Smart Phones are Taking Over the World

As technology becomes more readily available for the masses consumers are becoming more dependent on the technology to perform daily functions. The development of Smart Phones has led to consumers to have a powerful computing power. The introduction off applications on these phones (apps) has become a revolution to younger generations. The applications can be uses as a GPS, an MP3 player, and even a Debit Card. Starbucks has taken a bet on that the use of smart phones as a debit card system will help boost their revenues this quarter. The concept is relatively easy the user purchases a debit card account through the application and then scans what their buying through their smart phone through a list of bar codes at the POS stand.

Starbucks believes that the use of the new system will cut down on waste by increasing the sales turnover within each respective store. Consumers will now be able to save time and not have to carry another debit card according to the this article. All in all, the use of smart phones is only going to be more prominent in the future so I believe the move by Starbucks is a strategic move.

"Hit or Miss"! Groupon is Here to Stay

The concept is relatively easy, a promotional company promises a retailer a bulk order of sales and in return the promotional company receives a group discount which eventually ripples down to the consumer after the promotional company makes a profit. Group-on has taken this simple business model and injected it with whatever "Lebron" was taking.

Group-on has revolutionized how companies can increase their sales by providing promotional discounts. Companies that use these services have seen drastic increase in consumer traffic, but do these cyclical increases stay constant after the promotion is over. The overflow of new customers created by the Group-on promotions creates a new hurdle for small companies. How should companies take into account extra labor and other extra costs when considering the Group-on promotions. Should they hire temporary workers and increase their inventory levels to temporarily meet this phenomenon of increase demand or is this new constant demand a new "normal" that management has to deal with by hiring permanent employees and changing their inventory ordering process.

Moreover, the use of Group-on requires retailers to provide services/products well below their profit margins, and at times may even take a loss when using the Group-on services. Critiques of Group-on in the article "Should Your Company Use Group-on to Increase Sales" have suggested the bottom line is that Group-on is a powerful tool in fulfilling customer acquisitions (new customers), but beyond that Group-on may require the retailer to markdown their products by as much as 50% on top of a variable cost of $2 per transaction. Thus, leaving the retailers to function well below their respectable break-even points. Should companies bet on Group-on promotions to potentially reap the benefits of increasing their consumer base, or is the risk of taking a loss now in order to possibly increase their consumer base too risky for companies.

Nevertheless, Group-on has proven to be a successful tool in increasing revenue for companies. In fact, as the above article states, Group-on led Gap to attract 11 million in revenues from just one Group-on promotion. The use of the promotion was so successful that Gap's website crashed due to the increase web-traffic to their website. Moreover, Dan Yoo (see my previous blog), a restaurateur in Chicago, has been able to quantify that demand not only increased during the promotion but also stayed constant after the promotion was over leading him to increase market share. This proves that Group-on is successful for certain businesses/business models, and business/management should take into account that the use of Group-on may not increase their bottom-line: profit, but has the potential to increase their consumer base tenfold.

Social Media the New Tool for Small Businesses

The existence of social networks has been around since the stone age. People have formed social networks in the past for trade, politics, friendships, and knowledge. Marketers in the past have used existing social networks to take advantage of viral marketing as a way to spread brand awareness of their products or services through existing social networks. Viral Marketing relied on word-of-mouth awareness in hopes of capturing potential customers. The use of social networking in the market place today consists of new innovations such as Facebook, Twitter, and even Blogging.

The innovations of Facebook and Twitter has made social networking an attractive tool for small businesses. These networks has made it possible for  in order for businesses to facilitate "beneficial exchange relationships" that add value to their product/service. The tool is extremely attractive to small businesses because of the relatively cheap start-up cost and the potential for attracting new customers through the social networks. The use of social networking has led to businesses increasing their market share in their respective industry. Specifically, the use of Groupon (a social network that provides group purchase discounts to consumers) has made it possible for small businesses to gain market share and maintain this market share even after the promotion was over. The following article shows how a restaurateur in Chicago, Dan Yoo, was able to utilize Gourpon to not only increase sales through the use of promotions but also maintain the increase in sales even after the promotion was over due to increase of awareness of his business.

On the other hand, the use of social networks has drawn negative feedback from various sources. Although the relatively low start-up cost of these networks the maintainability of the networks require extensive time and effort (time=money). The possibility of negative consequences from the network could potentially reach a large amount of brand loyal customers, and therefore could potentially destroy the image of the brand. All in all, social networking is here to stay and businesses are finding new ways to utilize the networks in order to maximize their profits, maintain relationships, and provide added-value to their consumers.

Mind Control!

New developments in technology has led marketers to use a new processes to exchange information with end users the result: Neuromarketing.

Neuromarketing in easy-to-understand terms is the use of different technologies (magnetic imaging, EEG) in order to measure consumers brain responses to certain information. The marketer may use this information to find out what consumers do and do not like. The processes has been found to work. Studies have shown that Campbell Soup has introduced a new label campaign in response to research they have done on consumers through Neuromarketing. In addition, the use of Neuromarketing has led Frito Lay in developing a new ad campaign.

The use of Neuromarketing has made it more clear for marketers to distinguish between likes and dislikes of consumers. Unlike conventional methods such as market research analysis the use of Neuromarketing gives companies definite answers as to like and dislikes of products/services. The use of focus groups in the earlier studies found that when people were asked if they liked a particular feature of an item most answered "yes" when they actually "didn't" like the feature. This gives companies better use of information they receive when marketing.

Neuromarketing in the twenty-first century means companies now have the access to get inside our brains to really know what we do and don't like. Now we can look forward to companies producing what we exactly want. Right....!