Getting Paris Back on Track

As you recall last week I wrote a blog about the economic repercussions of the Paris attacks, now I am following up with how Paris should go about getting back on track. You can probably imagine tourism has slowed down significantly since the attacks in Paris. Tourism accounts for over 7% of France's GDP. Two weeks later Paris is still seeing sparse lines at stores, less traffic, and early Holiday sales in hopes to attract customers. The 4th quarter was not so great for the people who do business in France because of the attacks, long-term planning on the political and business fronts will likely increase the countries economy. Last week a survey was completed which involved American Business people who have conducted business in France and the results showed that France is actually perceived less bad as years before. France especially now relies on business people around the world to continue doing business in France because of the downfall of the economy. The survey results look hopeful for the French economy and the likeliness of long-term effects on the attacks are slim. If the percentage of people with a negative perception of the French Market continues to decrease, France will likely see better days ahead.








Works Cited:
Karabell, Shellie. "Paris Now: How to Get Business Back on Track." Forbes. Forbes Magazine, 28 Nov. 2015. Web. 29 Nov. 2015.

Black Thursday & Cyber Sunday

By the looks of the title of this blog you must have thought I had the name wrong. Not this year! More and more stores are opening on Thursday (Thanksgiving) evening and allowing shoppers to shop. However stores have actually started to begin their "black friday sales" almost a week before actual Black Friday. Well-known stores like Herbergers and Macys have begun their Black Friday festivities nearly one week ago.
Cyber Monday also has been promoting the early bird sales that begin on Sunday instead of Monday. Walmart announced big sales will hit its website everyday in November leading up to Cyber Monday.  More than likely we will see both Black Friday sales and Cyber Monday sales continue weeks after the actual days if stores don't sell out of the products they intended to.
Although Black Friday is still an eventful day for shoppers, with continued extended sales offered by stores, we will start to see less and less popularity of just the Friday after Thanksgiving. Businesses seemed to have a hold on their prices in order to offer such large sales for such an extended period of time so it is likely we will see this trend continue into the next few years until the demand for Black Friday decreases.
The newest Holiday to add to the bunch is Small Business Saturday. As the name mentions, this is to promote shopping at small businesses on the Saturday following Thanksgiving. Small businesses are the only category of this infamous trifecta that are less likely to extend their sales weeks before and after the actual day. Now we have Thursday-Saturday to take care of all of our holiday shopping!

Works cited: "Friday Favorites - JK Style." JK Style. N.p., 20 Nov. 2015. Web. 24 Nov. 2015.

Freenomics

According to marketingbinder.com, Freenomics s a business model that encourages giving products away for free because of the increase in profits that can be achieved by getting more people to participate in a market. We as consumers don't quite grasp how a company can be successful by giving away products and services for free. The example that comes to mind when I think of freenomics is the free music app called Pandora. Pandora is a great example of how freenomics works. Although there is the option for subscribers to purchase ad-free listening for $4.99 per month, that is not how Pandora makes their profits. Pandora, and other freenomic operating businesses make their money because they have the ears of so many consumers listening to their streaming that advertisers will pay big bucks to get their advertisement streamed to listeners on pandora. Essentially, the more people that listen to Pandora the bigger the market gets which means the bigger the audience get which ultimately leads to higher priced advertisements. By offering free music services Pandora has earned profit into the millions in recent years. Freenomics turns out to be a win-win situation for consumers and Pandora.  This new business model has show quite the success over the last few years and will continue to grow as we enter into more and more technology driven markets.


works cited:
"Freenomics." Marketing Binder. N.p., n.d. Web. 23 Nov. 2015.

