4 Forecasting

Are you inferring I’m bad at mathematics?

Posted on by spr1324jvaca

It’s amazing to think that with a simple program you can increase any companies sales growth without any of your help. In the case of Vik Singh, a 28-year-old engineer, thought it to be easy and is on a mission to prove it. Vik Singh has created software using simple mathematical formulas and algorithms that will allow create sales growth and accurately predict sales.

On April 23rd in Palo Alto, California, Vik Singh had a coming-out party presenting his new company “Infer”. Infer has raised 10 million dollars from Redpoint Ventures, Andreessen Horowitz, Social+Capital Partnership, and Sutter Hill Ventures. Infer has been diligently working on creating the technology for about two years. Singh already has a variety of customers that include Yammer and box, and Silicon Valley. In addition, infer has worked with traditional companies that include health care and insurance providers. Singh is not only in the business software industry he is an extremely brilliant engineer. He has helped in creating programs and systems for companies like Google and Microsoft. If these projects are not impressing you, Singh has also built a completely new search system for Yahoo at is still being used today.

Infer applies software to your company information that uses algorithms to locate your buyers. Infers software starts with the basics of your company, by searching for your customers and locating there name address and company. Then it starts surfing the web for more information about the company itself, at this time it determines all the important information such as headquarters, demographic information, hiring rates and any information it can use to determine the company’s needs. Singh determines the company’s outlook of trademarks in a certain area that can show growth. Once he applies all these factors to the sales system trends start to emerge and tries to relate certain kinds of customers in different states with similar sales.

The initial companies that Infer worked with verify the successful results. When you compare sales data and compare outcomes with predictions. Singh verified that the company nearly predicted the outcomes of other companies perfectly. Infer has yet to release any documentation proving these claims in sales growth.

Companies already spend millions of dollars trying to find sales. With this new Infer system, companies can focus on the sales its self and not worry about locating their next prospective client. With this technology, it will enable companies to forecast sales by determining the demand and volume of leads the system is creating. If companies can predict sales accurately it will complete eliminate old forms of forecasting and effect every aspect of the way to run a business.

With this new technology, do you think this will become the new norm in forecasting sales and production? Does Infer really have a revolutionary product?

http://www.businessweek.com/articles/2013-04-24/infer-promises-more-sales-through-better-math

http://www.ehow.com/list_6507308_risks-sales-forecasting.html

Audio Innovations-Growth Stage

Posted on by spr1324czarate
Rock-It 3.0 OrigAudio

We have learned in our Management 301 class that every product is subject to a life cycle. In its early stage, called introduction, the product is designed, developed with attention to quality, short production and limited models. The next stage is growth, where forecasting is critical, the product goes through competitive improvements, and distribution is enhanced. Then the product goes through maturity, in which standardization takes place. Finally, the product declines, where there is a lower product cost, differentiation decreases and capacity is reduced.

 
There are several products in the market that we can see going through the life cycle, but I have found an interesting article that makes reference to good examples of products on growth stage. They are the OrigAudio products, such as cardboard speakers, headphones and golf-ball-size amplifiers. According to the article in the Chicago Tribune by Ronald White, these OrigAudio products started being developed by Chicago entrepreneurs Jason Lucash and Mike Azymczk. These two marketers got their products in the market and successfully accomplished to be listed as one of the best inventions in 2009 by Times Magazine, just after a short period of time of their introduction (White, Ronald).
During the introduction stage the process design and development were critical, as well as they had short production run. The article mentions that since they are marketers, they don’t know about engineering, so they have been looking for people that can complete their team by helping them to bring their innovating ideas to life. Now, in the growth stage the entrepreneurs have been working on enhancing distribution. One of their most important decisions was moving to California. According to the article, by moving closer to the Pacific, great benefits were acquired by OrigAudio such as; decrease on transportation costs of inputs from China. But mostly, because the region with core surf and skate crowd represents a good market for them, to increase sales. In order to accomplish their goals they have been and will continue hiring more employees. Also they are working in more innovating designs for their speakers, headphones and amplifiers (White, Ronald). Finally, they are forecasting to have $5 million on sales this year, a totally different amount than in 2010, when they had just $700,000 in revenue (White, Ronald). But it makes sense since they had $3.5 million revenue in 2012 .
Some other OrigAudio products in the market, mentioned in Ronald’s article, are:

  • The Fold and Play speakers, which looks like a Chinese restaurant, take out box.
  • The Rock-It, which according to the article, includes a piece of the size of a marshmallow peep candy.

