Yoasis - Fro Yo - Spoon Me - Red Mango

Image sells. In other words, non-ice cream frozen desserts can charge a premium over ice cream because they are "healthier." Frozen yogurt and gelato, although not much lower in calories, are considered healthier because they can be lower in fat. Thankfully for those "ice cream alternative" shops, they are in business because they are hip and "healthy." If they weren't so creative in their styling and appeal, these dessert places would probably go the way of Leatherby's and the old-fashioned ice cream "shoppe." Way to go for figuring out how to charge more money for less of the same thing!

Daybreak - Kennecott's cash cow

So, if you are one of the biggest mining companies in Utah, and you just happen to own a lot of land (think square miles upon square miles), and environmental restrictions and economic crises limit your mining usage of all this prepurchased land, what do you do?

Build Utah's largest housing development - Daybreak.

Beginning in 2004, Kennecott Land, owned by Rio Tinto, decided to plan out a community that spans 4,000 acres, includes 20,000 homes, and includes a man-made lake. Not only that, but there are business parks, and the first temple possibly built due to massive housing development. The UTA is expanding Trax out to Daybreak, and even though prices are a little higher than average in the area, the convenience and small yards are attracting plenty of new buyers - possibly even yours truly! What a great way to make money, and a way that most mining companies probably never explored in order to diversify their business to make the best of their resources.


Wikipedia's article on Daybreak

Oil investment

Speculation and buying futures of oil. You think people would have learned from Enron that you shouldn't make bets on something that is so unpredictable. Also, supply and demand need to meet eventually - massive shifts upward in price without a match in upward demand or massive drop in supply doesn't make sense and the markets balance out. Not that futures should necessarily be stopped - but not too long after there are tons of reserves available, the market should be allowed to adjust so as not to cause the huge shock and drop in gas prices over just a few months - from over $4/gallon, down to $1.25/gallon. Now that prices are low again, should consumers be required to endure the shock based on speculation? Transparency in the market is essential.

Crazy person buys first barrel of oil at $100/barrel

Southwest Airlines enters NYC!

Southwest has really pushed some limits, but one is trying to take advantage of the highly competitive and highly demanded New York City airline market. I have been quite impressed with their abilities to make money off of expensive or less competitive markets but am surprised to see their move into an established market. The only thing I can figure is that they must be moving to help people they already serve in obscure areas access New York for cheaper than their competitors, or perhaps to help New Yorkers travel to more obscure places for cheaper.

I know that they are great at helping establish their brand in the mind of consumers, and to be able to use Southwest no matter where you go in the country really establishes their presence as an all-around great airline. Due to their success in Boston, if New York works out as well, Southwest won't be relegated to simply a well-known airline in the western part of the country.

BusinessWeek's take on the matter

Wii stockpile... time for a price change?

Lately walking by the shelves at Wal-Mart, the Nintendo Wii is stocked full to the back of the case. Sure, Microsoft and Sony are laughing at the fate that has finally hit Nintendo with their overstock on shelves, but is it time to lower prices?

Not right now, according to Nintendo. The Wii, although selling less than previous months, is still far outselling the Xbox 360 or PS3. The current price of $250 for the console, one controller and an included game, is still cheaper than the PS3 by $150 and $50 cheaper compared to an Xbox 360 with a hard drive. In a down economy, people are choosing to cut back costs, and the entertainment industry is no exception. People are already choosing the Wii because of its price point. To lower the purchase price would only suggest that the Wii is an inferior console or that the company is having trouble moving its products. So for the time being or until a new generation of video game consoles is announced and all manufacturers shift prices downward to clear out inventory, $250 Wii consoles will be the norm. And why should Nintendo change its strategy? They are the most profitable video game console producer - Sony still loses money on every PS3, and Microsoft just recently started turning a profit on its consoles. Not to mention that Microsoft and Sony often compete head-to-head targeting typical video gamers and Nintendo goes for non-competitive family gamers these days - their differentiation makes them successful.

http://www.thetechherald.com/article.php/200915/3416/Nintendo-president-won-t-rule-out-Wii-price-drop

Dell Adamo

Dell just dealt the lightweight laptop market a new entry. Not only is it lightweight and much more powerful compared to cheaper netbooks, but it is much more useful to business users than a restricted MacBook Air which also has high repair costs not covered under warranty. The only problem with the Adamo is the cost is much higher than a laptop that weighs only a few pounds more and comes with a DVD drive, so finding the right user who can afford to have their company pay for it or a technophile who has money out of pocket in the down economy could be very interesting.

