Increased customization of jeans offers a sense of individuality. REFERENCED: "Advertisement." Photograph. Levi's Jeans Go Organic for Fall 2006. Collin Dunn. Portland: Levi's, 2007. Web. 24 Oct 2011.
Walking along Main Mall, every girl’s jeans appear to be generally the same. Blue, check. A brand name, check. Boot cut or flare, check. It seems our assembly-line, mass-producing culture has squeezed out individuality. Think about it – when is the last time you sewed a pair of pants and wore something truly unique?
Levy Jeans has fortunately noticed millions of women’s unfulfilled needs and has begun offering custom jeans. Clothes are a personal canvas – and the importance of being unique makes people willing to pay a higher price; so, customization increases a firm’s pricing power. So what’s the catch? Customization is expensive. Yet, the internet virtually eliminates this cost, offering an inexpensive platform for taking mass orders for customized products. What’s the best part of Levy’s customization strategy? Think about it – jeans share many common components and can thus be created from mix and match modules that all share the same basic inputs – so Levy’s wont have to increase its inventories. By using the same inputs to produce a different product – Levy’s is creating value from nothing, an “illusion of choice” with a higher price. Moreover, as these jeans are “built-to-order” – it reduces the amount of merchandise Levy must hold, thus reducing the risk of not being able to sell stock. It’s kind of ironic, isn’t it. Asking a mass producer for an individualized product.
Applying is easy - a student doesn't have too many other choices. REFERENCED: "Advertisement." Photograph. Think UBC. Vancouver: University of British Columbia, Web. 24 Oct 2011..
Guess what? That $4,916/year2 you pay in commerce general tuition fees is going to keep increasing. But this despair is spreading everywhere – the average undergraduate tuition fees increased from $5,366 to $5,1461 in 2011. It seems universities can easily drive up prices for one reason: they have supplier power.
With limited amounts of universities, consumers face limited choices and are forced to accept increasing prices. UBC has its fun, SFU has its depressing buildings – each university is unique and “differentiated.” Students or “buyers of education” cannot obtain the same education, atmosphere, and facilities from each university – students merely accept increased tuition as they have no other choice to obtain another such good. Me, you and that annoying classmate sitting behind you – we’re individually not a large proportion of a university’s “sales.” So the bargaining power of universities is high – a single student can’t negotiate a lower fee as, individually, they are a low proportion of a university’s revenue. But wait, why don’t we just leave school?
The substitutes for university education – for example working – are becoming less appealing as wage differentials increase. What does this mean? Students have nothing else to “buy” that has the same value for their time and money. What gives universities the most supplier power? The “buyer” (us students) must buy inputs (education) to create our output (a successful future) – so I guess we’re all screwed!
This is difficult choosing: the value of your choices is measured differently? REFERENCED: "Picture." Photograph. How to Compare Roofing Estimates. Unknown. Mr. Roof Repair, 2010. Web. 14 Oct 2011..
Financial Accounting is not that geeky man recording small numbers with a fountain pen, it is a tabulation of transactions for mainly external stakeholders – whether investors, banks or the IRS. Yet, like your mum’s overcooked tuna bake, there are many ways to value assets or “things;” so the accounting world has a set of general rules to create consistency – GAAP. But what happens if one of those external stakeholders – the banks – is the very culprit of valuation inconsistencies?
The financial crisis in Greece is sending despair across Europe – but the problem arises when banks measure this despair differently. With Greece sinking towards insolvency and therefore not being able to fully pay their bonds, banks – such as BNP Paribas and U.K.’s Royal Bank of Scotland – are forced to devalue their assets of Greek debt. What’s the catch? Each bank “devalued” their assets differently – some (BNP) are devaluing by the decreased market price (writing off 50% of their greek debt) and others (UK RBS) are using their own models (writing off just 21%.) The problem? The banks are valuing these same assets differently, creating inconsistencies. Imagine being an investor trying to compare banks’ results – without knowing the true quality of assets on a banks’ balance sheet? Would you want to enter a competition to guess which jar has the most jelly beans when all the jars are different sizes or when all the jars are the same? Which begs the question: who really wants to invest in an inconsistently-valued Greece?
Is Google Plus that annoying kid who constantly pokes consumers with no reaction?
Google’s marketing mishaps led to a sharp decline in traffic. REFERENCED: Prit, Kallas. “Top 10 Social Networking Sites by Market Share of Visits.” DreamGrow Digital . DreamGrow Social Media (Image originally from Spekulator), 08/2011. Web. 10 Oct. 2011.
Have you just deleted Facebook and thought you’d never have to make someone like you again? Think Again. Google has recently launch “Google Plus” – but can it position itself as a “plus” to an already-crowded market?
Google Plus has many points of difference – more privacy controls, a synergy with google by having buttons beside all search results and “hangout” – a multiple-friend video chat application. But it forgot the entire POINT of a point of difference – it must be difficult to attack in order to give a competitive advantage. With Facebook’s large innovative team and huge monopoly (refer to figure two), any points of difference Google Plus develops can be easily copied by Facebook.
It seems Google Plus has also forgotten its place in the market – choosing to tackle Facebook head on instead of emphasizing its points of parity. By losing sight of Facebook’s gravitational pull on users, Google Plus is alienating an entire market (refer to Figure two) – so who is left? Yes, you. You who are tired of Facebook – but the main problem is you are also tired of social networking. So who needs a substitute?
Figure Two: Too many Substitutes? REFERENCED: Gefen, Eran. “The New Ad Environment: Facebook and Google Plus.” All Facebook. WebMediaBrands, 28/07/2011. Web. 10 Oct. 2011.
"Skylight." Photograph. HowStuffWorks. First Last. HowStuffWorks Inc., Web. 20 Sep 2011..
When Lieber Light Division of Fraser Co, a company with a 70% monopoly in the Seattle skylight industry, was challenged with a new Canadian competitor (Vancouver Light) offering lowering prices – the company faced a diminishing customer base. To retain customers, Lieber could not reduce costs as this would devalue its strong brand; or, engage in a price war as it had higher variable costs. Therefore, Lieber’s best strategy was to maintain its price, but continue retaining customers by focusing on quality.
By focusing on branding and therefore perceptions of quality, Lieber will attract high-end customers who will be willing to pay the higher prices.
(Sourced from ExpoMediaGroup Staraya Krepost from the blog http://www.russiablog.org/2008/09/russian_cosmetics_market_overv.php)
Paul Mitchell Hair products faced similar problems, with high variable costs and increasing entrants in the hair industry, the company decided to focus on their brand and perceived quality. By only selling to professional salons, the company could demand higher prices which compensated for a highly – fragmented market. Even though Paul Mitchell’s pricing strategies marketed to less than 24.1 % of the industry (see chart above) the company still experienced higher revenues (with annual sales now approaching 900 million) 1 than many larger companies who cater to the entire market.