It looks like these entrepreneurs from Chicago are doing a good job in the growing stage of their products, since they are working on the competitive improvements and options.
Do you think they will be able to stretch their products’ life cycle enough for OrigAudio to earn and keep a good place in the market?
What would be your recommendations for these entrepreneurs to maintain their business growing?

Source:

http://www.chicagotribune.com/business/breaking/la-fi-socal-design-20130510,0,5421129.story

Google Glass’s: Varying Forcast’s due to Design Flaws

Posted on by spr1314wschulenberg

Over a year ago Google announced their ideas for a new product called Google Glass. Their idea was to release a products that would allow users to have access to smart phone applications such as email, text and video messages, face-time, and others such as these, all at the convenience of a simple voice command.   Although Google Glass has not been released to the public yet product analysts have begun to forecast the sales of this product. One analyst from IHS believes that Google will have orders of over 9 million by the year 2016, but how dies he come up with a forecast for a product that has not been even introduced to the market?  Essential this forecast has no factual basis, but rather it basis its facts on potential users and developers.

Google spokesman, Chris Dale says “Glass is designed by users and for users from all walks of life,” but the simple fact is the majority of first time users are male, and many females including the product’s designer are frustrated with this disparity.  Some of Google’s representatives believe this to be partly due to the fact that Glass has only been released to about 1000 developers, and not more widely to the public.  The majority of developers being technologically savvy males, are all over blog sights such as tumbler posting photos of themselves and the way they use their new glasses, but this has seemed to be counter productive to the products overall popularity. Some women have claims that the Glass projects design is lacking in creativity and trendiness.  One female marketing professional who was questioned about the “look” of Glass stated that they were so unattractive that she would never wear them.  Some people also commented on how they cannot believe that developers would not create these glasses in a more fashionable frame such as Gucci, Prada, Ray Ban, etc. Although I think that this products design is going to take off like a rocket, others are more skeptic.  What do you think about how Google chose to release their product? Would you consider Google selection process as sexist or is it just due to the lack of technologically savvy women applying to receive the product.  Google tends to agree with the later but intends to reduce this disparity of users when it fully launches its product into market.

http://www.forbes.com/sites/cherylsnappconner/2013/05/10/google-glass-just-for-men/

http://www.usatoday.com/story/tech/2013/05/10/google-glass-io-men-women/2133861/

http://www.androidauthority.com/google-glass-sales-forecast-197526/

 

Wrong for Wrigley?

Posted on by spr1314drutkowski

 

When you think of Chicago, some of the thoughts that come to mind are: great food, tourist sites, and sports. Whether you are visiting or living in the city, nearly everyone loves to go to the Chicago Cubs games, unless you are a Sox’s fan, but even then, the charm of Wrigley Field and the surrounding area is something undeniable. So when Tom Ricketts announced the possibility of moving the Cubs outside of Wrigleyville, you better believe he received backlash. The degree of disapproval of the move came from die-heart fans, rooftop owners, and other local businesses. When I first heard that Wrigley Field might be moving, I was heartbroken. All I could think about was the memories my family and I had from going to the games and making a day out of traveling to the city. Even more than contemplating the move, Ricketts is planning a $500 million renovation that will impact the city, fans, and surrounding businesses as a whole.

At first thought, some fans might say to leave Wrigley the way it is. The old nature and lack of high-technology is what makes the field so charming and historic. However, by looking at this situation through Theo Epstein’s mindset, President of Baseball Operations, I have come to see the more important managerial implications that come along with the $500 million renovation. Decisions of forecasting, location, and organizing are all factors in the Wrigley renovation. Theo has to think of the costs/revenues that will be generated by these renovations and compare that to how the location of each addition will impact the field and businesses that surround the ballpark.
For those of you who are not familiar with the renovation, the $500 million plan requires no city or country money. It will provide a video board in left field that will be 6,000 square feet, and a secondary sign in right field that will be 1,000 square feet. The plans also include a three-story addition that will contain new clubhouse, restrooms, restaurants, and potentially an upper-level deck. Furthermore, there have been talks of a proposed hotel on the McDonald’s lot, a two-story Captain Morgan Club, and open-air plaza on the west side of the park.

