Scene From Above

Will the Market Crash in 2011?

That the state of the economy has a significant effect on business operations should be clear. When the economy is doing well, businesses do well (sometimes even with poor strategy and management), and when the economy is doing poor, companies follow suit. One of the proxies for the state of the North American economy is the Dow Jones Industrial Average.

While the Theory of Efficient Markets suggests that it is impossible to accurately predict which way the market/economy will go, that hasn’t stopped people from trying. While demographics may provide little insight into how the market will behave, there is an interesting pattern that emerges if you look at the percent change in the Dow compared to the percent change in live births.

Now to see this pattern, you need to compare the Dow and with the number of live births 46 years prior ¹ (i.e., the number of live births in 1950 suggests where the Dow will be sitting in 1996). Interestingly, 46 is the approximate number of years (18-65) that an adult is expected to be active in the workforce. Although our work habits have changed and many people are choosing to delay their entry into the workforce to pursue higher education, there may be something here.

Nevertheless, if we project this pattern into the future and it continues to hold, the Dow could face the following future and experience a huge drop in 2011: ²

While many things can happen to change this pattern—and there is no guarantee that it will play out—North America is an aging society, and most people’s wealth is tied up in the stock market in the form of pension plans. People still have expenses once they retire, and if they’re not working, they need to get money from somewhere. And for most people, that money’s going to come from selling off their investments in the stock market, and that will lead to falling prices and a recessionary economy that will likely have a global impact.

Even though this pattern may not repeat itself, the “sudden” retirement of a large number of people from the workforce will have a significant impact on the economy, not only because they will still need some form of income, but because they’re taking valuable experience with them when they leave companies. What kind of long-term plans does your company have for these possibilities?

Chris Gbekorbu – Visionary

July 4th, 2007 Posted by Chris Gbekorbu | Demographics | no comments

Core Competencies and How to Market Video Game Systems

Knowing your core competencies is key to successfully marketing any company or product. When it comes to video game systems, believe me, I’m no expert, and I don’t play video games.¹ But some of my fiends are, and on occasion, I’ve been drawn into conversations about the game consoles currently on the market. Between the Wii, the X-Box 360, and the PS3, I honestly have no idea which is the better system in terms of hardware or game experience. But I do know marketing and that in certain instances, these consoles were marketed well, and in others, not so well.

When I think of Nintendo, X-Box, and PlayStation, the first thing I think of is: video games, video games, and electronics. Why? It all comes down to the initial branding. Nintendo has always been a video game company. While the X-Box is produced by Microsoft (a software company), for me, the association between Microsoft and X-Box was never made—it’s always been referred to as “The X-Box.” The original PlayStation, on the other hand, was usually called “the Sony PlayStation.” It wasn’t until the PlayStation 2 (PS2) was introduced that the Sony brand name was disassociated from the console.

So how does all of this relate to the current console wars? If you look at Nintendo’s history in the gaming market, you see that it has always been a family-oriented system, with games being targeted primarily at young children and their parents. In contrast, games for the X-Box and the PlayStation are targeted more at teenagers and adults (think Halo).

Nintendo stayed focused on its core competency and developed a system and games that would appeal to families. Sure the graphics pale in comparison to those of the X-Box and the PS3, but are cutting-edge graphics necessary for a family gaming experience? Not really. And so the Wii doesn’t even try to compete in this area. Rather, it focuses on producing games that the whole family can enjoy and offering distinct features that the other systems don’t. Given the demographic situation of an increasing number of young children and a growing elderly population, the Wii is well positioned to capture both ends of the market. Add to this fact that the Wii encourages players to be physically active—something that is sorely lacking in today’s society—and the Wii is a great video game system that can be enjoyed by everyone.

Compare this with the X-Box and the PS3. Both of these systems are targeted at the same audience—teenagers and adults who are interested in violent and sexually suggestive games. Both of these systems are in direct competition with each other, and offer similar features. While I’ve been told that the hardware in the X-Box isn’t as great as that in the PS3, the only real significant difference between the two (from a gaming experience point of view) is the storage medium. The X-Box uses HD DVD while the PS3 uses Blu-Ray.

Although there will eventually be a winner in the HD DVD vs. Blu-Ray format wars (and with Blockbuster announcing that it will carry Blu-Ray titles in all of its stores,² and people canceling orders of HD DVD players, this could happen soon), should gamers really care? Now maybe it’s because I don’t play games, but I don’t think so—all gamers should care about is whether or not the system provides a good gaming experience, regardless of the hardware.

And this is where Sony has failed in marketing the PS3. Rather than trying to serve a niche with no real direct competition (Nintendo), it chose to compete head-on with the X-Box which is a gaming system backed by years of software development experience (Microsoft). Furthermore, the X-Box doesn’t have the association of being part of a company that is an expert in another field. Combine this with the fact that Sony marketed the PS3 as a video game system with a price that is significantly higher than its competitors, it’s no wonder that the PS3 has been a disappointment.

Quite simply, Sony is a consumer electronics company, not a video game company. Although the PS3 seems to be technically superior to the X-Box and the Wii as a gaming system, the reality is that it is so much more than a video game system. Rather than trying to market the PS3 as a gaming system, Sony should refocus its efforts on marketing the PS3 as a consumer electronics device. Sony has already demonstrated that it can succeed in computers with its Vaio line. Why not position the PS3 more like a computer with many uses as well as being able to play games rather than simply as a gaming system? The PS3 is already fairly portable, and at $500-$600 makes a very cheap and powerful “laptop.”

