October 2014

RE: Marketing in a Digital Age

A video cover from popular beauty and DIY YouTuber ilikeweylie. Image sourced from www.youtube.com/user/ilikeweylie.

“The average woman spends $15,000 on makeup in her lifetime” according to this infographic on the finance website MintLife Blog.

That’s a lot of money. When it comes to makeup, I try to decide which products I should splurge or save on and I try to get my money’s worth. My friends and I regularly consult beauty blogs such as www.imabeautygeek.com, beauty review sites such as www.makeupalley.com and YouTube ‘beauty gurus’ and ‘reviewers’ for product research. As Stella Cho mentioned in her post ‘Marketing in a Digital Age’, the latter especially has a huge influence on potentially converted consumers.The appeal of the ‘regular people’, who usually also document their lives through ‘vlogs’, makes their recommendations seemingly more genuine, personal and believable. When a group of YouTubers ‘rave’ about a product at the same time, usually right after a new product release, loyal subscribers are also influenced by the Fear Of Missing Out. One bad review can also deter me from purchasing a product because makeup is something I put on my body.

I know that when I consult these sources to research on the quality of a certain product, I also become distracted by other products that the ‘beauty gurus’ recommend and eventually brand familiarity is instilled in me. That new mascara on the drugstore shelf that vaguely looks familiar? A YouTuber probably mentioned it in her new video. Companies have begun to realize the sway these girls have over the younger demographic, and many have partnered up with the YouTubers to promote new product releases, provide event sponsorship such CoverGirl sending missglamorazzi the 2014 VMA’s, or to simply ask for a product review for more exposure.

With the US beauty industry “estimated to amount to about 62.46 billion U.S. dollars in 2016” (The Statisitcs Portal), beauty companies can be very profitable if they can catch onto the new word-of-mouth way of marketing: YouTube.

0% Financing!

‘Zero down-payment’, ‘0% financing’: these banners have become a normal sight in front of auto dealers. But what does this mean for buyers, sellers and the banks?

 

Although the term was not explicitly used, this article from the Financial Post discussed a great deal the time value of money for buyers, sellers and loaners. If any of us have been considering buying a new car, we would have noticed that many dealerships are advertising longer amortization periods with extremely low interest rates. We learned in class that this means that the value of the money returned to banks is decreasing more and more as we move further into the future. As well, automobiles are a depreciating commodity. If the customer defaults on a loan and the financing term is very long, the collateral that the bank collects will not be worth very much. The question is: what is the break-even between collected interest and depreciation? Hopefully the banks have learned from the last financial crisis.

From the consumer’s POV, ‘0% financing’ seems like a good option because they can keep more cash in the present, and present value is always worth more than future value. On the other hand, some dealers are willing to give greater discounts if you are willing to pay cash up-front than if you choose financing because the present value of the cash will also be greater than the future value of collected payments.

Considering the time value of money is crucial: banks need to be careful about the break-even point and buyers should not always jump immediately to 0% financing.

It’s Not Just About Energy

I remember that on Imagine Day at the pep rally, all of us freshmen and faculty took a moment to acknowledge that we are on traditional and unceded Musqueam and Coast Salish territory. I believe that many of us did not understand what that meant, and at the beginning of The Spark, Victor Guerin explained to us more about the First Nations and what trade meant to his people.

Image taken from www.thetyee.ca

In this Vancouver Sun article, this passage caught my eye:

Both chiefs said their communities are interested in supporting smaller projects in areas such as wind, solar and geothermal power. But they say the valley flooding would impair their rights to fish, hunt and use the area for ceremonial purposes.

I often hear people say that the First Nations are against any development or that they are ‘backwards.’ I think the huge misunderstanding stems from much of what we hear the First Nations are against, but not what they are for. It is time that we take on a more positive perspective on the First Nations as important stakeholders in developmental and infrastructural projects. We cannot simply try to appease or win over groups in projects that did not seriously consider their interests. In the above passage, the chiefs have clearly stated that they support energy projects that are not as intrusive and risky as Site-C. I think the key to sustainable development is to build projects that deliver value to not only the predominantly urban population, but also to the people whose lands and culture will be most directly impacted.

RE: The New Telecommunications Star, Huawei

Image taken from www.huawei.com

Image taken from www.huawei.com

After I read Jennifer (Baoyi) Chen’s blogpost on Huawei, I felt obliged to add my own two cents. As I write this post, my dad is sitting in another room browsing the Chinese Huawei website, contemplating whether he should ask a friend to bring him an Ascend Mate7 from China.

For the past few weeks, every dinner time is when my dad takes the opportunity to instill in us the virtues of the Android model Mate7. He tells me that the Mate7 has specifications that closely rival those of the iPhone 6 Plus and in some cases even surpass those of the latter. Indeed, the superior camera quality is very attractive to someone who likes to take photos of every cute thing (selfies included). The fingerprint sensor on the back of the phone can also act as a button to take photos. While this is a small detail that my dad and many others do not care much for, I think this is the perfect compromise between the obsolete physical buttons of a bygone era and the thumb-stretching touchscreen phones of today. The battery life for this model is much better than that of the iPhone 6 Plus, so while it cannot claim the qualities of old Nokia bricks, it would certainly reduce the anxiety of many who run around looking for outlets. And perhaps most importantly, the design is elegant and luxurious.

So why hasn’t my dad bought one, despite having sung it praises at every dinner? Well for starters, it is not available in Canada. If he decides to buy it, he would have to have a friend in China buy one and deliver it to him. As well, the after-sales services, such as the warranty and repairs, would be a terrible hassle because the product would have to be shipped back to China for any service. Perhaps these fears would be assuaged if my dad could physically touch and examine a sample phone, but that is currently impossible. All he is banking on are the raving reviews online and the Huawei website. As Jennifer said, Huawei is an excellent brand in China and its products are also extremely popular in Asian markets such as Singapore and India. Yet here in Canada, its brand is more closely associated with lower-end models that the Big Three do not offer. I have only heard about this model from my father, who in turn learnt about it through word of mouth and niche Chinese-Canadian websites. To really go global, Huawei has a lot of work to do in terms of overseas branding and distribution channels. Maybe then will it truly rival Apple and Samsung.

Have your McCafé at home

Image taken from www.mcdonalds.ca

After the all the publicity of the pending merge of Burger King and Tim Hortons, McDonald’s has dropped another bomb on us: the introduction of its popular coffee to Canadian grocery stores. In this Toronto Star article, McDonald’s Canada’s CEO John Betts explains the company’s strategy behind this move. Some of the main reasons are that:

1) Canada is the largest consumer market for the McCafé.

2) The article cites a Saeco Survey from August 2014 that claims “92 per cent of caffeine fans make their own brew regularly,” so making McCafé accessible to home-brewers can expand the coffee’s consumers.

3) The aforementioned home-brewers usually pick the DIY way to save money as prices for coffee rise, as well as to have the freedom of customizing their drink to their tastes.

I found it interesting how McDonald’s has used the survey to analyze their target segment’s needs, which is exactly what we discussed in class. Note that the three reasons mentioned above are all customer-centric. The company then used the consumers’ ‘pain’ and ‘gain’ to direct the development of their product. While McDonald’s is not the only company to offer coffee on grocery shelves (Starbucks, for example, has already pushed its product into other distributing channels), the move certainly indicates that the fast-food industry is very sensitive to consumer preference. To stay relevant, these ultra-competitive companies must constantly revise their business model as consumers start to shift towards more health-conscious or cost-effective eating habits.