Marketing has always been a subject that has fascinated me. The idea that changing the presentation of a product, even a simple change, can make a drastic increase to it’s value is a fundamental staple of modern economics. Given two products of almost identical nature, the perceived idea that one product is better than another is often based more on the color of the toy rather than any inherent value.
As shown in one study as posted on Livescience.com:
Study participants were presented products ranging from cordless phones to lawn mowers. The goods were presented in three ways:
* One choice was clearly superior to the other two (asymmetric dominance)
* One choice was intermediate to the other two (compromise)
* Two options that were somewhat equivalent (control)
After participants made choices, they rated the products and their satisfaction. In five tests that shifted the products and setups, the participants’ preferences were affected by presentation. The bottom line: A product presented as clearly superior to other products on a store shelf makes for a happy customer, regardless of the product’s inherent qualities to some degree.
“A pen selected from a set in which it asymmetrically dominated another pen produced a more positive writing experience and a greater willingness to pay for the pen than if the same pen was selected from a set in which it did not dominate another option,” conclude Song-Oh Yoon of the Korea University Business School and Itamar Simonson from Stanford University.
The study is detailed in the August issue of the Journal of Consumer Research.
This is an interesting article on Techdirt that deals with a disorder where people believe their lives are a movie, like Jim Carey in the Truman Show.
Having had a brother with paranoid schizophrenia, I’m actually well aware that this is a real condition that drastically affects peoples lives, as well as the people around them. People with this disorder really have no say in how they perceive the world, they just do, and it’s a struggle for many of them to deal with many of the things we take for granted. Often, these delusions cause anxiety and depression, which can lead to social disfunction. Honestly, it isn’t a disorder that magically goes away by itself, but people who have this disorder benefit greatly from having good emotional support around them. And while I’m not a big proponent of medication in general, some medications seem to work for people.
Anyway, I won’t repeat the article, just passing it on.
When it comes to socially ineffective, Toyota is not the first company that comes to mind. Quite the opposite in fact. With cars such as the number one selling Toyota Prius that runs predominantly on electricity and gets a gas mileage of 48 MPG city and 45 MPG highway, Toyota is paving the way in social conscienceness.
Even their less prestigious models such as the workhorse Toyota Corolla have excellent gas mileage and continue to have a high resale value even after five years of ownership. It’s this commitment to excellence that makes Toyota a great company and a major indicator of things happening in the global market.
From their initial creation and implementation of the Toyota Production System, a precursor to the Six Sigma concept, Toyota blew the lid off of the competition by making the workers own experiences the focal point of their company. The workers know what works, and they know what doesn’t, and each employee is given the power to make their own mark on the company and deliver the best possible quality product. Everyone from the line workers to management are accountable for the end result, and if one of the line workers sees an issue crop up with one of the cars, they have the power to stop the entire line operation with the push of a button until the issue is fixed. This kind of empowerment gives workers the ability to control outcomes, it also allows for a greater sense of satisfaction, and in turn better workforce engagement. With Prius leading the charge as the number one alternative fuel vehicle and the company positioned as the number one company in worldwide sales, Toyota is the best at what it does.
This trend toward quality over quantity has been growing in the last few years. Companies like Toyota and Honda are recognizing the need to grow their brand, and to do so they’ve emphasized giving the people what they want, affordability, comfort, craftsmanship, and ultimately resale value.
“Recognizing the allure of low depreciation, Honda pursues a strategy aimed at maintaining high resale rates.
“It’s a very long-term outlook of protecting the brand by protecting resale value,” says Honda spokesperson Chris Naughton.
The pillars of that program include striving for high quality and durability so its models will remain desirable even after they rack up lots of miles. Honda avoids building more cars than it can sell and adjusts its factory output to match consumer demand, Naughton says. It also avoids selling to car-rental and commercial fleets. Both strategies prevent over-supplying the market, which depresses used-car prices. Balancing supply with demand also negates the need for sales incentives, which reduce used-car values by reducing new-car values.”
This method of marketing appeals to both new car buyers and used car buyers alike in that it is much less wasteful than many current marketing strategies. The cars themselves maintain a significantly higher value than many other automobiles, and this translates to higher values for used car dealers at the time of trade in as well. Further, you maintain brand loyalty for their next car, as well as a built in sales pitch for an up sell later on in life. A person buying a Toyota will most likely buy there again when shopping for the family sedan or SUV. Likewise, you may even be able to interest them in an Avalon or Lexus if luxury is more their style. But ultimately, the key idea to take away here is that customer demands have driven the market, and what the consumer wants is something that fits their lifestyle.