On the other hand the profit margins on a product like this must be immense, and Dell has a good reputation for quality and service, so hopefully this will take off compared to the Macbook Air.

iPod Shuffle

The new iPod Shuffle shows how crazy Apple is about locking down its product lines. Each one of their products is restricted in the user agreement and physically by means of soldering, voiding warranties if replacing hardware on your own, and just being proprietary to the maximum amount possible.

The new iPod Shuffle can only be controlled by either the included, generally inferior headphones or by headphones that have a proprietary chip to control the device. This then adds complexity, cost, and the purchase of new peripherals, then making a once cheap music player instantly more expensive than the mid-range iPod Nano. Strange, and highly ineffective.

Fiat and Chrysler Tie-up

Chrysler is tanking. What to do? Get in an alliance with a foreign also-ran manufacturer that's barely hanging on? Yes, that's what Chrysler has done. However, given the circumstances, it doesn't seem like either will survive without each other. However that's exactly what Chrysler wants to do, get cheap Fiats to sell as economy cars while still selling their heavy-duty trucks and other signature vehicles.

Check out more here:

Nardelli explains why it's supposed to work

Pizza Hut - Natural?

Pizza Hut is known now as just another take-out pizza place competing with Domino's and Papa John's and every other neighborhood pizza joint. Pizza hasn't really been known to be healthy or organic, but Pizza Hut is looking to change the options available to people all around the country. With a distribution network and availability all over the place, families can look other places for healthier choices, even out in more rural areas, which are unlike big urban areas which are health conscious. This could really open up their opportunities to differentiate themselves as an alternative to greasy, unnatural pizza by rolling out Pizza Hut Natural.

Zion's Bank Extra Hours

A bank is a bank to most people - put money in it, withdraw it from an ATM or using a debit card, and make sure you make any payments on time!

However, being a locally owned and operated bank, Zion's Bank can help its customers out by being open before and after normal business hours. By not having to go take care of transactions on a lunch break or right after work, customers really can feel like their bank cares enough to help them out.

Burger King Burger Shots

Or, how to up your profits by charging people more money for less food.

Burger King has just started selling Burger Shots, which are two miniature hamburgers for $1.49.  However, you can get a single cheeseburger for cheaper, but the marketing strategy seems to go for the unique factor.  Sure, you can get a regular-size, large-size, or double cheeseburger anywhere, but Burger King is taking its chances by introducing an unknown product in a down market.  On the other hand, it could be a win for them if they play their cards right as they will earn an additional 20 or 30 cents per order, and by the sheer volume of burgers they sell, this could really boost their profitability.

Alaska Airlines - revolutionizing company boards?

Well, they may be revolutionizing the way that boards are compensated as long as they follow a recommendation from the shareholders - one that says that executives and board members need some sort of accountability for their actions.

Alaska Airlines has been doing better than the rest of the airline industry, but shareholders want a bigger say in what kind of performance they see from the company and want to choose the rewards for the executives.

Although the suggestion made by shareholders is not binding, it could be well for the executives who really want to show that they are dedicated to the company; on the other hand, given a down economy and an especially more difficult airline industry, Alaska Air could go through executives pretty quickly and not have a better result than they currently have with self-rewarded executives.

Executive reward

Wi-fi Airlines.

Not only is Southwest the industry leader for the airline industry on price, service, and destinations, but they have started to introduce a new service for their passengers.

Wireless internet is being tested on Southwest flights provided by a company called Row 44 that allows for passengers to surf the net on flights, and by testing, it shows that the service should be put into play as a chargeable service in the next few months.  This service is likely to be popular and with a charge of $10 or more per user depending on the length of the flight, this is a way for Southwest to earn more revenue without increasing ticket prices across the board or charging for bags that almost everyone takes.

Instead of charging for a universal service that was previously free (like other carriers with baggage), Southwest is introducing a new service to its customers and charging for an "extra" premium.  This will do well on the PR front and give them a better cushion in a down economy.

Link to article on Information Week

Redbox - rental store killer!

In the past, there have been ideas to have easily accessible, cheap ways of getting movies, like Netflix, but that requires a subscription, and watching so many movies a month to get the full benefit out of the system.  Granted, it is convenient for those who use the internet and watch many movies, but for the rest of us casual movie watchers, we were stuck with Blockbuster or Hollywood Video or our neighborhood video store for rentals.

Thanks to Redbox and their strategy of putting kiosks at accessible locations, starting first with McDonalds and Albertsons, and letting most of them be accessible 24 hours a day by putting them outside the stores.  Furthermore, these kiosks have always charged $1 a day, and no late fees.  This is a much more attractive option than the $5 a week at Blockbuster per DVD when most of us only watch a movie once, and only watch it the first day we get it.  

