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“Fashionista” here at my fabulous local library again.

That’s right, I took another test and completed Lesson 3 on consumer behaviour.  I am on a roll… 

It was another informative chapter on the consumer buying habits—the “why, when, and where” of it all. This lesson really gave me a better understanding for and a direction of who I want my target consumer to be. I already had a good idea, but this lesson REALLY helped me to better understand my target consumer.

So, what are my dreams, goals, and aspirations?

I WILL become the successful owner of a small specialty store that caters to the more curvacious women in the nation. Yes, I said the NATION.  

Starting with one store here in my new home city, I plan to make waves that will eventually lead to a tsunami.  I’d like to open chain stores in not only the major cities like Atlanta, Miami and New York, but smaller cities too.  

Even small towns have divas…

My chain stores will carry clothing that I purchase carefully as a buyer for my target market.  Once my chains are up and running, I will then open up a few boutiques featuring custom designs by myself and other fashion minded designers.

I want to be a Brand. Clothing, shoes, accessories—the works!  

Fashion week! Global recognition!  Non profit organizations for the empowerment of young women!

I guess you could say I want it all. But hey, why want less if I can strive for much more? 

Evita a.k.a. “Fashionista”
Student
Ashworth Fashion Retailing Program

 
               Thanks to Chris Metcalf for permission to use this Photo.

In the hyper-competitive business environment of today, there are millions of dollars invested and mistakenly often wasted by companies looking for the “next big thing,” the elusive innovation that will electrify the marketplace.  When most people think of innovation, they automatically consider it in the technological sense, but innovation means much more than producing a faster computer or a telephone that doubles as a home entertainment system; innovation is ultimately about ideas.  In the following video, innovation expert Charles Leadbeater discusses how innovation isn’t just reserved for the corporate giants with infinite capital, but rather how independent thinking entities, people like you and me with a vision, are now empowered like never before to compete in the marketplace on our own terms.  I found this presentation both informative and inspiring.  I hope you feel the same way after viewing it and approach your next lesson with a sense of enthusiasm.  Click on the image above to watch this video. 

Ryan Rode
Interactive Services Manager
Ashworth University

              Thanks to Mzelle Biscotte for permission to use this Photo. 

Any organization in which you find employment will have a variety of managers who have a variety of responsibilities.  A typical business will have sales, operations, financial, and other types of managers, each with a different viewpoint on what it takes for the company to succeed.  In smaller enterprises a manager may wear several of these hats.  In a large corporation managers tend to be more specialized, either as to their duties or their geographic area or product line. 

These managers speak different “languages” and sometimes the result can be a virtual Tower of Babel.  For an example of this, you might try sometime asking an accountant, a plant supervisor, and an engineer what it costs the company to make a particular product.  Having completed this course you should now be able to communicate effectively with a financial manager, and you should also know how to read and interpret financial statements, determining what they’re telling you and what they aren’t.  Armed with these skills you now have the ability to ask the right questions to make better decisions both as a manager and as an investor.  And you can appreciate why the accountant, the plant supervisor, and the engineer would look at “cost” differently.  You needn’t expect them to all agree, so long as you recognize how you need to view the cost of a product. 

Whatever profession you choose, if you’re not already tied to one, you’ll need to master its language and those of professions tied to individual departments, as well.  These could include production, purchasing, materials management, human resources, sales and marketing, and even corporate legal disciplines.  This is the purpose of a general business education such as the one you are pursuing at Ashworth University. (more…)

           Thanks to Richard Summers for permission to use this Photo.

Sometimes technology is driven not out of necessity or productivity, but simply in the name of technology. I will let you decide on this one. Earlier this year, Papa John’s Pizza initiated a partnership with a private firm called trackmypizza.com. Drivers carry GPS-enabled handsets that feed location data to a TrackMyPizza server. There, the data is coupled with the customer’s phone number, providing location updates every 15 seconds. Customers simply go to www.trackmypizza.com, order their pizza and can then watch their delivery in real time.

Not all franchises have adapted it as of yet, but an eleven store chain in Alabama that did the initial test roll out experienced a 100% increase in online orders, which provides substantial savings to the chain versus the traditional order taking. Not to be outdone, Dominoes is supposed to unveil its own on-line pizza tracking system which will even track the pizza through the kitchen as it is made. One can only imagine what is coming next.

Brad Rudisail
Computer Network Technician-Network Security Instructor
Ashworth University

                 Thanks to jean poole for permission to use this Photo. 

I’d like to discuss the challenges of accounting for stock options used as compensation.  Stock options are very popular with start-ups and firms expecting high growth.  The reasoning is simple.  Both types of firms have huge cash flow needs today.  If they had to rely on salaries to attract employees, they most likely would not be able to afford the talent they really need to grow the business.  By awarding their employees stock options, the right to buy stock in the future, they delay part of their compensation expense.  Stock options give their holders the right to buy stock in the future at a specified exercise price.  Typically, the exercise price is higher than the current market price of the stock.  This gives employees incentives to take actions that will raise stock prices, including actions that favorably distort earnings.   

The problem with stock options is that the company records no compensation expense for them.  When an employee exercises an option, the firm must have a share to sell to the employee at the exercise price.  Usually employees do not exercise their options until they are “in the money,” meaning the market price is higher than the exercise price.  At this point, the company has to buy back stock at the higher market price to sell to employees at the lower exercise price or issue new shares or issue shares from treasury stock.  In any event, this is a real cost to the firm.  Currently, this expense does not appear on the income statement.  It has only recently become a requirement to disclose the expense in the footnotes to the financial statements.  For a company like Microsoft that makes extensive use of stock options, this severely overstates reported earnings. 