Other companies have joined this Solid State marketing revolution as well. Solid State meaning: giving consumers a product with a high sex appeal and less breakage. Apple Inc, for instance, maintains it’s prices by limiting operation issues and creating computers, phones, Ipods, etc that last longer and perform better than their competition. Resale on Apple products is far superior to its comparable PC counterparts. Another example is Pixar, now a division of Disney. Their production quality, always phenomenal, continues to bring audiences to the theater year after year. Likewise, Disney has had similar success in marketing the videos releases of these films, inflating the market by limiting the quantity; videos are released only every few years to high demand. Consumers continue to use the product until it’s eventual demise, and often pass these movies on to their children, continuing the consumer cycle. The high sentimental value of the brand lends itself to open other avenues of revenue as well, in the sale of toys, books, and games.
This method of selling Solid State appeals to a wide variety of customers and raises the bar for other companies in their respective industries as well. Customers get a better product, and while they may pay more up front, they can hold on to the product longer. Unlike the disposable culture of the early 2000’s, where E-Machines were completely un-upgradeable, the Windows platform experienced the blue screen of death, and everyones favorite cell phone always seemed to fail at the most inappropriate of times, technology has advanced to the point where these items must work better than their predecessors and must have a consumer life cycle that assumes that the product can be reused or recycled; consumers demand it.
The moderate to low end solutions will always have a place in the market, but it’s the high end of technology that continues to advance the industry and paves the way to better, and less wasteful, consumerism.
So now we’ve built a culture that has survived the tech boom and moved into what could only be described as a Utopian Social Trend. People want people, not just machines, not just things, not just cool facades. The general sense I get looking at television, pop-culture, the news, and just the people around me is that people want community.
If you look at current trends in the online world, we see Second Life and MySpace as two of the largest examples of growth in online communities. Here people can gather online and interact. If they so choose they can even meet.
Sit down restaurants and cafes have begun popping up on every street corner from Minneapolis to Timbucktoo. In the last five years I’ve seen several community revitalization projects go up in the Twin Cities area. In each case, dining establishments have been the focal point of the development. Like the kitchen at your friends house party, these establishments are natural points of congregation for people to meet, talk, and socialize. They are also a strong indicator of both economic and social factors currently at play in the United States. People have more money to spend on eating out and are making a bigger point of doing so than ever before.
Further, the media has picked up on this trend as well. Television depicts peoples want for a larger world community in shows such as “Extreme Makeover: Home Addition”, and “the Biggest Loser”. Even Oprahs, “The Big Give” was a failed attempt in the same vein. These shows are an example of peoples need for community, a way to self identify by comparing oneself to others, and a hope to make the world a better place to live.
Even corporations have jumped on the bandwagon. NBC the other day did a whole weeks campaign on keeping things green. Shows such as The Office and 30 Rock depicted the studios efforts to influence peoples ways of thinking on the environment, as well as their own commitment to stewardship. Plus we get to see David Schwimmer dressed up as Greenzo in a power mad rampage to save the environment and a cameo by Al Gore…both are hilarious.
Companies such as Best Buy and Target often have volunteer days for their employees to spend the day cleaning up the community. They sponsor charity classic golf tournaments. They also sponsor community projects such as United Way and Urban Ventures. While it could be argued that these are just tax write offs or less than subtle attempt to win over community approval for their failings, without employees backing these programs and customers demanding these programs, none of it would ever have happened in the first place.
It’s this awareness of the larger world that really drives the economy today. Because people are influenced by the media, are better educated, and have greater social incentives to argue for social change, companies have to be more aware of their customers and employees wants and needs than ever before. Without a greater effort to meet these demands, companies risk failure at the hands of the community as a whole and are deemed socially ineffective.
I read an article on Yahoo the other day about a man in Japan who died of overwork. The official cause of death was ischemic heart disease, which is essentially a heart attack. I’d never actually thought about it before, but it kind of makes sense that one could die from working too hard. In this case, the man had been working 80 hour weeks for over two months while under severe pressure as the head engineer developing the Toyota Camry Hybrid. This isn’t exactly the Dickensonian era, most of us aren’t working in sweat shops, but putting in 70-80 hours a week takes it toll after a while.
Having put in a few 70 hour shifts myself in the last few years, I can tell you it isn’t for the feint of heart. As one friend of mine commented, “You could never get an American worker to put in that kind of overtime. The unions would have a field day.”
The sad thing about all of this is that this event is so common in Japan that it actually has a name, karoshi; literally translated as “death from overwork.”