Science behind Black Friday

Black Friday has become the holiday after the Thanksgiving holiday. Driven by massive sales in nearly all retail store, consumers have cut their holiday of giving thanks short. Ironically they cut the thankful holiday short in order to get greedy in retail stores around the country. How are these companies able to offer such discounted prices year after year and still make a profit?
This diagram demonstrates how a typically company will operate on black friday:

As you can see the retailer will typically sell the product for double the money they paid for it. On black friday they will sell it for 1.5 times the money they paid for it instead of double. By doing this they end up selling almost 5 times more of the inventory which generates over double the amount of profit. So next Friday when you are out black friday shopping, ask yourself if you are really getting the deal you think you're getting. Chances are most marketing departments in companies won't set prices to match cost or lost money therefore they are still making a profit on your purchase.



Works Cited:
"Black Friday By The Numbers - The Accounting Degree Review." The Accounting Degree Review. N.p., n.d. Web. 17 Nov. 2015.

What is Beta?

Beta is a term used  in the financial and statistical industries. The greek term serves as a coefficient for both industries. In the financial industry Beta is a coefficient that measures stock's market risk. When it comes to stocks, there are two different types of risk, systematic and unsystematic. Systematic risk is unavoidable. Systematic risk reffers to recession or inflation of a market. Unsystematic risk can be eliminated because it is risk referring to product or labor problems. The unsystematic risk can be eliminated through portfolio diversification.

Beta coefficient shows a stock's volatility relative to the market and indicates how risky a stock is if the stock is held in a well- diversified portfolio. Beta measures the systematic risk of an asset. The average Beta is = 1.0 which is the Market beta. If Beta is less than one, the stock is considered less risky than the market. If Beta is greater than one, the stock is considered more risky than the market. If Beta = 0 it is independent of the market.

Beta measures the light blue section.

To estimate beta we must run a regression of the security's past returns against the past returns of the market. The slope you get is going to represent the beta coefficient. What if you get a negative slope? Yes that is also possible too. If the slop is negative, the correlation between the stock and the market is negative. This is a very unlikely situation.

works cited:

Tian, Rulin. "Risk and Return." Finance 320. Barry Hall, Fargo. 16 Nov. 2015. Lecture.

Paris attacks

Not only were the terrorist attacks by ISIS an extremely devastating series of events for the people of Paris at the time of the attacks, but they are also having a huge effect many days after. The people of Paris and the businesses of Paris are suffering right now. Shortly after the city of Paris began to set up for the Christmas market and hang lights throughout the city, the city was attacked. Today, many of the shops and stalls remained closed by official order and stores resemble ghost towns. Shops lacking customers is a very small tragedy in comparison to the loss of a life but is an indicator of Paris's lack of economic recovery after the attacks. Most people who were looking to travel to Paris over this holiday season are now steering away from traveling. Not only are tourists afraid to travel to Paris and walk the streets of the city, but the people of Paris are also fearful to walk the streets by shops and they want to avoid crowds. It is too soon to say how long the repercussions of the attacks will continue to be present, but its safe to say that for now the economy is suffering and many businesses will not see as many sales as previous months even though the Holidays are among us. Tourism represents 8% of the French economy and with many hotel cancellations, event cancellations, no foot traffic, and people remaining isolated, the French economy is sure to suffer.


works cited:
Jolly, David, Jack Ewing, and Doreen Carvajal. "After Paris Attacks, Waiting for Shopping and Culture to Come Back to Life." The New York Times. The New York Times, 16 Nov. 2015. Web. 16 Nov. 2015.

Branding a product.

In marketing, companies face a question when they release a new line or create a new product. The question is whether or not to keep the same brand name as the rest of the products or to use a completely different brand name. The term used to describe the continuous use of the brand name is called brand extension.
Brand extensions are useful when the company already has a good reputation therefore that reputation carries over to the new product too. Brand extension helps to gain a market share quickly because the brand is already established and people trust in the products. A firm is also able to set their prices a little higher right off the bat if they extend the brand name because of the value that the brand carries.
A new brand name comes in handy when a firm needs to rebuild the reputation and disassociate with the previous brand because of negative views. This strategy also differentiates a companies products by giving them different names. For example, the company dodge introduced the model of truck called the Ram, they eventually turned Ram into its own brand name because it differentiated the truck from the other cars dodge sold.
There is no right way for every situation a company faces. The strategy to be used should depend on the type of product being introduced, companies reputation, market share, and price.


works cited:
Pillai, Rajani. "Branding." Marketing 320. Barry Hall, Fargo. 5 Nov. 2015. Lecture.

