Would you like some “Free” with that?

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This just might be a possible question asked by a McDonald’s employee in the imminent future. Currently, the only reward you get for eating at McDonald’s is: well, the food itself. McDonald’s does not have a rewards card to attract customers to stop by because of additional points or freebees. Though, it sure can use one.

The traffic in McDonald’s in on a steep decline. Frankly, their forecast also suggests a continuing future decline. We have previously discussed in class the need to identify the reason for having a negative trend and making adequate changes and adjustments to avoid declining sales. This is exactly what McDonald’s is doing. They are reconsidering their strategy and trying to come up with a way to retain their clients, meanwhile attract more clients who can make up for the decline over the recent years.

To create this new traffic, McDonald’s designed what you can almost call a new product, a loyalty card, which it is planning to introduce in the upcoming days. Other food chains such as Panera, Subway, and Starbucks already have some form of a loyalty card, and they all have seen a greater rate of return after its introduction. People love when they get a good deal: a purchase made on sale or just a freebee. Therefore, people are choosing places that reward them for their loyalty with rewards-only deals, or accumulation of points which eventually leads to some discount. This also helps keep customers loyal.

The three major fast food chains: McDonald’s, Burger King and Wendy’s have yet to come up with a loyalty card. Being the first to introduce one can definitely be a competitive advantage for McDonald’s. This can help them further differentiate themselves from the other two.

In addition, McDonald’s market consists of people who are relatively small spenders, which is what brings them to McDonald’s, a food chain with fairly low prices. Introducing a loyalty card that can save them even more money or get them a better deal will definitely be something these types of customers are interested in. Another amazing benefit of a loyalty card is that companies can track client’s purchases. They can then use this information to customize their marketing with coupons and sales that are specific to your interests. Therefore, this is an ideal solution for the decreasing sales at McDonald’s. The loyalty card will keep clients from going to the other places, which do not reward them for coming in.

Although many companies focus on improving their processes through efficiency and cost cutting, without sales, there is no need for production at all. McDonald’s is currently in need of increased sales and traffic. And although investing in the design and creation of a loyalty card can be quite costly, I believe it will definitely pay off with increased sales and loyal customers.

 

Do you think the loyalty card will keep their clients loyal? increase traffic? increase sales?

What is your experience with loyalty cards?

 

http://consumerist.com/2013/10/01/mcdonalds-testing-rewards-program-for-customers-using-mobile-devices/

http://www.businessweek.com/articles/2014-11-03/mcdonalds-and-other-fast-food-chains-step-up-battle-for-loyal-customers-with-rewards

The Ressurection of Spikeball

Have you ever heard of Spikeball? Spikeball is a sport that is becoming more popular in the United States. Spikeball is basically a combination of volleyball and foursquare. It’s a very easy game to play all you need is two teams of two people and the net. Spikeball is very portable it can be played in the backyard or on a beach.  If you purchase the product, which retails around $50 you will receive a trampoline like net which is a couple of inches off the ground, and a palm size ball. Basically, players stand around the net each team has up to three hits to transfer the ball to the opposing team. The purpose is to hit the ball into the net so the opposing team can’t return it. The winner is the team to get to 21 points first.

Chris Ruder is the founder and CEO of Spikeball. He first came across Spikeball in the 1980s when he purchased his very own Spikeball from Toys R Us. Ruder would always get the same question when people saw him playing Spikeball with his friends. The questions included, “What’s that game? How do you play? Where can I get one?” this were all simple questions but the last one because Toys R Us didn’t sell Spikeball anymore. That’s when Ruder had the idea to make Spikeball his own. Spikeball Inc. sold their first set in 2008 and Toys R Us was not involved. After having great success and growth Ruder quit his day job to focus on Spikeball. Spikeball has become more popular and has become a popular new sport. There are many tournaments in which people can compete in all over the United States. The top places are Chicago and Nashville. Other places include Los Angeles, New York, Georgia, and Iowa.