Now there is also an ability to do online reservations at Redbox and not have to wait in line just to find the movie we want is not available.  Any way you look at it, Redbox looks to have cornered the market on new-release rentals and is making Blockbuster, Hollywood, and the local guys sweat as Redbox and Netflix redefine the movie rental market.

Not only that, but now Redbox has just started renting older movies, and is eating into the traditional rental market even more.

Redbox Replay

What happened, Microsoft?

Microsoft has been a world-leading company (supposedly bent on world domination). However, this proves even the big can struggle with Microsoft's planned layoff of 5,000 employees, its largest ever.

What has Microsoft been doing?

Developing the most secure operating system available.
Reaching out to developers more than in the past.
Developing better products all around.
Making Windows more compatible with everything.

And yet, the "Vista effect" is still in play. The outcry against Vista as being a clunky, difficult system has come from all sides, and the "Mojave Experiment" (helping people see how easy Vista is to use) hasn't quite sold the public on the benefits.

Microsoft needs to do a better job at winning people back who ran so blindly to Mac. Given Apple's approach to marketing, no wonder Microsoft hasn't quite proven their point.

Microsoft:

The Mojave Experiment

Apple:

Mac vs. PC

Entering the US grocery market

Tesco, a major British retailer, has decided to open a chain of stores called "Fresh & Easy" here in the US. They have years of experience and large amounts of capital to invest, but unfortunately, that's not all that you need for success in an established market.

The amount of advertising they have done in putting their stores in place has been minimal and the knowledge of the store in their initial markets (California, Nevada, and Arizona) is also very low. They are similar to Trader Joe's, a specialty market popular especially in these areas, but with larger store sizes and a wider selection of goods.

However, this new entrant has not gone unnoticed, and Wal-Mart is ready to step in with a response. Wal-Mart announced its plans for a very similar type of store in these areas known as "Marketside." With Wal-Mart's phenomenally more developed distribution model and name recognition (at least in the US), who knows how long Tesco will be able to keep funding this unsteady venture before they decide to give up. Or, if they have more plans up their sleeves, what new, unique features will they be able to offer?


Times Online article
http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article2799403.ece

Forbes article
http://www.forbes.com/2008/01/14/tesco-walmart-arizona-markets-equity-cx_vr_0114markets19.html

Strategy... and Amazon.com

Amazon.com has quite possibly one of the best strategies for sales of merchandise!

There are so many different techniques they employ -

Mostly automated processing.

Warehouse based distribution models.

Outsourcing delivery costs.

Giving marketing space to small distributors to promote their goods.

Free shipping on certain orders.

Price discounts (due to lack of brick and mortar stores and associated inventory and employees - in fact, the existence of Amazon helped coin this phrase)

Reduced packaging.

In short, Amazon did what all the analysts on Wall Street couldn't predict: a large, highly efficient company based on the web that has far surpassed all other e-tailers. Nice job, Amazon.

Strategy... and Apple

On to a successful company:

Apple.

They are quite possibly the biggest "image" company I can think of.

Their hardware is inferior for the price.

Their software is not necessarily easier to use - in fact, in my opinion, the more powerful the software, the harder it is to use on a Mac versus the PC version.

What makes them so popular?

Exclusivity.

iTunes - works best with iPods.

Mac OS X - only runs on certain hardware configurations (mostly those provided by Apple)

Authorized resellers.

iPhone - only on AT&T with a high-price data plan at a high price.

Way to go, Apple. Now if only other firms could create this exclusivity and image perception!

Strategy... and Circuit City

Circuit City used to be one of my favorite stores - I used to find the best prices and best selection. Even the employees used to seem more helpful and not so pushy.

However, with the onslaught of much cheaper online retailers like Newegg and Amazon and a switch in the customer relations department, Circuit City sent itself to its grave.

In the last few years, it seemed like the employees were driven entirely by commission, especially when selling inferior products at high prices and always pushing extended warranties. Not only that, but apparently their most valuable employees, the most experienced employees weren't valuable enough to keep:

http://www.usatoday.com/printedition/news/20070329/1a_bottomstrip29_dom.art.htm

Best Buy's employees don't earn a commission and aren't as pushy. Too bad Circuit City didn't have a longer chance to learn from this fatal mistake.

Strategy... and Wamu

Washington Mutual had a great strategy for so many years:  Treat the customer nice, keep fees low, increase business... by kindness.  For so many years, that also meant restricting loans in order to keep the bank solvent.  However, an ad in the past few years epitomizes the downfall of one of America's fastest growing banks.  Sometimes, in the path to becoming profitable, companies go after customers that don't suit their long-term goals.  And sometimes that can be fatal.