Human Resources in a Firm

If you have ever applied for a job in an established firm/company, you've probably dealt with the Human Resources department. Personally speaking, I have always wondered what the human resources department of a company does.

HR has 3 goals:
1. Attract an effective workforce.
-Internal vs. external hiring.
-Looking for a good fit.
2. Develop the workforce.
-Training and Education.
3. Maintain the workforce.
-Compensation, Benefits, etc.
As you can tell, HR is centered around finding good employees, developing them, and maintain them.

If only their job was that easy! HR not only has to hire employees they feel are a good fit for the company, but they have to make sure they are not violating any laws while doing so. One of the biggest issues they face is discrimination. Discrimination is making job related decisions on non-job related criteria. Whether they intend to or not, many HR departments could have faced legal action on the basis of discrimination. If a firm is 15 people or greater they are subject to legal action when the criteria describes a protected group. To avoid potentially facing legal action firms will take affirmative action( sometimes required by a court) and give preference in hiring and promoting to members of protected groups.


Works Cited:
Brown, Paul. "Human Resources." Management 320. Barry Hall, Fargo. 8 Nov. 2015. Lecture.

Price Skimming

Price skimming is when a marketer sets a price relatively high with the intentions of eventually lowering it over time; it is a form of price temporary discrimination. A company might consider using the strategy of price skimming when first entering a market for a number of reasons.

Establishing the brand

Marketers often want to base their brand off of quality or status. Price skimming is a great way for marketers to reach their target market by establishing how their brand is perceived.

Perceived Quality

There are many different ways that consumers perceive quality, price being the most obvious. Usually when something is more expensive it is also better quality (or so we think). Using a price skimming strategy provides a perceived idea that the quality is greater than something that is similar but less expensive.

Attract the status driven customers

The status driven customers are always concerned about the price but not in the way that most of us are, they want the price to be high. This group of customers is all about looking prestigious and wealthy. Price skimming creates those high priced items that the status driven customers are looking for and "HAVE" to have.

Early Adopters

In the PLC (product life cycle) some of the quickest people to purchase a new item to the market are the early adopters, these people are generally willing to pay more than the later majority of purchasers. If a marketers sees that his/her firm is one of the only firms in the market he/she will use price skimming because he/she knows that they have control over the pricing of that market and have no competition.

Recover costs

As you can imagine startup costs for a business are not cheap. Price skimming can quickly recover those research and development costs that occur when starting a business or entering a market with a new product. 

Works Cited:

Brookins, Miranda. "What Are the Benefits of Skimming Pricing Strategy?" Small Business. N.p., n.d. Web. 09 Nov. 2015.

Informational and Operational Efficiency

In the world of finance there are many different markets which exist. For instance we have the commonly known markets such as the stock market and the bond market. Another aspect of the financial markets are the efficient markets which relate to stocks and bonds. Efficient markets are ones in which security prices are current and fair to all traders, and transactional costs are minimal. Within the efficient markets there are two forms: operational and informational.

Operational efficiency refers to the speed and accuracy with which trades in the market are processed. Many of the markets have developed systems to aid with operational efficiency. NYSE has developed the SuperDOT computer system and the NASDAQ has developed the SOES. These types of systems match buyers and sellers in a very efficient way by doing so at the best available price for both parties.

Informational efficiency refers to the speed and accuracy with which information is reflected in the available prices for trading. This type of market consist of 3 hypotheses that make up the EMH (efficient market hypothesis); weak form, semi-strong, and strong form. The weak form is implying that the market is efficient and that the price (of a stock) reflects all information and historical prices have no impact on the current price. Semi-strong form assumes that the stock price reflects all public information and financial statements therefore that information is not useful. Strong form assumes that the price of the stock reflects all private information, public information and historical information therefore insider information is not useful.

