...without words

Cognitive dissonance

From NYTimes: In 1956, Jack Brehm, a Yale student of Leon Festinger, carted some of his own wedding gifts into the lab (it was a low-budget experiment) and asked people to rate the desirability of things like an electric sandwich press, a desk lamp, a stopwatch and a transistor radio.

Then they were given a choice between two items they considered equally attractive, and told they could take one home. After making a choice (but before having it snatched away), they were asked to rate all the items again.

Suddenly they had a new perspective. If they had chosen the electric sandwich press over the toaster, they raised its rating and downgraded the toaster. They convinced themselves they had made by far the right choice.

On happiness

From NYTimes: Happiness seems fairly cheap to manipulate. In one experiment, subjects were asked to answer a questionnaire about personal satisfaction after Xeroxing a sheet of paper. Those who found a dime lying on the Xerox machine reported substantially higher satisfaction with their lives.

Positioning through pricing

Pricing plays an important role in branding. The luxury brands have been the first to "discover" such an interplay, wholesalers cannot be too far behind either.

Consumer markets in developed economies have been facing steady dollar inflation and rise in commodity prices.

From a branding/positioning perspective, the status qvo for companies selling into the US market is being challenged.

US imports come from the following areas:

• China for trinkets--whose currency is pegged to the dollar;
• Europe for upscale products--since the "discovery" of (affluent)consumers in emerging markets they are no longer that dependent on the US consumer;
• Japan for automobiles and electronics--pegged currency;
• Latin America for agricultural products--prices have come up since such products are imported mostly by US brands.

Exporters into the US have several options:

• Pass the increased costs onto the US consumer through higher prices,
• Lower the quality;
• Gimmicks;
  
• Revive US based manufacturing/assembly plants.

As examples for gimmicks, consider the socks at Wal-Mart that are shorter and sell at the same price. Trash bags at Costco, sold under Kirkland Signature brand, are weaker. Import cars, due to the annual cycle of "innovation" and reduced Detroit competition have been able to play the "segmentation" game to their advantage and passed along cost increases. Moreover, sensing the market share opportunity play, automotive luxury brands are coming in with cars at lower prices.

For a conversation about this, check out the Q&A section at LinkedIn.

"New and Improved"

Consider the recent blow-up at Medtronic, which "[...] estimated that about 2.3 percent of patients with the Fidelis lead, or 4,000 to 5,000 people, would experience a lead fracture within 30 months of implantation. Those patients will require a delicate surgical procedure to replace the lead, experts said.

Replacing leads on a heart device like a defibrillator is considered by experts to be far more dangerous than replacing the device itself.

The Fidelis lead has been used with Medtronic defibrillators since 2004, and most patients who received Medtronic defibrillators since then have them.

Vice President Dick Cheney uses a Medtronic defibrillator, but it was implanted in 2001, before the Fidelis lead was introduced."

I think this is just one illustration of the "new and improved" drive for revenue. Grocery or home improvement shoppers know that stuff keeps "changing" all the time.

For more on the "new and improved" tactic to branding/product positioning, check out the discussion at LinkedIn Q&A.

Belief, lubricant of capitalism

"Liquidity" is a figure of speech, describing the following situation:

• A is ready and able to buy an asset from B on short notice
• At a price B considers reasonable
• Which usually means C has to be willing to lend money to A
• Which means C believes A is solvent and the asset is good collateral
• And if A is a dealer, A and C both have to believe that the asset could be readily sold to D
• Which means they both have to believe that there is an E willing to lend money to D.

In short, liquidity is about group belief in the solvency of counterparties and the reliability of prices, reminding us that "credit" and "credo" have the same root. When no one is sure who is broke, and there is high uncertainty about prices, we will discover that liquidity has vanished, however plentiful it may recently have seemed.

To alter Shakespeare a bit: "Tell me where's Liquidity bred, In the heart or in the head?"

At the end of the boom, in the heart, not the head, unfortunately.

(From a Letter to the FT Editor by Alex J. Pollock, Resident Fellow, American Enterprise Institute)

Enabling group creativity

Creativity, through group interaction, can be achieved when several of the following conditions are met:

1. Clear goals (expectations and rules are discernible and goals are attainable and align appropriately with one's skill set and abilities).Concentrating and focusing, a high degree of concentration on a limited field of attention (a person engaged in the activity will have the opportunity to focus and to delve deeply into it).
2. A loss of the feeling of self-consciousness, the merging of action and awareness.
3. Distorted sense of time - one's subjective experience of time is altered.
4. Direct and immediate feedback (successes and failures in the course of the activity are apparent, so that behavior can be adjusted as needed).
5. Balance between ability level and challenge (the activity is neither too easy nor too difficult).
6. A sense of personal control over the situation or activity.
7. The activity is intrinsically rewarding, so there is an effortlessness of action.

In fact, the above points describe the conditions for flow, as defined by Csikszentmihalyi. He goes on to say:

When in the flow state, people become absorbed in their activity, and focus of awareness is narrowed down to the activity itself, action awareness merging.

Source: "Beyond Boredom and Anxiety," Csikszentmihalyi

First, eat your own (...) food

Another great question from LikedIn reads: Do You Taste This Stuff Before You Release It? To which I replied:

I suggest an answer from a slightly different perspective than usual.

In the light of today's (lowered) numbers from Wal-Mart, I was wondering if its executives (the guys responsible for its well-being) ever shop at their own stores. Moreover, while the story about the WMT numbers was told in the background, the images where showing a scene from a store where a Wal-Mart employee, sporting the "how may I help you" message, was passing by shoppers without showing any of the solicitude implied by the message printed on their vests. I wonder if the employees even know that message (in form or meaning) since many a time I find myself lost, without any help at Wal-Mart--in contrast to Costco or Whole Foods.

To take it next to the tech-sector, anybody has any doubts as to where the internet info is coming from for Bill Gates or Steve Balmer, Is it MSN Search or Google?

So, by extrapolation, chances are that (the equivalent of) a product manager at your regular food company shops up-market.