What makes this company interesting is the fact that how Ruder took Spikeball which seemed to be dying out and making it into something bigger. Ruder had no money to be able to advertise his product but it made it grow by simply going to the beach and people see him have fun. The game was originally trying to target a younger age group but Ruder realized that the target was not the correct target for Spikeball he believed that it was more for an older age group instead of kids. Ruder had to be in charge of everything that had to be done. He had to deal with inventory, customer service, and e-commerce. He had to be able to manage everything that had to do with improving Spikeball and making it known. He would also like to email customers that made purchases and ask them how they learned about Spikeball. By emailing the customers Ruder was able to receive better feedback regarding his product.

Have you heard of Spikeball before?

Would you try to play Spikeball?

http://www.dnainfo.com/chicago/20130730/lincoln-park/chicago-based-spikeball-exploding-popularity-nationwide

http://www.esquire.com/blogs/news/spikeball-toy-to-sport

http://spikeball.com/

 

Consumer Knows Best: Quirky Inc.

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http://i.forbesimg.com/media/lists/companies/quirky_416x416.jpg

When it comes to buying things, the consumer knows best.  Quirky.com takes this need to understand the consumer to another level of crowd sourcing by allowing potential consumers in Quirky’s online community to submit ideas and their own input in order to develop innovations. There might not be a better way to identify what a consumer wants than what Quirky is doing by allowing consumers to actually create what they want. Some of the innovations they have created include the Pivot Power, a flexible surge protector, and Stem, a citrus spritzer. The most promising ideas every week are chosen by Quirky’s staff are then voted on by the online community and the employees at Quirky.com, where the top three to five ideas get to move on to development and later distribution.

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http://thecoolgadgets.com/wp-content/uploads/2010/07/Quirky-Pivot-Power-Adjustable-Power-Strip.jpg

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Quirky is set to record revenues of over $100 million dollars in 2014 after recording $48.7 million in 2013 and $18.2 million in 2012.  A lot of this revenue is created thanks to Quirky’s online community. Salim Ismail is the founding executive director of Singularity University, an educational organization and startup incubator in Silicon Valley, and he says that the online community has allowed Quirky to “scale very quickly” (Simon). At practically every stage of the product development stage, the online community is there with feedback such as on the style of the product or with their expertise in something like electrical engineering.

Inventors who get their product all the way up to development get 4% of revenue while there is an additional 6% that is split between the best feedbacks. It does not seem much but when you consider the starting costs for building a business around a single product to be around $200,000 just to do the paperwork and release a prototype, you might change your mind. There is also a lot of risk involved in getting into retail on your own when you do not have the contacts to get on the shelf, so Quirky would be a lot safer. For many people, like students and teachers, there is little risk and an immediate payoff if it works.  Jake Zein, inventor of the Pivot Power, got $28,000 in the first week of Pivot Power’s release after two years of being on Quirky. Now he has earned $696,343 as a result of his Pivot Power line.

Quirky has many competitive advantages under their business model. They get to keep the ideas that are voted into the development process. The company also avoids costs from the early design stages because of the online community’s validation as potential consumers. It helps as preordering allows recouping manufacturing costs to be a sure thing.

This company is set to grow. While most people do not always act on their innovations, Quirky can make the process a lot easier and less risky. Quirky’s mission to become a catalyst for innovation and it seems apparent to me that it will be.

Sites:

http://www.entrepreneur.com/article/220045

http://online.wsj.com/articles/one-week-3-000-product-ideas-1404332942

https://www.quirky.com/jakezien/summary

Questions

Do you have your own idea that you would like to be made?

Would you team up with Quirky, Shark Tank, or with your own team to get your innovation potentially made?

What do you think of crowd sourcing ideas and its effects?