 There are many pros and cons of the renovation plan. Some thoughts that should be considered are the local businesses – will having more Wrigley restaurants and a hotel take away from local businesses? More importantly, how will the jumbotron affect the rooftops since they bring revenue to the owners and to the city as well?
My question to you is what do you think of the renovation and the managerial decisions that face the Wrigley organization? The location of the jumbotron, hotel, and restaurants are important decisions to consider in the overall effect of the renovation. How do you feel about the possibility of the hotel that will be built right by the ballpark – would you forecast that expenditure to be revenue raising or simply wrong for Wrigley?

Sources:

1. http://ballparkdigest.com/201305066246/major-league-baseball/news/cubs-submit-wrigley-field-renovation-plans-to-city

2. http://www.dnainfo.com/chicago/20130501/wrigleyville/wrigley-field-renovation-renderings-released-jumbotron-hotel-unveiled

Kroger’s Enhanced Technology for a Quicker Checkout

Posted on by spr1324ismal

We live in a society dependent on technology and in the world of business, technology has helped in developing various systems to improve day-to-day business activities and satisfy both the consumers and the producers.

Customers are always anticipating the endless wait in checkout lines.  Sometimes if feels like the line has not moved for the past 10 minutes, but switching to a different line puts them at a risk that it might be even longer. Is the item really worth waiting in line for? Is it easier to bail and just buy it online or at a different store? Numerous retail stores are trying to find new ways to get the shoppers through with ease as online shopping is increasing and as long lines threaten sales and loss of loyal customers. 

 Kroger Co., a supermarket giant, has installed infrared cameras to aid in lengthy checkout lines in about 2,400 its stores. The cameras, which detect body heat and have been used in the past by the military for surveillance purposes, are paired with Kroger’s in-house software in order to decide the number of lanes that need to be open. Not only has this new technology allowed the stores to operate with lower labor expenses, but it also has reduced the customer’s average wait time spent in line. 

Competition in the retail industry is high and for companies to enhance the shopping experience and speed up service for each of their customers is a top-notch priority. Since the checkout lines are the last thing the customer experiences, the longer the  time is wasted waiting in line, the less satisfied the customer is leaving the store. The ultimate focus for Kroger and any other business is its consistent customers, and according to Kroger’s surveys, the customers believe the checkout speed has been much quicker since the installment of the cameras.

Kroger’s system, QueVision, which is now in about 95% of its stores, forecasts the length of time customers spend shopping based on the time and day as well as determines the number of lanes that need to be open. In addition, QueVision data shows the amount as well as type of items purchased by the times of day, and by adding more express lanes and boosting certain orders, Kroger has improved its operations as sales have increased by 13% in the past year.

Kroger’s goal is to please their customers so that they enjoy their entire experience so much that they will come back again and again. They are gradually improving the QueVision software system to predict shopping behavior and fix the checkout lanes procedure in order to get the shoppers out more quickly and make the checkout experience the best that it can be.

The most important way to create loyal customers is to understand their shopping trips and make them as personalized as possible so they will always come back. Making improvements is a continuous process. What other approaches could retailers take to better the overall shopping experience?

Article: http://finance.yahoo.com/news/krogers-weapon-infrared-cameras-011800830.html

 

Earnings forecast: How companies set low expectations to create a “surprise” growth

Posted on by spr1322jkhandwala

With the second quarter of 2013 well under way  companies are beginning to put out their first quarter earnings.  271 companies of the Fortune 500 which make up the S&P 500, have reported a earnings growth at 3.9 percent, 2.4 percent higher than the forecast of 1.5 percent. “Some 69 percent of the S&P 500 have beaten forecasts, once again conforming to the pattern of lowering expectations enough to “surprise” by beating them. The 69 percent figure exceeds the long-term average of 63 percent. This has been the pattern for the last 15 quarters, with growth estimates at the beginning of earnings ultimately being beaten by at least a full percentage point.” According to the article, companies are purposely low-balling their estimates only to beat those forecasts at the end of the quarter. This has held true for the past 15 quarters and seems to be the trend going forward. Investors and stakeholders will continue to be surprised and will be looking at positive earnings growth at the end of the quarters. It seems to me as if investors don’t really mind the idea of that since these earnings reports has caused the S&P 500 to rise 1.2 percent since the first company released its earning back on April 8th.