I discuss a couple of increasingly popular tricks used by struggling companies to boost reported earnings in your lesson reading assignments.  The first is stock buybacks for the purpose of reducing the number of shares outstanding.  By reducing the shares, the EPS rises.  This causes the stock price to rise.  The important point is that no value is created in this transaction.  The same earnings are now concentrated in fewer hands, so price per share will go up even though total market value is constant. 

Another troubling development is the creation of earnings definitions other than net income.  In order to distract attention from earnings reported according to GAAP, companies will often present alternative definitions of earnings such as pro forma earnings, core earnings, or EBIDTA.  Their argument is that GAAP earnings are not representative and the firm is trying to present a more accurate figure for its true earnings potential. The problem with this is twofold.  There are no accepted definitions for any of these alternative earnings measures.  Second, in practice, the items excluded from these earnings calculations tend to be ones that lower the firm’s earnings in that accounting period.  Beware of the firm that presents “pro forma” earnings.  The correct use of that term means forecasted earnings in the future.  Firms today are increasingly using the term to mean, “This is what our earnings would have been if all these bad, non recurring things had not happened to us.”  Often these things include depreciation and interest—I certainly don’t think these are non-recurring expenses!

Lee Woodward, CPA
Financial Statements Instructor
Ashworth University School of Business

Consumer confidence (the term used by the Conference Board) and consumer sentiment (the label used by the University of Michigan) are not quite at their all-time lows, but they are very close to them.

This seems a little odd because two of the biggest elements of consumer attitudes, unemployment and inflation, are quite benign.

Unemployment, at 5.5 percent, is a hair below its long-run average (5.6 percent).  Inflation (all items) is 4.1 percent, only a little above its long-run average of 3.7 percent.

Why the doom and gloom? (more…)

            Thanks to Juria Yoshikawa for permission to use this Photo.

When I was the account executive on Mr.  & Mrs. “T” Cocktail Mixes, the responsibilities of the advertising agency extended beyond creating advertisements.  The agency also prepared shelf talkers, table tents, and other point-of-sale items.  The client directed us to produce these promotional items because he wanted the product advertising incorporated into all trade and sales promotion materials. 

For example, “T” ran print ads in trade magazines targeting the grocery trade and the retail trade.  The objectives were to convince grocery buyers to carry the Mr. & Mrs. “T” brand of cocktail mixes.  For the retail trade, the objectives were the same: to convince bars and restaurants to buy and sell the “T” line of products.  These advertisements utilized the same visual as the consumer ads.  This strategy recognized that trade buyers were also consumers, and likely to see the same ads.  However, the ads included modified copy, which spoke directly to the trade audience by addressing their needs.  The copy detailed the advertising support behind the Mr. & Mrs. “T” line of products.  This information was included to encourage purchases by demonstrating a consumer pull strategy.  The copy encouraged grocery chains and retail outlets to carry the full line of products to fulfill anticipated consumer demand. 

We also developed sales sheets for use by the “T” sales force.  The front of the sell sheets featured, once again, a consumer print advertisement.  The back of the sell sheet summarized the consumer advertising schedule.  The Mr. & Mrs. “T” sales force used the sell sheet on sales calls with brokers and retailers to demonstrate the advertising support behind the brand, and encourage clients to buy the “T” line of cocktail mixes.

Furthermore, the agency developed contests to provide additional incentives to the trade to purchase the line of cocktail mixes.  The media planners and the account team negotiated merchandising with the various consumer magazines chosen for the media plan.  Southern Living and Sunset magazines were included in the media program in part because of their high reach against the grocery trade.  (Research had shown that many purchase decision makers in the grocery store business read these magazines to keep informed of product introductions and consumer products for their stores.)  Magazine merchandising supplied by these titles included tickets to college football bowl games.  The client used these tickets as incentives for grocery buyers to stock and order more of his product.  Through this integrated approach to advertising and promotions, Mr. & Mrs. “T” was in a better position to achieve its marketing goals.

Cheryl Syrett
Marketing And Advertising Instructor
Ashworth University School of Business

The insights of cultural/media theorist Douglas Rushkoff are always contemporary and often prescient.  He was deciphering the social codes of the virtual psyche, lifestyle, and marketplace before such concepts were formally identified by the so-called “machine.”  The Merchants Of Cool is a brilliant analysis of the incorporation of youth pop-culture that Ruskhoff created while working as a correspondent for PBS Frontline.  This is a very entertaining documentary.  You’ll learn a lot too.  Let me know what you think in the comments section.

Ryan Rode
Interactive Services Manager
Ashworth University

                          Image courtesy of Mike Maddaloni.

There’s that store over on the corner.  It is one of your favorite stores or you just go there once in a while.  But the next time you go by, it’s closed.  Not just closed for the day, but closed for good.  You feel bad as you liked going in there, but you may not have gone in there that often.  You think to yourself if you only knew that they were near that point you could have done something – blogged on them, told your friends or simply went in there more.

For me there were 2 such places, an awesome Vietnamese/fusion restaurant and a coffee shop.  Now a jeweler and a check-cashing store stand in each respectively.  But what if each owner reached out to its customer base for help, would I have responded?  I asked myself as I read about Toscanini’s, an ice cream shop I have visited in Cambridge, MA in a recent issue of Inc. magazine.  In this case, getting behind on paying their taxes resulted in the store closing, and after an Internet appeal they were able to raise enough money to reopen.

As I said before, you can’t mess with the numbers.  However, they did and paid the price for it, literally.  Had they reached out earlier to their customers, how would they have reacted?  How would I have reacted? (more…)