 

Introducing iPhone 6’s new shape: Bent

Apple reveals iPhone 6 sales

With the recent introduction of the new iPhone 6 and the iPhone 6 Plus, there has been a lot of controversy over one of the characteristics that constitutes its quality.  Both the new iPhones are a lot larger than the iPhone 5, but also a lot thinner. The current trend is moving towards thinner everything, so you might think this is great idea to create a thin iPhone. That is, until you realize that this feature can also turn awry.  As it turns out, in just the first 6 days, 9 customers complained about the iPhone bending from being carried in the back pocket.

For a prominent company such as Apple, which is known for their quality products, these news are terrible. Some might say that 9 is a very low number of instances comparing to the 10 million they sold. But, the publicity this issue is getting can drastically decrease the sales of the new iPhone, and its future products.

 

A company such as apple puts its products through so many different quality control checks, before they reach the market. Employees and machines, at different points in the process have to check the quality before it can move onto the next task. Apparently though, as mentioned in the statement by Apple, “Testing of the phones did not show any problems with bending or warping. IPhone 6 and iPhone 6 Plus meet or exceed all of the high quality standards to endure everyday, real life use.” Nevertheless, it is difficult to believe this issue never came up. Sometimes people overlook quality issues hoping someone else will catch them. And sometimes, it is just too costly to point out quality issues. If a product is already in production with an announced deadline of introduction, a design issue will cause a delay and an additional budget to fix the issue. This will create a bad reputation for the company. However, so will a bad quality product.

 

Releasing a statement that confirms the product has successfully gone through three-point-bending test, a sit test etc., does not fix the issue. Unfortunately the person, who has had their iPhone bent, might not be as happy with the company as he previously had been. And we all know, that the best form of advertising is from friends and family. If your friend has it and it is performing well, you want it. But, the same goes for when your friend has it and its not that great. Then, your opinion of it changes as well. Unfortunately, this may cause Apple to lose lots of loyal clients, and tons of sales.

 

What do you think about the bent iPhone?

Did you purchase the new iPhone? If so, any issues with bending?

Does this change your perspective on apple?

Will you continue purchasing apple products?

 

 

Arthur, Charles. “‘Bending’ IPhone 6.” The Guardian. N.p., 25 Sept. 2014. Web. 19 Oct. 2014.

 

Lego-lution: The Early 2000s were a Disaster and Now

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Continue reading “Lego-lution: The Early 2000s were a Disaster and Now”

The Hunger Games: Apple Edition

Since Apple’s latest press conference, who hasn’t been talking about the iPhone 6? It is easy to say that Apple products are incredibly popular in the U.S., and it is no secret that Apple has been trying to break into other markets abroad, especially Asia. However, few seem to realize the importance Apple has in countries in Asia, not because of their products, but because of the materials that make up their products. In “There’s a Downside to Making Parts for Apple,” Adam Satariano and Peter Burrows give readers a glimpse into the cutthroat negotiations Apple goes through with these companies, and how dependent they are on Apple products. Some companies simply exist because of Apple’s products. For example, 79.6% of Dialog Semiconductor’s, who makes chips within phones, revenue comes from Apple’s revenues. As scary as that sounds, the revenue from Apple is huge; their 79.6% revenue translates into almost $180 million. This seems like a lot of money and the benefits are obviously huge, but the suppliers worry that if Apple switches to a different supplier, as they did with Audience, who makes “mobile audio processors,” they will lose a ton of revenue. In Audience’s case, they not only lost 82% of their revenue from Apple products when Apple decided to use a different company to supply those audio processors, but their shares dropped from $22 to $6. Audience did find a new buyer in Samsung; however, their stocks never reached their heyday of $22 like they did with Apple. TPK Holding, which supplied Apple with the touch controls for the first iPhone, even held an IPO in 2010 because they felt so comfortable and reliable on Apple’s business. However, two years later, Apple decided to change its iPhone design, and began buying the same screens and controls from a rival. TPK Holding’s income fell by 50% in the last year, and its shares fell 73%. All of these companies lost majorly because they thought they could keep Apple around, but they could not.

