In response to my friend Judith Yeo’s post on Airbnb, I think that the company presents interesting value propositions yet uncertainties in the consistency of the product may lead to consumers staying away. One of Airbnb’s strengths is that it provides customers with a cost-efficient alternative to staying at a hotel. However, there is no way to know what kind of state the apartment or home will be in, creating uncertainty in the mind of the consumer as to how comfortable they will be, especially if they are in a foreign country. There is also the added risk of safety, given that the client is in another person’s home that they don’t know.

Overall, the value propositions that hotels provide will ultimately lead to long-term stability over a company like Airbnb. Hotels such as Hilton and Intercontinental create a customer relationship whereby the customer can expect to receive consistent cleanliness, safety, comfort, service and all the other aspects that hotels provide. A company such as Airbnb, although offering lower costs, cannot ensure consistency across these key aspects of hospitality, making their future uncertain.

Posted is the Hilton website where they list their worldwide locations. My point is to demonstrate how Hilton, as a global brand, creates value by ensuring consistency across their vast portfolio of hotels.

Hilton Locations

Recently, the company Snapchat has grown to immense popularity and it has been reported that it received offers from Facebook and Google for $3 billion and $4 billion respectively.

Snapchat as a company does not have advertising. Unlike Facebook, Twitter and even Instagram, its platform is very simple, with no place for advertisers to post material. This leads to the question, “Why would Google and Facebook offer so much for a company that isn’t making much money?”

My analysis of this question is simple. Snapchat is seen as an opportunity precisely because of its simplicity. One of its value propositions is that it creates a very simple and easy way of messaging friends that is not permanent. Youth are interested in it because unlike Facebook and Twitter where posted material can result in embarrassment, controversy and even bullying, Snapchat creates a fun, non-threatening way to communicate. Snapchat also has the added value proposition of not having advertising, eliminating the messages that constantly bombard other social media platforms.

Facebook and Google see this simplicity as an opportunity. They understand that preferences amongst social media users are always changing and that consumers always have the option to spurn one platform for another. Clearly Snapchat, through its product differentiation and simplicity has become a platform that people both now and in the future could prefer over giants like Facebook and Twitter. Perhaps that is why it has become the $3 billion happy ghost logo.

Here is a great article on this current topic: http://www.forbes.com/sites/davidwismer/2013/11/17/snapchat-how-to-make-3-billion-or-was-it-4-billion-disappear-and-other-quotes-of-the-week/

Netflix is a company that has unique value propositions which allow customers to view TV shows conveniently for a monthly rate. But a common question is how exactly Netflix decides which shows to include in their monthly program set. In his business blog for Maclean’s magazine, Nick Taylor-Vaisey reveals how Netflix collects data from file-sharing websites to determine what people are watching, therefore allowing them to purchase the most popular shows for their customers.

Although seemingly untraditional, this method is indicative of a management information system (MIS). By using a measurement strategy to gauge customer interest in a competing sector, in this case pirated television shows, Netflix is able to gather information and make a decision based on the data. This strategy is especially effective because Netflix is looking at websites where potential customers are going to watch a specific show. The data collected by this system is accurate because instead of gauging consumer interest through experiments or surveys, it looks at what people are actually looking for online.

The case shows that this strategy opens up new channels in which Netflix can reach its customer segment, which are people who want to watch television shows on their own time. It opens channels because Netflix can reach customers who might otherwise watch their favourite shows via file-sharing websites, enticing them to use Netflix instead and possibly become interested in other shows that Netflix offers.

Although strong company culture is an ideal that is always good to strive for, isn’t it best when this culture translates into a more successful business? A company that has done this successfully is Aldo shoes. Aldo is a good example of how company culture creates success through these three steps:

1) Providing tools and resources for their employees – Aldo has wellness programs to keep their employees healthy and happy. They also host annual social events to demonstrate their appreciation for their staff.

2) Using these tools and employment incentives to retain staff – Aldo has created a system whereby employees have chances for advancement. This reduces employee turnover and absenteeism. It also creates a system where senior management is comprised of people who have moved up in Aldo.

3) Using employees as recruiters for future employees – Generating word of mouth referrals shows that people are happy working at Aldo and want to recommend it to the people that they know. It also brings people into the company that recruiting employees think will be a good fit and engage well with the present culture.

Now how do things relate to a successful business? Well Aldo is in a people-oriented business and hence the employee is a large part of the customer experience. By creating a positive employee environment, Aldo motivates their staff to do perform their job at full effort and treat their customers well. Just like they’ve been treated.

Check out this Financial Post article for a full description of Aldo’s culture: http://business.financialpost.com/2013/02/04/aldo-stays-true-to-the-values-of-compassion-ethics-and-social-responsibility/

Although we sometimes take it for granted, in countries where water is scarce, it can sometimes be difficult to have enough to properly bathe oneself. Ludwick Marishane a recent commerce graduate at the University of Cape Town in South Africa came up with a solution.

He created a product called DryBath, a moisturizing gel that is applied to the skin and cleans 99.9% of germs without the alcoholic smell of hand sanitizers. This form of social entrepreneurship started as way for Marishane to avoid the hassle of taking a bath, but has turned into a company with a strong social objective. Although Marishane charges for sachets of DryBath and sells to corporations, airlines and hotels, he has also has benefitted those in his country who have limited access to clean water. Through using DryBath, people are able to maintain proper hygiene and save precious water for other purposes, preventing disease and preserving time spent fetching water.

Social entrepreneurship strives to make a profit while being committed to a social cause. DryBath has effectively done that by selling a product that can be effective for corporations needing it for convenience, but also incredibly crucial to poor communities in need of alternative methods of bathing. As it continues to make a profit and grow, look for DryGel to continue to positively affect people in need not only in South Africa, but in places all over the world where water is scarce.

