Archive for April 3rd, 2008
Pickens points out a story at The Guardian about the development of neuromarketing, the method by which advertisers track signals inside the brain to roughly extrapolate how a consumer reacts to products and advertisements. We’ve discussed this technique in the past, but now consulting firms are appearing who have begun to use this research to increase the effectiveness of their marketing practices. The author also notes a paper which elaborates on the scientific details (PDF). “At McLean Hospital, a prestigious psychiatric institution run by Harvard University, an advertising bureau recently sponsored an experiment in which the brains of half-a-dozen young whiskey drinkers were scanned. The goal, according to a report in Business Week, was ‘to gauge the emotional power of various images, including college children drinking cocktails on spring break, twentysomethings with flasks around a campfire, and older guys at a swanky bar’. The results were used to fine-tune an ad campaign for the maker of Jack Daniels.”
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coondoggie brings us a NetworkWorld story about IBM’s efforts to use complex algorithms to manage responses to natural disasters. Researchers are making use of recent increases in processor speed and algorithm efficiency to develop a scalable, flexible model capable of handling the complicated planning involved in reacting to a crisis. Quoting: “‘We are creating a set of intellectual properties and software assets that can be employed to gauge and improve levels of preparedness to tackle unforeseen natural disasters,’ says Dr. Gyana Parija. ‘Most real-world problems involve uncertainty, and this has been the inspiration for us to tackle challenges in natural disaster management.’ In the case of flooding, for example, the stochastic programming model would use various flood scenarios, resource supply abilities at different dispatch locations, and fixed and variable costs associated with deployment of various flood-management resources to manage various risk measures. By assigning probabilities to the factors driving outcomes, the model outlines how limited resources can meet tomorrow’s unknown demands or liabilities. In this way, the risks and rewards of various tradeoffs can be explored, IBM said.”
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An anonymous reader writes “Engineers’ focus and attention to details, along with their perceived lack of social skills, make them best targets to be recruited as terrorists, according to EETimes. Planning skills make engineers good ‘field operatives’ was written up by Raphael Perl, who heads the Action against Terrorism Unit of Organization for Security and Cooperation in Europe. He offers that ‘Engineers ideally make excellent strategic planners, and they make excellent field operatives. They think differently from how other people think.’ That may sound like a stereotype, but Perl claims that ‘because of those traits, terrorist groups actively recruit engineers.’ He says that Al-Qaeda has widely acknowledged that a significant number of the group’s top leadership had engineering backgrounds.” This the second time in just a few months that engineers have been likened to terrorists.
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Inexpensive housing speak irks Sebastiani - Sonoma Index-Tribune
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Filed under: International markets, Other issues, Products and services, Management, Consumer experience, Rants and raves, Competitive strategy, Microsoft (MSFT), Apple Inc (AAPL), Starbucks (SBUX), McDonald’s (MCD), Adobe Systems (ADBE), Serious Money, Commodities
 We have seen this play before, and there are two scenarios as to how it could end. Starbucks Corporation (NASDAQ: SBUX) is being challenged like never before, having saturated the market place in some locations it is now facing the challenges of selling high-priced coffee in a slowing economy.
Would you rather pay $4 for a cup of coffee or a gallon of gas? You can find cheaper coffee but you have few options to find cheaper fuel. Amid the already difficult operating environment Starbucks is faced with competition from the largest restaurant chain in the world, McDonald’s Corporation (NYSE: MCD). McDonald’s is looking to steal its morning thunder with competitive offerings at a far lower pricing structure. The threat is very real no matter what spin Starbucks puts on it.
This brings to mind two similar situations both involving Microsoft Corporation (NASDAQ: MSFT) and past competitors. Early on there were two word processing programs that together probably had 90% market share. Those were Wordperfect and Wordstar. Both of them were fine programs offering strong features, and now they are nowhere. Microsoft displaced both of them with MS-Word integrated with their Office suite of products, and is now king.
McDonalds is attempting to do to Starbucks coffee (and others) what Microsoft did to WordStar. And like MSFT, MCD is packaging it’s coffee with its existing bundle of food products and experiences to gain market share. Besides offering lower prices and one stop shopping, they are wisely refurbishing stores in a mock-Starbucks motif, softening colors from bright yellow and red to beige and brown. They’ve added new furniture and also started to provide for Wi-Fi World wide web access. They are very good at what they are doing and early signs are that they’ll be successful and take market share from the specialty coffee houses.
There is however hope for Starbucks and others because there are other historic models that have resisted Microsoft’s tidal wave. Adobe Software (NASDAQ: ADBE) has maintained 90%+ market share in the graphics world with its suite of products and free Internet PDF standard. They did this by getting a high quality product to market early, pricing it right, and having free offerings that became a standard. This has proven easier to maintain then $4 coffee will be, so I anticipate that Starbucks is going to take a big hit to its profit margins, even if it can continue to be a successful growing enterprise.
Another example of success is Apple Inc. (NASDAQ: AAPL), led by Steve Jobs. Apple has created many leading edge products and such a unique culture that it is growing market share and holding it’s margins in numerous areas. It has also grown dramatically over the past few years. Howard Shultz has returned to grab the reigns of Starbucks, but can he reinvigorate the company and hold off the competition a la Steve Jobs? That is a very massive task indeed.
Starbucks needs to expand the strength of experience, offer more competitive products, and remain different enough to matter. They remain with some advantages in that they are suitable to smaller outlets and more unique locations and there are fewer screaming children to disturb one when doing homework, or meeting a date. Even though Starbucks is the biggest target for McDonalds and has been receiving the most ink, it is by no means the only one. There is room for more than one player in the market and it may be third and fourth tier chains that suffer much more and perhaps disappear.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of SBUX.
