Thursday, April 03, 2008

Stats, stats, stats

Can't get enough of statistics, I really can't. First of all, you have to question them. Don't give in to the allure of your first interpretation. Dig deep and dive in, and keep questioning. Chances are that if someone is using stats to prove an argument then they are using only those stats that help their case. So it follows that other stats will work against their case. Only when you see the full picture will you get a chance to make a reasoned, informed choice. Sounds simple enough but just a quick look in the media (any medium) will show you an example of biased use of stats. Whether by accident or design, it happens every day.

Interesting Wharton article on this topic here.

Wednesday, April 02, 2008

Environmental cues and marketing

Well, yes, it does make some sense. Read this first, from Wharton: "Marketers should consider the nature of consumer environments when designing product names, packages and advertising campaigns," the researchers conclude. "A car dealership in Minnesota might consider linking itself to cold weather or mittens, whereas a restaurant in Arizona might want to consider links to the dry climate. Depending on what planet NASA decides to go to next, the Mars candy company might even want to think about introducing a new candy bar."

And then imagine what it means. Well it means that a sizable number of us are influenced by environmental cues - heck, probably all of us are influenced by these cues, surely? Anyway, some of us are influenced to actually do something, be it to subconsciously remember to eat healthily or just to favor one color over another. Well that makes sense, doesn't it, as whatever is lurking in our working memory does tend to hang around in our heads, like pop songs and certain smells and their associated feelings. Somethings just "jog" our memories and away we go...

It's not unreasonable to think that targeting colors and messages tightly around a product will help sell that product. I can remember being told many years ago when I started in the sales game (a game I left some years later) that my choice of suit and tie color would have an impact on my sales. Well I never really noticed but I can say that a sober, dark suited salesman entering a recording studio in the mid-80s was treated with undeserved respect!

Dell's continuing case study

You can't ask for a better case study, really. The Kodak vs Polaroid debacle, followed by Kodak vs Digital photography, perhaps? Well Dell vs everyone is a good one, anyway, although sometimes it looks like Dell vs Dell. Here's a link for you: Dell, the world's second largest PC vendor, plans to cut costs by $3 billion as it slashes the price of materials and components going into its gadgets and reduces operating expenses, including jobs, the company said Monday. "Now this does not happen overnight," said Lynn Tyson, vice president of investor relations at Dell, on the company's investor blog. "In fact we said we believe it will take three years to achieve an annualized savings of $3 billion. This means that before you adjust for growth, we believe our costs at the end of our fiscal 2011 will be $3 billion lower than at the end of fiscal 2008." Money saved from the cost reductions will be invested back into the business and used to improve profitability, Tyson said.

Now they are saying that they will cut some labour out of the business, which is a common way to cut costs. And they will cut out a PC production line - apparently they misjudged the size and timing of the switch to notebooks, although how they could do that is beyond me. Perhaps more worrying is that they plan to "seek savings in all areas, from design, manufacturing, logistics, materials, and operating expenses", and that they "may also sell or spin off...Dell Financial Services".

For a company that started out with a claimed innovative means of assembling PCs "to order" via super-cheap phone and on-line distribution, it's worrying that incremental review of operational costs is not embedded into the company ethos. After all, that's where they started. Pulling together reasonable quality components from competing suppliers in a just-in-time assembly process that met the individual needs of consumers, without the added overheads that the big players had built in. Oh dear. Maybe they became fat and lazy too?

Well if if needs to be knifed, so be it. As long as quality is maintained, at least where it is now, I mean. Any less and the compromises will peek through just a bit too clearly. But hiving off the finance arm? Is this a reflection of recent loss of focus on core competence? Or are they bleeding so badly that they need to convert assets to cash, pronto?

All very interesting to watch as this case study unfolds.