Here is a short TED talk about DryGel:

And an article outlining its basic principles:
http://www.southafrica.info/business/trends/innovations/drybath-100113.htm#.Uom7ZxaE7ww

I recently read my friend Angelli Dimatulac’s blog post about an ad created by Chipotle Mexican Grill. I agree with her that the ad lost me at points, but primarily because of its complexity rather than its content.

At times, I found the ad veered away from its central purpose, which was to promote Chipotle’s commitment to natural foods. The inclusion of the scarecrow, although endearing and fun, make the message more complex than it should be and at times I wasn’t even sure what the ad was for. The customer segment that this ad is targeted for are fast food consumers who are tired of heavily processed foods that are normally associated with companies like McDonald’s and Taco Bell. This ad serves to introduce Chipotle’s value proposition of providing a more natural alternative to traditional fast food and is indicative of their strategy for differentiation. However, the length and complexity of the the ad serve as more of a distraction in the minds of the audience.

An alternative strategy in marketing that I argue is more effective is Minute Maid’s Simply Orange ad. These ads are similarly targeted at a customer segment looking for healthy, natural foods for which they know the ingredients. Minute Maid does this by emphasizing that their Simply Orange juice has nothing else but oranges, reassuring customers through a very simple ad that the product contains no modifications. This strategy of advertising a value proposition is, I argue, a more effective way of differentiating the product in the mind of the customer and keeping them focused on why they should purchase it.

Here’s the Simply Orange ad:

General Motors in the United States is attempting a new program aimed at increasing convenience for customers becoming the first major automobile company to sell cars online. The program will allow customers to choose exactly what kind of car and options they want and have the car delivered to them. This is an example of how GM is expanding their customer base. They are building upon their value proposition to consumers and in turn, reaching new customer segments. Tech savvy consumers don’t mind substituting the human interaction inherent in buying a new car for a convenient method that saves time and energy. As well, since GM is the first major company to implement this idea, it has the added advantage of being a leader in positioning. Even if other companies decide to adopt this method of sales, customers will remember GM first. This online brand identification could be further strengthened by GM’s vast portfolio of vehicles and options. Finally, GM is not losing business by developing itself online. Customers will still enter dealerships in person, and GM will still need to invest in salespeople and properties. Customers are just now able to do business with GM in more ways.

http://online.wsj.com/article/SB10001424052702303492504579111752452221502.html

A few days ago, Guido Barilla, the chairman of the largest pasta producer in the world, Barilla Pasta, stated that he would never feature a gay family in any of his commercials. This caused a fierce backlash from various groups who called for the boycott of Barilla’s products in protest.

Some businesses such as Barilla and Chick-Fil-A have made very clear their traditional stance on homosexuality. Despite facing opposition, these companies have made their value system clear by articulating their views publicly. In the business world, this seems to be a rarity. How often, if ever, do we see gay families featured in commercials for large companies? Although interesting, these bold ventures are unlikely. Large businesses have diverse customer bases that they cannot afford to alienate or anger and it is especially important for them not to lose customers to competitors.

This case makes it evident that it’s usually beneficial for businesses not to take sides on controversial topics. Regardless, companies have to decide for themselves whether they want to develop a series of values and whether they are willing to stand by those values despite the effect (positive or negative) it could have on their sales and image.

http://o.canada.com/2013/09/26/pasta-company-barilla-wont-advertise-with-gay-couples/

Recently in the news, we’ve been hearing a lot about Blackberry and its drastic decline in the smartphone industry. We see 4500 jobs being cut, almost $1 billion quarterly losses and the sharp fall stock value and we see that Blackberry is certainly in distress. Despite this, many say that selling Blackberry’s vast portfolio of patents and intellectual property could be the key to making up for losses and possibly helping them to go private.

Although the patents are worth a great deal of money (billions of dollars), investors need to be careful about overestimating how much these patents will garner. Remember that much of Blackberry’s technology was popular when Blackberry itself was popular. In other words, what worked for Blackberry might not work for another company. It’s clear that smartphone design and technology is constantly changing. This means that patents on features such as the keyboard (Blackberry’s bread and butter) might be irrelevant given the trend towards touch screens.

Blackberry is at a point where it can either redefine itself or cease to meaningfully exist. Certainly, selling its patents will help the recovery process. We just need to be aware of how much their intellectual property is really worth.

http://www.theglobeandmail.com/report-on-business/value-of-blackberrys-patents-at-mercy-of-changing-technology/article14508039/

Blackberry’s Stock Chart: http://finance.yahoo.com/echarts?s=BBRY+Interactive#symbol=bbry;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

An issue regarding business ethics have been the circumstances that led up to and the reaction that followed the collapse of the Bangladeshi garment factory in April which resulted in over 1100 deaths. In that factory, large commercial retailers such as Joe Fresh, Mango and Walmart had garments produced in crowded conditions by poorly paid workers.

When the building collapsed, many looked to the corporations that utilized the workers’ labour to take responsibility and properly compensate those affected. Instead, many of these corporations tried to distance themselves from the incident, saying that they were not directly involved and therefore should not have to provide reparations. This leads us to wonder about the ethics of their decisions regarding production.

Why was the building’s condition not checked more often or closely for safety? Why are companies distancing themselves from the incident when the factory’s products were being sold in their stores? It is clear that responsibility needs to be taken especially when lives are lost. Obviously, within businesses, profits and cost management are areas that should be closely monitored. The main issue is how businesses can balance those areas while being cognizant of the welfare of those involved in the process.

http://www.dw.de/bangladesh-textile-workers-await-compensation/a-17046711

http://www.huffingtonpost.com/2013/08/06/rana-plaza-collapse-victims-compensation_n_3713408.html