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Filed under: Products and services, Ford Motor (F)
 Ford Motor Co. (NYSE: F) has recognized in the last 24 months that it needs to get the kind of vehicles that customers actually want to buy to market much faster. Foreign competitors have been able to do this for a while now, which is a reason Toyota Motor Co. (NYSE: TM) has moved up the chain to become the global automotive heavyweight to beat these days — even ahead of General Motors Co. (NYSE: GM).
In that vein, Ford has sold off some of its niche brands, reorganized focus on its core manufacturing and sales finesse and is now taking another step under “fixit” CEO Alan Mulally. The global automaker is reorganizing its design and engineering centers worldwide to speed product development on a global scale. Not only will this help Ford compete more effectively, but let’s also hope the company knows — in advance — what the majority of customers want to purchase in terms of new cars. Unless I’m totally wrong, the large SUV won’t be at the top of those plans for a long while.
It’s been said that the business world of sellers and buyers takes place in a “global village” — and automakers like Ford are finally realizing that a broader global view makes perfect sense in trying to maintain consistent sales when one market might be down while others are up. It’s no secret that U.S. auto sales have been down for a long while — and the ability of shifting more product mix to non-U.S. markets to deflect slowing sales would seem to have been on Ford’s roadmap much sooner than it actually was. Better late than never, though.
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Filed under: Other issues, Bad news, Press releases, Products and services, Management, Industry, Consumer experience, Competitive strategy, Employees, Southwest Airlines (LUV)
 Two years after coming out of bankruptcy, ATA airlines has once again been forced to file for chapter 11. The airline canceled all flights, and has advised travelers to begin to look for substitute travel arrangements.
The airline operated roughly 50 flights a day, and had more than 2,200 employees working. On its website, ATA has issued a formal statement and blamed the final straw for its collapse on the loss of a key military contract. In 2006, the company had won a $335 million dollar contract from the U.S. Air Force for international airlift services.
In its statement, ATA has advised passengers to contact their credit card company, or travel agent to discuss the options to get refunded for their unused tickets.
When looking to rebook your travel plans, you can use this website that lists alternative airlines that fly to the destinations that ATA had been servicing. On the site you can find airline information, website addresses as well as phone numbers for reservation desks.
If you have ATA tickets that you purchased through Southwest Airlines (NYSE: LUV), then you need to contact Southwest directly at the following number: (800) 308-5037.
For the 2,200 employees of the company — they’ll be receiving official notices this day that their jobs have been eliminated. While it is never a good feeling, hopefully it will not be too much of a shock for the company’s workers. The writing has definitely been on the wall.
Last month the company announced that it would no longer be using Chicago’s Midway Airport (where it has had a hub since 1992), and then just two weeks ago the chief executive of ATA’s parent company resigned under pressure regarding ATA’s profitability.
I am sorry to see the company shut down, and only hope that the challenging environment that airliners are currently facing won’t lead to more repeat stories like this one.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.
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esocid sends us to the European Space Agency’s site for news of a new discovery that appears to resolve the long-standing mystery surrounding Omega Centauri, the largest and brightest globular cluster in the sky. The object is 17,000 light-years distant and is located just above the plane of the Milky Way. Seen from a dark rural area in the southern hemisphere, Omega Centauri appears almost as large as the full moon. What the researchers discovered is a black hole of 40,000 solar masses in the cluster’s center. From the press release: “Images obtained with the Advanced Camera for Surveys onboard the NASA/ESA Hubble Space Telescope and data obtained by the GMOS spectrograph on the Gemini South telescope in Chile show that Omega Centauri appears to harbor an elusive intermediate-mass black hole in its center… Exactly how Omega Centauri should be classified has always been a contentious topic. It was first listed in Ptolemy’s catalog almost two thousand years ago as a single star. Edmond Halley reported it as a nebula in 1677. In the 1830s the English astronomer John Herschel was the first to recognize it as a globular cluster. Now, more than a century later, this new result advocates Omega Centauri isn’t a globular cluster at all, but a dwarf galaxy stripped of its outer stars. According to scientists, these intermediate-mass black holes could turn out to be baby supermassive black holes.”
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esocid sends us to the European Space Agency’s site for news of a new discovery that appears to resolve the long-standing mystery surrounding Omega Centauri, the largest and brightest globular cluster in the sky. The object is 17,000 light-years distant and is located just above the plane of the Milky Way. Seen from a dark rural area in the southern hemisphere, Omega Centauri appears almost as large as the full moon. What the researchers discovered is a black hole of 40,000 solar masses in the cluster’s center. From the press release: “Images obtained with the Advanced Camera for Surveys onboard the NASA/ESA Hubble Space Telescope and data obtained by the GMOS spectrograph on the Gemini South telescope in Chile show that Omega Centauri appears to harbor an elusive intermediate-mass black hole in its center… Exactly how Omega Centauri should be classified has always been a contentious topic. It was first listed in Ptolemy’s catalog almost two thousand years ago as a single star. Edmond Halley reported it as a nebula in 1677. In the 1830s the English astronomer John Herschel was the first to recognize it as a globular cluster. Now, more than a century later, this new result suggests Omega Centauri is not a globular cluster at all, but a dwarf galaxy stripped of its outer stars. According to scientists, these intermediate-mass black holes could turn out to be baby supermassive black holes.”
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Chroniton writes “The BBC has a story that many Slashdot geeks will be happy to hear: the caffeine from a cup of coffee a day can help prevent Dementia, by blocking the damage of cholesterol. (At least in rabbits) This is in addition to the already-known protection against Alzheimer’s Disease. More research is needed to test the effect on humans.”
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