Overall the efficiency markets are as they sound: efficient. The main goal is to create speed and accuracy and assume that the prices of the stocks reflect all relevant information to the potential buyer.

Works cited:
"Weak, Semi-Strong and Strong EMH - CFA Level 1 | Investopedia." Investopedia. Investopedia, 18 Apr. 2008. Web. 03 Nov. 2015.

The product life cycle

The product lifecycle is a concept that explains how products go through four distinct stages from birth to death: introduction, growth, maturity, and decline. The product lifecycle is a very important cycle for marketers to know before introducing a new product to the market. The strategies marketers use varies depending on the stage of the cycle it is in. Here is a brief overview of what the stages of the product life consist of and how prices, sales, profits, goals, and marketing strategies change throughout the life of a product.

Introduction Stage
The introduction stage is when a single company produces a single product. The purchasers of the product in this stage are usually the eager first-time buyers. The sales at this point in the cycle are increase at a slow but steady rate yet the profits are still negative due to the research and development startup costs. Pricing strategies are usually high to recover those R&D costs or else low to attract a large consumer base. Marketing in the stage is all about informing the consumer about the product.

Growth Stage
In the growth stage new competitors enter the market creating different variations of the product. The goal of the marketers is to encourage brand loyalty. Sales are now rapidly increasing while profits start to see positive numbers and often times peak. The pricing may need to be reduced if it started off high because of competitors. Marketers promote heavy advertising to seek a competitive advantage.

Maturity Stage
Now the products contain new features and most of the sales come from replacing the products. Marketers are now seeking to attract new users who are maybe late to jump on the product wagon. The sales however start to decline and the profit margins narrow. The prices are set in order to maintain the marketshare. Marketers are now advertising for the purpose of reminding consumers about the product.

Decline
During the decline stage the number of variations for the product decreases and the goal for marketers is to remain profitable and make the decision of whether or not to keep the product. The sales and profits are now declining and the product prices are quite reduced. There is little to no marketing during this stage because of decreased profitability.


Works cited :
Solomon, Michael R., Greg W. Marshall, and Elnora W. Stuart. Marketing: Real People, Real Choices. Upper Saddle River, NJ: Pearson Prentice Hall, 2006. Print.

Drones and the Economy

A new business is about to enter the delivery market. We currently have ground delivery and air delivery and in 2017 we will have drone delivery. Google expects to be delivering packages to customers some time in 2017. Google is currently in talks with the Federal Aviation Administration to discuss an air traffic control system to fly the drones under 500 feet.

Using drones for package delivery could dramatically change the dynamics of the delivery industry. Companies such as UPS and Fedex could see some competition among the companies that offer drone delivery. I would not be surprised if all delivery companies develop some sort of drone delivery. The idea of drone delivery is to make deliveries much quicker and cheaper than ground or air delivery.

Not only will drones be used for package delivery but one drone company claims that 90% of the drones will be used for farming purposes. Farmers will use drones for precision crop-dusting and seeding and scanning the crops for health related issues. Drones could result in farmers using less pesticides in the crops. Another thing that farmers need to do to be successful is to scout their crops to make sure they look good and that there are no bad weeds surrounding the crop. Drones can aid in this process by viewing the crops from 200 ft and snapping images and videos to report back with results.The drones are likely to create up to 100,000 jobs in 10 years because of the use of them in the farming industry.

Although drones seem to be something that is unrealistic, it is becoming more real everyday. In about 2 years some of us may have drones dropping packages off at our homes, some of us may have drones checking our crops and lastly, some of us may be working for a company in a drone department dealing with drones every day. As technology advances so does our economy and competitive markets.

Works cited:
"Google Wing Will Begin Drone Deliveries In 2017, Exec Says." Popular Science. N.p., n.d. Web. 03 Nov. 2015.