A recent blog post by S.J. in The Economist entails the difference pricing for each of the two editions of Philip Pullman’s His Dark Material trilogy – teens and adult. The blogger identifies this practice as a classic case of price discrimination through market segmentation. Although the books were initially categorized at young adult fiction, the publishers also recognized that the trilogy may also have a strong appeal to older adults as well. Ticketing the adult edition at a price that is 17% higher, the publisher hopes to increase sales within the adult market. The bookstore staff also described the practice as charging an “adult book premium” on the book for its not-so-childish appearance.

source:http://www.guardian.co.uk/books/2009/sep/30/american-library-association-banned-books

This behaviour by the publisher can be identified as a attempt to maximize profit as the respective costs for each edition are roughly the same. In reality, people do judge a book by its cover. It is a smart move on the producer’s part in recognizing the added value of the alternative version of book, and taking advantage of this added value by increasing the price of book to increase profit. Personally, I don’t believe there is an ethical issue in play, because adults do have the freedom to choose the cheaper edition over the other. It is simply a question of how much the reader is willing to pay for his/her image.

Price discrimination: The adult-book premium | The Economist:

http://www.economist.com/blogs/freeexchange/2011/11/price-discrimination

Rachel Yang’s recent blog post “FTC rebukes Reebok Marketing in settlement” questioned Reebok’s misleading advertising in terms of corporate social responsibility. Reebok claimed that their EasyTone shoes could give the person who wears them “better legs and a better butt with every step.” This claim was later revealed to have been drawn without any scientific backing, therefore, making it a false claim. The Federal Trade Commission orders that Reebok reimburse US $25-million to consumers for its false advertising. The 25-million dollar may seem like a large portion of the company’s revenue, but it is only a short term problem for the company. Whereas the long term damage was done to Reebok’s brand image. It may take years for Reebok to remove this stain from its logo as it made a untrustworthy promise to its consumers. Any further attempt by Reebok to advertise its innovative products will be questioned for its legitimacy, because this single incident has created a new association with Reebok’s brand – liars. Businesses everywhere must learn from Reebok’s mistake and be sure to make promises that can be kept. The bigger your brand, the more exposed it is to the public eye.

Rachel’s blog post: https://blogs.ubc.ca/rachelyang/2011/10/10/ftc-rebukes-reebok-marketing-in-settlement/

Wendy Yu discussed Yahoo!‘s decision to exit from the Japanese market in a recent blog post. Wendy identified Google‘s market dominance as the main reason for Yahoo!’s exit. Here is how Google was able to edge out its major competitors in the search engine market:

source: http://www.netmarketshare.com/search-engine-market-share.aspx?qprid=4&qpcustomd=0

In its initial stages, Google focussed its operations on developing the best search engine. It was able to do so, and over time, Google became the synonym for “search” and developed a large loyal user base around the world. As a result, everything Google offered became what each and every one of us expects from any search engine, and if the competitor fails to meet these expectations, they will lose their place in the consumer’s mind.  Google’s rapid improvements made it extremely difficult for competitors to be on par with its service, not mention outcompete what Google offers. Once Google was able to set up these barriers within the industry, it eventually expanded its brand to provide a variety of services common to its competitors, making it a one-stop channel for internet users to get access to everything the “cloud” has to offer. Thus, Google was able to dominate the internet market. Yahoo! on the other hand, does not dedicate the majority of its resources toward a particular service, therefore, it does not have a unique brand association to stand out from its competitors.

Wendy’s Blogpost: https://blogs.ubc.ca/wendyyu/2011/10/10/15/

In today’s world, entrepreneurs enter into established markets with innovative ideas and battle for market share. But more often than not, the most successful entrepreneurs create entirely new markets with their exciting products and services. In this case, entrepreneurs exploit unattended needs of consumers and well as undiscovered demand within the market. As a result, consumers have little to no expectations for the goods that are to be introduced, it is now up to the creativity of these entrepreneurs to fill in the blank slate. As the bar has yet to be set, the concept of points of parity ceases to exist in brand new markets. Entrepreneurs who create something different for consumers are able to break the rules set by the status quo of marketing, and completely change the way people think about the world. At the heart of innovation, successful entrepreneurs capitalize on the uniqueness of their ideas and leave a lasting impression in the hearts of their future customers.

