Which products should you push first?

Walking past my local grocery store today I noticed a sign that that said “Ice cream. On sale.” Now for those of you from the warmer parts of the world let me underline the fact that I am from Norway and in Norway only a very special segment of the populations yearns for ice cream in December. It came to my mind that this grocery store probably had left over ice cream from the recently concluded ice cream season, which they were afraid would go bad if they didn’t sell it soon.  But was this really a good idea?

It occurred to me that if they advertised packets of instant hot chocolate instead they would sell much more extra units than if they sold boxes of ice cream. So I thought to myself, let’s assume that a packet of instant hot chocolate cost about the same and have approximately the same margins as ice cream, should they advertise for ice cream or hot chocolate? It is important to underline that if they sell one extra hot chocolate they would have to buy an extra one from the grocer while in the case of the ice cream they would have to throw away that which is not sold. Given that the price and margins for both goods are, well let’s say $5 and 20 %, we can see that only if the sign sells five times as many boxes of hot chocolate than ice cream the store should focus on selling hot chocolate. Let me explain that again.

Since the alternative to selling the ice cream is to throw them away, both the 20 % margin and the already spent 80 % purchase price counts as profit for the ice cream. If the store can sell 1 additional box of ice cream it makes $5, since the alternative is to throw away the box. If the store sells one additional carton of instant hot chocolate it only makes $1, because the alternative was to order less hot chocolate next week, and thus avoiding the $4 expense it would mean to buy an extra unit. Because of this the store should keep selling the ice cream if it is more than 20 % as effective as advertising for the instant hot chocolate. Also you shouldn’t throw food away.

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Google vs. Newspapers: Why Murdoch is right and why he will fail

Murdoch is right. By taking stories of Google, his customers will have to come to his site to read the news there. It has worked for Schibsted in Norway, but then again, they have a virtual monopoly on country wide news (at least a very high share). If more newspapers follow Murdoch, it will work for them to, but it is unlikely that it will work if only News Corp. Newspapers follow this practice. This may be viewed as a prisoner’s dilemma game. If no newspapers choose to have their news on Google, then the entire newspaper sector will benefit, because consumers will be forced to go directly to the sites they wish to read news from, and thus watch the ads, or pay for the content. However, in such a scenario each individual newspaper will benefit relative to the others should they choose to index their sites, because they might up their share of readers. Therefore it is likely that Murdoch will be alone outside of Google Search and Google News, and loose readers due to it.

If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.

Fu the FAQ - or do it right!

If you own a website, my challenge to you is that if you ever create an faq, don’t guess what people would ask. That’s just stupid. Wait until you actually get questions! I’m so incredibly tired of clicking the faq link and getting to a site where the first 50 questions was probably never asked. Your faq is a place to go to get answers, not another advertising channel. If your most frequently asked question is “Why is *** better then everyone else?”, then something is wrong, ok! No one has ever clicked a faq link to get that answer. You see Microsoft does this right. On the IE8 faq the most asked question is “How do I uninstall IE8?” isn’t that just honest?

Storytelling continued

Carmen Agra Deedy is a brilliant storyteller and a children’s books author. Originally from Cuba, she moved to the United States when she was a child. Recently I came across a video of her telling a story at TED, and because my last post was long and tenuous, without any video it seems fitting to add another post with this incredible storyteller. Watch the video, and think about what tools she uses to get you excited about the next part. Where do you get physical reactions? What emotions flutter through you? Do you like her as a person? Why / why not? These are the answers that any good storytellers need to understand.


Talk by: Carmen Agra Deedy tells a story. Settle in and enjoy the ride -- Mama's driving!

Predictable irrationality: Why we are wrong!

 A central theme in marketing as well as leadership is the question of: how do we make decisions? It seems suitable to kick of this new blog by saying some words about this. For most people that have either studied psychology or business it seems like a cliché to say that humans have long been looked at as rational actors, when we are really not. Stating this over and over has little or no value, but the question is: why are we systematically wrong? This is a topic that is intriguing to me, and the other day I came over a series of short lectures (13 x >5 minutes), that shed some light over this question, the introduction follows:

Lecture by: Dan Ariely, author of "Predictably Irrational" and Professor of Behavioral Economics at Duke University

To see all the chapters go to http://www.predictablyirrational.com/?page_id=7. Click the pictures on the right to open the videos, I recommend viewing them in the order they are presented.