The suppliers of Apple products are in a dangerous game. Their rises and declines come and go “in large chunks.” Companies often taste the sweet victory of signing a supplier contract with Apple almost immediately. For example, the revenues the companies involved in the iPhone 6 will receive will be huge, especially with a record setting opening weekend. However, there is a scary reality that a lot of these companies, in a few years, could lose Apple’s business, and depending on how reliant they are on Apple, it could be catastrophic.

How do you feel about Apple’s negotiating tactics? Do you think it is smart for these suppliers to go into business with Apple, knowing they could lose a ton of business in the next few years? What do you think the suppliers could do  in order to prevent losing Apple as a client?

Article: http://www.businessweek.com/articles/2014-09-18/some-apple-suppliers-get-cut-off-must-scramble-for-new-business

 

Technology in the Workforce and the Rise of the Nontraditional Work Environment

Technology is changing the way people do business. With applications that create faster overall processes and improved communication, the key to success is often accomplished through the use of the right technology. Managers must be aware of what these changes are and how technology is facilitating them. There are a number of growing trends that demonstrate how the workforce is shifting towards nontraditional work environments and which technologies are being used to support these environments. Remote employees working in virtual work environments are becoming more commonplace in today’s workforce, whether it is through outsourcing work to other countries or US employees based in different geographic locations than their teams/managers. No matter which type of nontraditional work environment, it is clear that technology is a crucial key to success.

There are a number of different tools that a remote or virtual employee can use. Working in teams with people located in different geographic locations requires extra attention on communication. Managers must make sure that remote employees feel included and equal to their non-remote peers. In order to do so, there are a number of technologies that help bridge the geographic gap. Video conferencing allows individuals who are in different physical locations to interact as if they were all in the same place. Having a round-table meeting over video conference allows individuals to express themselves through gestures and expressions. It also creates a sense of familiarity amongst employees since it is a social environment. Another tool is web conferencing, which allows people on different computers to simultaneously view one person’s screen. This allows individuals to host a meeting where they can present to a large group and not have to send out loose documents. Another online tool that allows people in different locations to communicate is Instant Messenger. AIM (AOL Instant Messenger), Gchat (Google Chat) and Facebook Chat all allow you to communicate in real time via text with many other individuals simultaneously.

While these technologies have many benefits, a word to the wise is to be aware of everything that comes along with the use of technology in the workforce. On the positive side, technologies like video conferencing and web conferencing allow many different people to get together in one virtual location. Being able to type at the rate of a normal conversation (through an instant messenger program like AIM) also allows people from far distances to communicate. However, both of these positive benefits have the potential to be negative as well. Video and web conferencing can sometimes be difficult to set up and if the Internet is down you often lose access to many of those tools. Typing a conversation can also lead to things taken out of context because you lose tone and expression. Overall, technology can be used successfully as long as individuals are mindful of the potential roadblocks.

Have you seen nontraditional roles emerging in your work environment? What technologies does your company use (or have you personally used) to help you stay connected to your peers?

Nike Relationship with Livestrong Charity Dies!

A relationship that generated millions and branded Nike to what it is today has finally come to an end. After a nine year relationship, Nike is closing down its support with the Livestrong Foundation that former bicyclist Lance Armstrong has created to help cancer survivors.

Livestrong-Nike-Cancelled
NIKE LIVESTRONG DISCONTINUED

The footwear company is pulling the plug on all Livestrong merchandise off of store shelves. I know exactly what all of you are thinking, “Wait a Sec! That means no more yellow Livestrong wristbands?” Yes this is exactly what it means. They are discontinuing all footwear and clothing, so the shoes you just bought last week that retailed over $100 will now be worth nothing. Nike has generated over 100 million in funds to the foundation since 2004 and during the time accounted for about a quarter of Livestrong’s average yearly revenue.

The foundation said that change in its relationship will have no affect on the services it provided to cancer survivors. Nike said they would continue the support in other ways, but they weren’t able to provide specifics at the moment.