Photo credit: stockopedia.co.uk

Though the companies that have posted earnings have had a good growth, the companies that are yet to report are expected to have a 0.4 percent decline in earnings. Among these companies could be Walmart and Home Depot since they have not posted their earnings yet. First quarter revenue was projected to have 1 percent growth but instead is expected to fall 0.3 percent. Even though, companies have had a success when it comes to profits, revenue forecasts have declined, which goes to show that many companies still have a decline in sales. “’It does concern me. It’s not sustainable over the medium or the long term. There’s only so much companies can do to sustain growth without increasing sales,’ said Paul Zemsky.” They are able to get higher earnings through cutting costs and expenses but not through an increase in sales. This poses a threat to the economy in coming quarters because it will mean that companies will be hiring very less now since they will try their best to cut cost.

After reading this article, I felt that companies have to better forecast their earnings since there is such a gap between the forecast and the actual amount. They may have to use a different forecasting technique to come up with their earnings projections so that there isn’t a “surprise” when the actual numbers come out.

Do you think that companies are doing the right thing by setting low forecasts of earnings? Does this fairly present the true position of a company?  Also, as I mentioned before, many companies are doing good with profits and yet the revenue is going down. Do you think these companies can survive through cost-cutting measures or will they have to do something to increase sales?

 

 

“Earnings beating forecasts but jury’s out on rest of season” by Caroline Valetkevitch and Ben Berkowitz

http://finance.yahoo.com/news/earnings-beating-forecasts-jurys-rest-211325797.html

 

 

That’s the Way the Cupcake Crumbles: Is the market for the sweet delicacy crashing?

Posted on by spr1313krodriguez

Molly’s. More. Sweet Mandy B’s. Chicagoans may recognize these names as local eateries specializing in the most convenient of small pastries: the cupcake. Though recipes for these treats have been around for hundreds of years, and are a major staple at birthday parties and big celebrations, it was not until the early 2000s when the country started to develop a demand for gourmet cupcakes. You can thank the TV series Sex and the City (of all places!) for that; with the show prominently featuring the popular Magnolia’s cupcake shop, the nation went cupcake crazy. Today, hundreds of gourmet cupcake shops thrive in our city and throughout the country, rallying behind its industry’s largest leader, a New York-based publicly traded company called Crumbs Bake Shop. With mouth-watering flavors ranging from red velvet to cookie dough, you would think this market would continue to thrive off of our taste buds.

Unfortunately, that may not be the case anymore.

Source: The Wall Street Journal

At the peak of its success, Crumbs launched their initial public offering in June 2011 with a strong $13 per share. This past month in mid-April, though, its shares have sunk to $1.70, and they continue to fall at a disquieting rate. Because of this, the company adjusted their 2013 sales forecast from an initial $73 million to an unsettling $57 million. The declining performance of such a huge company as Crumbs has caused some analysts to claim that the market for gourmet cupcakes is beginning to collapse. A recent Wall Street Journal article poses the question, “Is the cupcake bubble that inflated relentlessly over the last decade finally about to burst?”

There are many factors that could have caused this impending cupcake recession. Probably the most apparent of these is the oversaturation of the market. Since the trend began, cupcake making became one of the prime choices for young entrepreneurs to kick-start their small business ventures. This has obviously led to increased competition and a staggering number of locations selling the same product; in Chicago alone, there are nearly three hundred different gourmet cupcake shops. But even these specialty stores have to compete with other establishments like grocery store chains, which are trying to attract the same market with their own cupcake concoctions. With all of this competition, the lines of differentiation start to blur, and it leaves consumers wanting a change of pace.

