O'Leary on Aer lingus

Obama and expectations

Tuesday marks the inauguration of President Barack Obama, I must say I am quite excited about this, and I think it marks the end of the frankly ridiculous 2-term reign of George W. Bush. However I think that the expectations that come with the Obama administration may prove to be troublesome

I have long been a believer that expectation management is extremely important, the Obama campaign was undoubtedly successful but has whipped the US population, and the majority of the world into a complete Obama-frenzy, with expectations of his performance in office being sky high.

Barack Obama is inheriting a number of extremely challenging issues, most of which are unlikely to be solved in the first year or two. I believe Obama is going to do a great job, and will probably find it easy to do as well as his predecessor, however this will not be good enough, if Obama does not live up to the world-changing expectations set out by his campaign and supporters, he may be remembered as the President who could only talk the talk.

Congrats to Mr. Obama, and good luck, you'll need it...

Short Termism and Pricing

With the thoughts of my last article on charities and their short-termist marketing ploys in mind, my German guest poster Jo has come up with some anti-short termism thoughts of his own.


Well, we are still somewhere in the turmoil, crisis whatever you want to call it. Like most of the times people and firms react different to pressure. Today’s post is going to have a look at inappropriate short-term focus. An industry which has caused a lot of bewilderment in my eyes in the last years is the US car industry. It is one of those, most affect by the crisis, but there’s more. Beside inappropriate product portfolios and missed trends, the US carmakers have been gone completely crazy with discounting to prevent the erosion of their market share on their home market.


You want to see what I am talking about, well let’s examine a case. Take GM for instance:


“A 2007 Chevrolet Tahoe will have an MSRP of $33,990 for a model with a 5.8-liter, V-8 engine. That is $2,000 below the 2006 Chevrolet Tahoe even though the new Tahoe offers better fuel economy.”


First obvious question, why do you offer a product at a reduced price when it offers more value to the end customer?!
Anyway, just to show what this 5.6% price cut from the 06 to 07 model implies. Let’s assume they sell 1000 cars, and made a profit on each car of 3000 USD (a very positive assumption, in fact GM actually lost (!!!) some money on certain models). The graph below shows what this short-term, market share orientated marketing move means for the bottom line:
The graphs show that GM will have to sell 3000 (!!!) cars to just make the same profit as before. Amazing, right, what do you think a 5,6% price cut will you boost your sales by 200%? I simply don’t and even worse you ruin your long-term profits and prospects. This is how the fall of America’s car industry started. Well see where it goes, or well maybe their competitive strategy is more like this:
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj54MzX0uxBHeh3qyMur0rPqDAP7NG7pJV_ag_L6oE5W-O55o_jzUMJLa2mIHRsMIYYVjD2C6Kd_FLQ6cs_uFHPGORXwuJ_wGZxO0xtHOdh9GggYYqXqsY6AHRBMfwEmx0281yg-vviayX9/s1600-h/Bailout_Advert.jpg

OverFishing - Charities and long term image

*Doorbell rings*
Ed: Hello? (seeing its a representative of Concern)
Man: Oh hello I was just wondering if you would like to support... (launches into what would inevitably be a long drawn out spiel)
Ed: Listen, thanks for coming around but I won’t waste your time (implying go away)
Man: Oh I see, what’s the matter, you don’t like Concern?
Ed: Gives angry stare and shuts the door* ...
...

The last few years have seen the major charitable organisations in Ireland turn to somewhat questionable methods in order to gain the most revenue they can, and I suppose the change represents a shift to a more “Target driven” culture in these organisations.

The most visible and hideously annoying example of this are the representatives that hit the streets and harass the public (with often questionable methods) to “take a few minutes” of our time to be bullied into giving a standing order to the charity in Question. The shift has been a very definite move towards contracting out private firms, who pay their reps €13 an hour to pester the public, and is something find a little disturbing to be honest, and I’m not sure is particularly in line with the spirit of “charitable” donations.

With consumer confidence extremely low, and many people either feeling, or fearing the consequences of the economic downturn, I would imagine that those who might have given money to a charity in better times will reconsider this. As a consequence I think this will lead to a rise in the level of the “aggressive” approach of gaining revenue.

And to be fair, it will probably work, pester people a little bit harder and they may pay up, however I think that the conduct of these charities, and what their marketing managers consider to be acceptable marketing practices are ultimately going to be harmful in the long run. By annoying/infuriating large sections of the public I think they are ensuring that they person will have a negative view of that charity in the long run, and in turn will be unlikely to donate money to them.

I like to think that the situation is similar to the problem of over fishing, you will get good returns now, but one or two years down the line what have you done to your market/fish stocks. The way things are going I think most of the major charities will have tarnished their images substantially and will regret the “hard selling” conducted during the tougher times.

Approval rating 2002-2008 - George Bush

Above is a graph detailing the US public's "approval rating" of the outgoing President, the one and only George W.
From my last visit to the states I gathered that the population in general seemed to be in (vocal) acknowledgement that Mr. Bushs reign has been somewhat disastrous, a fact backed up by the data above.

Fed-Ex tracking - I'm Impressed

I am generally not overly impressed by many things...

For instance I am un-impressed with the idea of paying extortionate fees for a concert ticket from online ticket scalpers, which unfortunatly I had to do this week. I paid roughly double the face value of a ticket for a Roger Hodgson concert in Niagara Falls in March (which I am a little peeved about, but then again I now get to see the main singer for Supertramp, and I got a front row seat!), from a Toronto based "ticket broker".

I was a bit unsure of how long it owuld take to deliver a ticket from Toronto to Dublin and was a bit surprised and IMPRESSED (thats rare) by the whole affair.

The thing that impressed me most was the Fed-Ex package tracking service that you can get online, from the time Fed-Ex picked up the ticket from the seller in Toronto I was able to follow its progress at every stop it made along the way. Whats more is the whole transaction, door to door, took around 36 hours, which again I must admit impresses me (although I did have to pay about €20 for the pleasure).

Seeing as I am in such a state of joy at receiving my ticket for the concert I have drawn up a little graph to show its progress through the various stops it made en route to my hand:

Contruction & Decoration

Happy New Year

Despite most peoples moaning and groaning I found 2008 to be a pretty enjoyable year, 2009 should be a fun one!
To all those out in blog world, Happy New Year.