The company ended the sponsorship last October after becoming aware to the news of Lance Armstrong using performance-enhancing drugs and lied to Nike for over a decade. Mr. Armstrong is now resigned from chairman of the foundation and dissociated himself from Livestrong.

Stores like Dick’s Sporting Goods and Sport Authority are now severely hurting due to heavy inventory of Livestrong merchandise of exercise equipment and clothing that failed to sell. Consumers have already turned their back on the brand that was once so dominating and meant so much. The foundation that is based in East Austin, Texas, is looking for a new outlook and a way of rebuilding itself to what it used to be. A Spokesperson for the foundation said, “We want to steer a strong and independent course that ensures the long-term health and sustainability of the organization.”

The foundation has derived 1/3 of its budget from corporate and licensing sponsors, 1/3 from events, and 1/3 from general fundraising, according to chief executive Doug Ulman.

Livestrong still has some corporate sponsors, and still in the works for seeking more. “The foundation has taken other steps to reinvent itself, including moving its “call-to-action” day—which was celebrated on the anniversary of Mr. Armstrong’s cancer diagnosis—to May 17, the day that its yellow wristband was introduced.” The foundation has started new relay marathons all throughout Austin, while ending the sponsorship with the Austin Marathon in April after three years being the top sponsor. Nearly 500 runners associated with Livestrong have already raised $250,000 this year.

I just feel that after the foundation was basically led by an imposter is going to be really hard for the company to regain its trust in its consumers and hard to rebuild itself after an impact like this.

WILL THE FOUNDATION BE ABLE TO REBUILD THEMSELVES AFTER NIKE DROPPING THEM?

WILL THIS AFFECT THE QUALITY OF THE SERVICE THE FOUNDATION PROVIDES?

 

Sources:http://online.wsj.com/article/SB10001424127887323855804578511271244741516.html#articleTabs%3Darticle

 

Spirit Airlines: We Know You Hate It, But We Don’t Care

Spirit Airlines is an American airline company that is known for having low-cost flights. The company is more concerned about the prices they give out rather than the complaints they are receiving. Spirit has been acquring their fair share of criticism from customers and the media. A survey was made of some 16,000 customer ratings and Spirit Airlines was among the bottom of the list for flying in America. “That report did not ask the one big question of who offers the best prices. And hands down, the No. 1 thing we’re told by our customers is that the price matters,” says Spirit spokeswoman Misty Pinson. Let’s be honest, would you complain about a flight that is two and a half hours long and only cost 75 bucks?

Spirit AirlinesThe company strives to make the price for flights as low as possible. They have an average base price of only 79 dollars. One thing that customers hate about Spirit Airlines is the fact that they charge fees before and during the flights to passengers. These fees can add up to be 40 to 50 dollars for the majority of customers. Spirit Airlines does not even offer a free cup of water or have a video system while the passengers are in flight. There is not much leg room either so you are cramped, regardless of how short you are.

The airline company believes that is what the Spirit customers want when it comes to this airline business. Spirit believes they have travelers who would most likely be getting a bus seat if their airline service was not available. The Chief Executive Officer Ben Baldanza says, “Well, what we say is that we care about what our customers care about, which is price, and one of the things that Consumer Reports survey didn’t ask is where do you get the lowest fare? And so they asked about leg room, and they asked about check-in, and they asked about bag fees, and things like that. But the total price that customers pay on Spirit Airlines is less than they pay on anyone else, and that’s why they love us.”

Spirit Airline company should not be upset by all the criticism coming their way. Spirit is a very solid business as their sales rose 23 percent in just the past quarter. The planes are fuller than the rest of the other airline companies. The company has a rate of 85.1 percent in the first quarter  of 2013 when it comes to flights being full. That makes the company really profitable as they move forward.

The airline company still gets a lot of negative feedback from the press even when they are succeeding. So, is it fair that Spirit Airlines is getting this terrible assessment from the media when they are making profits and almost all of their flights are full? Does the base price really trump all the niceties that other airlines offer?Or should management try to improve their baggage fees and legroom in the flights in order to please the customers more?