Chris Gbekorbu — Visionary

June 23rd, 2007 Posted by Chris Gbekorbu | Marketing | no comments

How to Define Your Audience

In the 4 Elements of Successful and Good Writing I introduced the concept of SOAP and suggested that the Audience is the most important element to consider when writing.

As I suggested, the audience is so important because even if you get the other elements right, your writing still has to appeal to people and make them want to keep reading.¹

So how do you make your writing appeal to readers? Previously, I defined the audience as the who you’re writing for and the how you’re approaching your subject. While you’ll probably never know exactly who your audience is, you can make some reasonable guesses as to who is likely to read what’ you’ve written. Ask yourself, “Who do I want to read this?” Answering that question helps you to clarify who your audience is.

For instance, if you’re writing about statistical methods in marketing informatics, it’s safe to assume that your audience will be made up of marketers and other business professionals. Similarly, if you’re writing about nature symbolism in King Lear, then your audience will probably be Shakespeare scholars and English critics.

Knowing who your audience is (or is likely to be) is quite useful because it helps you to shape the rest of your writing and fill in the answers to the following questions:

• What kind of language will you use and how much jargon?
• What kind of information should my reader already have?
• How much information do I need to include?

With the statistical methods in marketing informatics example, if you’re writing an introduction to the subject for people who have no idea what your subject is, you need to keep your writing relatively free of jargon (or at least explain your jargon) and very broad. You’d also probably want to point your reader where to go to for more in-depth information about certain topics. Similarly, if you’re writing about nature symbolism in King Lear for Shakespeare scholars, you can use a lot of jargon and focus on the symbolism rather than having to tell the reader what symbolism is.

Although all four elements of SOAP are important, the audience is the most important to get right because without it, people aren’t going to read your words. By simply taking a few moments to think about who you want to read what you’ve written and what they need, you can easily write something that more people will want to read.

Chris Gbekorbu - Visionary

June 15th, 2007 Posted by Chris Gbekorbu | Communications | no comments

4 Elements of Good and Successful Writing

Although anyone can write, not everyone can write well. There’s a lot more to it than simply typing your thoughts onto the screen. While spelling and grammar are important and help to give your thoughts more authority, these alone don’t make for good writing. When I teach students how to write, I always emphasize what I call the SOAP—the Subject, Occasion, Audience, and Purpose.

• Subject: the WHAT you’re writing about. While you can write about anything, you generally should a have strong interest in your subject before trying to write about it.
• Occasion : the WHEN and/or WHERE—the context for your writing. For example, are you responding to some world event? Are you writing an email or a report to a government committee?
• Audience: the WHO you’re writing for and HOW you approach your subject. Although you’ll probably never meet your readers, who are the people you want to speak with and how do you get their attention?
• Purpose: the WHY you’re writing. The reason(s) your audience should care about what you’re saying. You’ll usually have many purposes (e.g., informing and persuading) to your writing.

While all four elements interact with each other, the audience is the most important. You could write the most brilliant piece on a subject that everyone cares about, but if you mess up who you’re writing for and how you approach the subject, your efforts will probably be wasted. I’ll have another post that looks at the audience in more detail soon.

Writing well is a skill that comes with years of practice. This doesn’t mean that you can’t be successful right away—I’ve seen students improve dramatically in a number of weeks simply by keeping these four elements in mind.

Chris Gbekorbu — Visionary

June 8th, 2007 Posted by Chris Gbekorbu | Communications | no comments

Border Security and the Spead of Infectious Disease

Last week we were told about Andrew Speaker, the Atlanta-based lawyer diagnosed with a drug-resistant strain of tuberculosis. Although investigations are still ongoing as to how Mr. Speaker was able to leave the United States and travel throughout Europe before returning to the US, we do know the following: Mr. Speaker knew he was infected with TB before leaving the US, while in Rome he willfully disregarded health officials’ warnings not to travel, he knowingly attempted to sneak back into the US through Canada, and a US border inspector disregarded the security warning flagging Mr. Speaker as an entry risk.

While this incident does raise a number of security concerns, the public health issues and their consequences are equally as important. As shown in the map below, Mr. Speaker traveled to many countries and would have come into contact with a number of people. Although he doesn’t appear to be contagious at this time, the possibilities if he was are frightening.

Andrew Speaker’s Travel Plan. (Map created using Google MyMaps.)

Health officials are currently looking for 80 passengers who sat close to Mr. Speaker to screen them for TB. (This doesn’t include any of the people that he came into contact with while traveling through Europe. Think of how many people you come into contact with on a daily basis.) Now suppose that only eight of those people (10%) get infected and become contagious.¹ If each of those eight people come into contact with another 80 people, and those infected people come into contact with another 80 people, the number of infected people is:

Now while TB isn’t very aggressive and Mr. Speaker showed no signs of being sick, suppose he had been carrying something more virulent and that made people sick in 2-3 days. In less than a week, more than 10,000 people could be infected and contagious—all from one infected person. Since this would happen so quickly, it’s possible that health officials wouldn’t be able to respond that fast, and the number of sick and dying people could rise considerably. And because of international travel, something like this could spread across the world in no time.

Limiting the number of people infected is one of the best ways to stop the rapid spread of disease. The fact that health officials knew that Mr. Speaker was infected with TB and that he was able to travel to a number of countries and risk the health of many others suggests that we need better global monitoring of infectious diseases. As I’ll show in a future post, the business and economic implications for failing to do so are staggering.

June 5th, 2007 Posted by Chris Gbekorbu | Pandemic | no comments