Globe and Mail – Five Ways to Challenge the Status Quo:                                                   http://www.theglobeandmail.com/report-on-business/small-business/sb-marketing/advertising/five-ways-to-challenge-the-marketing-status-quo/article2199894/

Corporate social responsibility is a key factor in how a company is perceived by consumers, especially in developed countries. However, as companies continue to outsource their supply chain into developing countries where labour is more cost-effective, it also becomes increasingly difficult to monitor sustainable practices throughout the supply chain. Apple, Inc. is a great example of a major corporation that has been affected by questionable practices in its supply chain. On the back of most Apple products exists a line of text stating, “Designed by Apple in California – Assembled in China”. The assembly process has been brought into question numerous times in recents years. For instance, contract manufacturers in China had allegedly taken part in labour practices that may seem unacceptable to developed countries. Instances as such have left a stain on the seemingly spotless Apple logo. Having realized the damage done by said practice to its brand, Apple took quick actions to answer these allegation by gradually raising labour standards to win back consumer confidence. As Apple’s supply chain is once again accused of environmentally and socially irresponsible practice in discharging harmful pollutants, Apple has once again taken actions to remove these stains by implementing policies that require suppliers to produce on higher social and environmental standards. But if Apple plans on keeping its highly held brand image in the public’s eye, the administration team in California will need to stay one step ahead of potentially harmful practices throughout its supply chain before the “Apple” starts to rot, instead of constantly cleaning up after suppliers as problems continue to arise.

ImageCredit: http://thegratefulbunny.files.wordpress.com/2010/06/rotten-apple-logo-zaw2.png

BBC Article – Apple meets China environment groups to polish image: http://www.bbc.co.uk/news/business-15768708

In recent years, Facebook has been dealing with numerous privacy issues as its clientele continues to expand. In a recent interview with PBS’s Charlie Rose, Facebook CEO Mark Zuckerberg stressed the fact that Facebook’s privacy control has been the same since its first day on the market and the company has attempted to make these settings easier for its user to understand and control.

Image credit:http://4.mshcdn.com/wp-content/uploads/2011/02/facebook-privacy-360.jpg

Then why are these privacy issues emerging now instead of the first days of Facebook?

The answer is simple. Facebook is now extending its reach beyond its initial niche market of tech-savvy college students and beyond the early adopters of this social networking service. Facebook now embraces an increasing number of less tech-savvy users through its rapid expansion, and privacy is one of the many points differences that are relatively more difficult for individuals in the late majority to swallow due to their lack of understanding of mechanics behind Facebook. The aforementioned reason, combined with the transparency of Facebook’s clear exposure of client information led to the increasing privacy issues. However, the public will start to accept the exposure of personal information as a price they have to pay for the most popular social networking service in the planet. Facebook will also be able to draw upon these complaints in adjusting the the taste of the it’s growing market.

Article on Forbes (including link to interview transcript) :                http://www.forbes.com/sites/kashmirhill/2011/11/10/mark-zuckerberg-and-sheryl-sandberg-facebook-is-the-luke-skywalker-of-privacy/ 

To many prospective entrepreneurs, Dragon’s Den seems like the perfect place to pitch their ideas for the venture capital and expertise needed to kick start their business. However, what they are pitching is not just he idea in their heads, but also their ability to turn these ideas into reality. Prospective entrepreneurs are constantly rejected by the Dragons because all they have is an idea. Such outcomes are not only restricted to the confined Dragon’s Den studio but also in the real business world. The uncertainties of human behaviour are simply impossible to predict. Therefore, ideas must be put into practice, and overtime the rough edges will be polished by the challenges presented by the real world. Having gathered operational data, entrepreneurs are able to add more reliability to their business pitch and prove to the Dragons that they have the passion and the ability to make things happen. This is why many participants with seemingly fantastic ideas are turned away on the show. The Dragons are able to apply their own experience and knowledge of the business world to the countless ideas that came without practical evidence of success. People are often overly optimistic about their products, a reality check is the first thing they need before risking everything for a dream that may forever remain a dream.

Learn more about Dragon’s Den here:          http://www.cbc.ca/dragonsden/

Dropbox, Inc. is a company founded by MIT graduate Andrew Houston in 2007. The company provides web-based file hosting service to a wide range of clientele across the world.

imagesource https://www.dropbox.com/home

Houston arrived at the idea of a easy-to-use cloud-based file storage due to his own frustrations with physically transferring files from one computer to another. Having realized there are others facing the same problem, Houston came up with a solution to the problem. Short after acquiring a $7.2 million seed funding, Houston entered into a market with many existing competitors offering similar services. However, Houston and business partner Arash Ferdowsi focussed on Dropbox’s ease of access across a variety of operating platforms, making the company a easy choice for PC users all over the world. The company, now in its 5th year of operation, is speculated to be valued at more than $2 billion, while holding 10% of the world’s backup client market share and expected to continue experiencing rapid growth and expansion in the years to come.

Sometimes, innovation is not only about thinking outside the box, but finding that dark corner inside a box which has yet to been explored.

With over 2 million unique visitors accessing the Dropbox server monthly and over 45 million users worldwide, Dropbox has undoubtedly made Andrew Houston one of the most successful entrepreneurs of the 21st Century.

Additional Sources:

Tech Crunch:                                 http://techcrunch.com/2011/07/12/dropbox-raising-massive-round-at-a-5b-plus-valuation/

Dropbox | Crunchbase Profile:       http://www.crunchbase.com/company/dropbox