Links:

http://www.businessweek.com/articles/2013-05-23/spirit-airlines-doesnt-care-if-you-hate-it

http://money.cnn.com/2012/05/03/news/companies/spirit-airlines-fees/index.htm

http://aviationblog.dallasnews.com/2013/05/spirit-airlines-ceo-we-have-the-lowest-prices-and-thats-what-customers-care-about.html/

Mass Customization: Tailoring To The Individual

NIke, Dell, and Swatch

The system of mass customization benefited manufacturers by offering services and achieving greater customer satisfaction and brand loyalty. In addition, customization brought greater advance information on market trends and reduces inventory. Usually, many companies cannot handle the mass customization system because of the way how their supply chains are designed and optimized for producing predetermined amounts of stock.  Because of this, some manufacturers believe that the profit margins are too low for those who adopt the mass customization system, and thus the system is not economically feasible since it depends on the type of the product.

To increase sales, most manufacturers integrate the most common appealing features into their products to move units.  Conversely, the ideology of mass customization is that every aspect of a product will be tailored to a customer specifically.  For example, Swatch, the world’s largest watchmaker company, produces standardized internal mechanism components en masse, but also offers a wide variety options such as colors, straps, faces, and so on. The idea of a personally tailored product has been adopted by prominent vehicle manufacturers, computer manufacturers, and many more.

Dell, as another example, has demonstrated the idea of mass customization and utilizes it to allow their customers a very personal PC experience. Dell allows customers to assemble their own desktops and laptops online by customizing components such as, hard disk, graphics cards, processor, memory (RAM), and other options before assembly and delivery.  Amazingly, Dell manages to offer a fair amount of variety with their components, but achieves the lowest cost of production in the entire industry, leveraging the benefits of e-commerce and mass customization in selling directly to customers.

Both Swatch and Dell offer personalized experiences, but these two manufactures do not offer an unlimited number of choices.  Instead, companies learn what sort of spectrum that customers would be comfortable purchasing in and adjust the limits accordingly so that customers will end up happy with both their product and service.

Nike, as the most popular sports equipment manufacturer in the world, pioneered many ideas in the industry of mass customization. In spite of this large number of products tailored to golf, basketball, tennis, and soccer enthusiasts, operations managers at Nike have improved product quality while reducing overall costs. Nike allows customers to customize many of their products. For instance, customers can print their own names and numbers on shoes as well as customize their shoe strings to different color. Consequently, these practices boosted sales of Nike products to phenomenal levels, smartly marrying the links between sales, production, design, supply chain, and logistics.

The greatest downfall of mass customization is wait time.  Considering that each product must be tailored to a specific customer, often being done by hand, it will take longer to be in a purchaser’s possession.  That is where uniformly mass produced products are advantageous, as they do not have to meet a specific criteria.  In addition, most custom products cannot be returned to a manufacturer, since the item was created specifically for an individual and the likelihood that that product would meet another person’s needs exactly is slim.

 

Should more businesses adopt the idea of tailoring a product to an individual’s needs?

 

 

 

 Sources:

“Combining Elements of Mass Production with Those of Bespoke Tailoring.” The Economist. The Economist Newspaper, 22 Oct. 2009. Web. 23 May 2013.
http://www.economist.com/node/14299807

Mello, Adrian. “Mass Customization Won’t Come Easy.” ZDNet. N.p., 19 Dec. 2001. Web. 23 May 2013.
http://www.zdnet.com/news/mass-customization-wont-come-easy/296569

“NIKE ID – The First Example of Mass Customization Driving Profit? | Crossroad Innovation.” Crossroad Innovation NIKE ID The First Example of Mass Customization Driving Revenue Comments. N.p., 10 Sept. 2010. Web. 23 May 2013.
http://www.crossroadinnovation.com/nike-id

“NIKEiD.” Mass Customization. N.p., n.d. Web. 23 May 2013.
http://www.mass-customization.com/custom-shoes/nikeid/