I have an article coming up in a couple of weeks that touches briefly on the iPhone as well as other Apple products, so I’ve been looking around and doing some research, which just happens to coincide with the launch of the new iPhone G3. It looks like an interesting product, and like most Apple products these days, it tends to set the bar for products in it’s category.
Looking around at all the different reviews, it’s funny to see how negative most of them have been in the last few weeks leading up to the launch. On the whole, most of the reviewers seem to be looking for a completely new product, which doesn’t really fit with Apples traditional marketing plan; basically releasing a really cool product that everyone jumps on, then release the low cost dumbed down version as well as the up scale, though slightly cheaper alternative. Then, charge the heck out of the consumer with services. It’s something they’ve made a killing at with products such as iTunes and their Mac OS X. It’s a tried and true methodology that has worked for everyone from Intel to Pepsi and it isn’t going away any time soon.
Anyway, getting back to the iPhone G3 itself, to see a more well rounded review than the ones mentioned above, check out:
According to an article by Sally Buzbee from the Associated Press, Iraq has stepped up pressure on a timetable for the withdrawal of US troops. The withdrawal is specifically linked to Iraq resuming security responsibilities for all 18 of it’s provinces, with 9 provinces already under Iraqi control. After that, the countries security situation would be evaluated every 6 months for 3 to 5 years to decide when US troops would pull out completely. At this time, the handover of the final 9 provinces have no turnover date, which gives the US some flexibility in how it handles troop withdrawals.
This is a good step, as it indicates Iraq’s growing confidence in its ability to secure itself. The main issue with pulling out of Iraq has always been their lack of infrastructure. With warring factions a constant threat to people on the street, police and hospitals in short supply, utilities such as water and electricity nearly non existent in some areas, and an economic structure just scraping by, it’s difficult to imagine Iraq being self sufficient without a stable governing body in place.
With current violence levels having fallen to their lowest point in the last 4 years, and with the latest statement from the current parliament, it’s becoming clear that Iraq is beginning to see the light at the end of the tunnel. What their statement says about the Iraqi government is that we can and will police ourselves, and that’s a good thing to see after so many years of war.
So now we have a problem. Who are all these people?
Every day you interact with people. Over the phone, on television, email, and in person. Ideas, thoughts, philosophes, and problems are everywhere. There is so much information, and so many people telling it to you that it becomes impossible to make sense of it all.
As Ashton Kutcher is so fond of depicting in his socially provocative show “Beauty and the Geek,” peoples views of social hierarchy are often ruled more by their perception than any actual physical limitations.
So what are our perceptions?
The truth is, that this is a very large topic…much larger than I want to cover here…but on the whole, perceptions of sexuality, intelligence, cultural upbringing, and religion all carry with them a certain amount of archetypal belief model that is easily passed between people.
Everyone knows what a Catholic is, or a black person, or a gay person, or a geek, or a Mormon. Some of these archetypes are considered social norm, while others are considered social fringe. These belief systems can change from culture to culture and people group to people group, but within any given society there tends to be a social norm that most people can agree on.
So now, with the death of tech, we’ve had a fundamental change in the fabric of this social norm. Where once the term geek symbolized a social dysfunction, post tech boom, the geek lifestyle, as shown by its rise in popular culture: movies, literature, and television, has become the social norm.
So how does that change our perceptions?
The term geek affectively becomes meaningless.
This is a bit of a misnomer, since our definition hasn’t fundamentally changed, but the scope of how it is viewed by the general population has. If the term only covered five people with distinguishing characteristics before, it now covers fifty with several other, less definable characteristics. Effectively, we’ve watered down the terminology to fit a larger group of people.
So what does this mean?
People have become more aware of their environment and the people around them. Though with a less defined view of those they encounter on a daily basis. It makes the question, “Who are these people?” more difficult to answer, since the basis of our conclusions has taken on a more abstract context. In simplest terms, just because someone wears glasses doesn’t mean that he or she is a nerd… However, cause and effect relationships have become more important as our context broadens, since without our standard definitions to fall back on, people are forced to deal with their current situation as opposed to relying on preconceived notions. For instance, if I hurt someone physically or emotionally, how does that affect them? How does that effect me in return?
So what is the ultimate result of this shift in the world view?
I’ve had a lot of contact over the years with children and adults with Asperger’s Syndrome. Talking with them, I’ve always wondered what this disease was all about, but I’ve never really taken the time to ask questions. When I stumbled across this documentary about David Jordan, it was interesting to see his perspective on the illness. People with the disease are generally mildly autistic. They have difficulty interpreting emotions like normal people do, which affects how they socialize.
Anyway, David’s take on the illness deserves a spot on the blog. Check it out:
