT them from unfair loan practices.

Links:http://bucks.blogs.nytimes.com/2009/12/29/resolved-better-money-management/

http://www.moolanomy.com/161/why-not-teach-money-management-class-in-high-school/

After the housing market crashed back in 2008, the banks tried to stimulate the housing economy by offering households historically low interest rates. With the introduction of the 2.25% prime rate, inevitably households took up larger mortgages; many were drawn to the variable rate mortgages over the fixed rate mortgages as it allowed them to access low interest rates that are set by the Bank of Canada.

The major banks are partly responsible for the financial problem Canadian homeowners face today as their decision to raise prime by 0.25% three consecutive times will burden households who carry sizeable mortgages. The prime rate drastically rose from 2.25% to 3% within this year. The 3% prime rate may seem minimal; however, according to the RBC Mortgage Calculator, those who carry a considerable mortgage of $500,000 dollars will pay an astounding $211,316.47 of interest alone for a twenty-five year amortization period.

Based on the evidence, I feel that the banks are practicing unethical business when it lends out excess money to clients who don’t have the financial means to pay back once interest rates escalate. It appears that Ryanair is not the only company that misleads its customers by misrepresenting favorably conditions that are nonexistent.