This change of pace is an additional factor contributing to the cupcake’s demise: consumers are growing tired of the fluffy delicacies and want to indulge in something new. The aforementioned Wall Street Journal article attempted to scour Twitter for the next big tasty treat. Responses differed from gourmet ice cream to mini-pies, but the uncertainty itself is pretty clear. Cupcakes are no longer king, and many successful cupcake shops are starting to feel it in their wallets… and their stomachs.

What do you think is the next big trend in the pastry/delicacy market? Do you think the “cupcake economy” will bounce back, or is it all heading down south from here?

Sources:

http://online.wsj.com/article/SB10001424127887324345804578425291917117814.html

http://stream.wsj.com/story/corporate-intelligence/SS-2-60962/SS-2-214382/

http://www.policymic.com/articles/35885/everyone-panic-the-cupcake-market-is-crashing

Infer: Better Math Can Produce More Sales

Posted on by spr1313zmares

Infer is a company that develops technology that allows company’s sales-tracking system to rank customer leads based on how likely they are going to purchase something. The company has raised 10 million over the last two years while working on this technology. Infer is rather simple as its software starts with basic information. For example, if a customer decides to enter their name, address and company when signing up for a product. The Infer system will then start doing research behind the person that signed up for the product.

The CEO, Vik Singh is young as he is only 28 years old, but he believes that his mathematical formulas will increase sales. Vik Singh and his 10-employee team are in the midst of improving sales by using better math.

Vik doesn’t seem to be short on confidence as he feels that this new  innovation is sure to help increase sales. The problem is the fact that he is  very young and there may not be that many people that believe in his new ideas. He may not be the best person to trust for sales, but he certainly has the right engineering track record. He worked with Google fine tuning search systems before moving to Microsoft. At Microsoft, he developed technology with Jim Gray, who of the greatest computer scientists of the last half century. He finished working with Microsoft and built a new Yahoo search system.

Vik Singh has worked with some of the biggest technology gurus in the world. Vik Singh says, ” The way the typical company manages data is piss-poor in comparison and there is more science at Facebook (FB) behind seeing which of your friends are getting drunk across the street from you.” This seems to be a common theme with all the new web-savvy engineers that are trying to make new rules for business applications. Vik Singh wants to treat sales deals like a puzzle. If Infer can makes their sales deal like a puzzle then it can be solved with an algorithm rather than a dinner between people who have ideas.

Infer has worked with Box and other customers to verify their research. It works with historic sales and compares outcomes with their own predictions. Singh continues to tell everyone that the experiments come out nearly perfect, but he has not released any proof of this for businesses to see. In my opinion, there are a lot of other things that factor in when dealing with sales. There needs to be more facts when trying to rely on just math to increase sales. From a management point of view, I don’t know if Vik is taking things a little too far with all these math equations, but he does have the technology background to speak for him. Then again who has time for someone that is only 28 years old and is trying to change the way selling works?

Links:

http://www.businessweek.com/articles/2013-04-24/infer-promises-more-sales-through-better-math

http://techcrunch.com/2013/04/23/infer/

http://blog.studentrnd.org/post/37455656817/why-asians-are-better-than-americans-at-math

How to forecast $43.6 billion?

Posted on by spr1313anasir

Apple has finally decided to give its shareholders back more now from the profit of $145 Billion. The shareholders demanded more return even though Apple posted their first decline in decades. Apple heavily relies on new product launches to make the mass amount of money; knowing this fact the company has decided to not launch any new products until fall and 2014. The company has to give the raging market a rest for a couple of months before they come out with something that will make the crowd go wild. The fall in the revenue has challenged the company to think of something truly innovative that will gain a higher popularity in sales than its competitors.

 The company did better than forecasted $39.2 billion; the actual revenue was $43.6 billion, exceeding the forecast by $4.4 billion. Apple had under forecasted due to past months revenue being over forecasted. As we learned in class, companies usually use naïve approach to forecast for their next month. Apple has been over forecasting since their iPhone sale success. Apple is not coming out with new innovative technology, their revenue has been declining therefore forcing the company to under forecast their revenue. This is the error of using forecasting because the company might not sell the same as the previous month because the company has not been able to come out with a product that would stabilize their revenue. In Apple’s case new product launches raise their revenue and place them on top of other companies.

 Many people are thinking that since Apple is not going to be launching any new products for a few months, the market is bound to fall. Samsung has been giving Apple good competition and now has been able to take over the market with recent launches. If Apple waits until fall to hit the market again with something innovative, will Samsung have taken over the market? Will Apple be able to compete with Samsung after staying out of the market for a couple of months? Only time will tell how innovative the new Apple products will be. Will the Apple products be able to beat the Google Glasses? Many people are not really sold on the new idea of using glasses as their cellphone but again no one can really tell how the market will react to products until they are launched. Before Steve Jobs died, he mentioned that his new invention was to make the TV remote user friendly. He emphasized that the remote was too complicated with so many buttons. This might be just the product to beat the Google Glasses or not. We all will have to wait for the next invention until fall of this year to find out.

Click here to read the article: http://trib.in/14El4B3

Sources: Gupta, Poornima. “Apple unlocks more cash for investors as profit slides.” Chicago Tribune 23 April 2013, Web. 28 Apr. 2013.

<http://www.chicagotribune.com/business/sns-rt-us-apple-resultsbre93m1b6-20130423,0,5337176.story?page=1>.

Apple Lacking Innovation? Or Master Plan…

Posted on by spr1313jmusolino

In the recent months, Apple has been the hot topic of debate for almost every media source. This can be derived partially due to its 25% stock price decrease in the past year, but also because of an increase in competition from companies such as Samsung. Despite record profits, critics argue that Apple is “lacking innovation,” which is vital for its continued growth. Does apple not understand what consumer’s want/desire? Or could their upcoming innovations be so groundbreaking that it just takes longer to unveil?

Despite popular belief, Apple produces almost none of the components that are in its products. What makes Apple products both beautiful and efficient is their ability to integrate the hardware and the software so seamlessly. This is done through their remarkably efficient and streamlined supply chain.

In my opinion, Apple tends to innovate backwards. Apples innovation can be described like this; Apple solves the puzzle first, and then finds the pieces they need to make their vision a reality. Apple’s size, power, and money give them the ability to do this, but the actual timeline for a finished product may not be so clear and defined. This is why an efficient and communicative supply chain is so important to Apple.

Most analysts would agree that the biggest upcoming feature on the iPhone 5S is its fingerprint sensor. This is not a new concept, but the way Apple will use it will be remarkable. The mobile payment system is the way of the future, yet is has failed to take off. This is not due less to lack of technology, but more because of security concerns. By having someone’s phone password, one could gain access to every credit card they own. A fingerprint sensor would basically eliminate this problem, and would allow the mobile payment system to grow exponentially.

Keep-Calm-And-Slide-to-Unlock-iPhone-Fingerprint.jpg

Apple sold over 50 million iPhone 5s, so a small glitch in hardware or software can be detrimental. First, Apple needs to make sure the hardware is functioning properly. Last week Reuters reported this, “A supply chain source in Taiwan said Apple was trying to find a coating material that did not interfere with the fingerprint sensor, and this may be causing a delay.” Second, Apple needs to make sure its manufacturers can produce the product that keeps up with demand. Third, the software needs to be 100% accurate to prevent possible fraud. Last, Apple needs to beta test the product until they know it is absolutely perfect.

Personally, I believe that Apple’s master plan is much smarter and more innovative then any analyst can predict. Critics thought the first iPhone would fail because it didn’t have a keyboard. They thought the iPad was just a “big iPhone,” and no one would buy it. Currently, these are two of the most successful and profitable consumer devices on the market. Apple’s master plan is bigger than we think. Supply chain issues may slow its product cycle down now, but I think it will only be a minor speed bump in Apple’s continued dominance.

What is your current view on Apple? Are you continuing to buy Apple products? Will a fingerprint sensor on the iPhone 5S be the deciding factor on whether you will upgrade or not?

http://www.forbes.com/sites/anthonykosner/2013/04/28/is-the-iphone-5s-fingerprint-reader-worth-the-wait/

https://www.google.com/finance?cid=22144