Magazine

Talk Show


"Our intention was to have a very successful summer sale.... That expectation was wrong." -- DaimlerChrysler Chairman Dieter Zetsche on a failed employee-pricing promotion that contributed to Chrysler's expected $1.5 billion third-quarter loss, in Detroit Free Press

In recent months, when oil topped $70 a barrel and was headed, some forecasters said, for $100 by yearend, the major airlines did what seemed prudent: They hedged, locking in much of their near-term fuel needs at then-current prices.

But with oil now under $65 a barrel, a nearly 20% drop from late July's peak, airlines are paying more for fuel than if they simply shopped the spot market. Continental (CAL) made the worst bet, hedging 33% of its third-quarter requirements at $73.18 a barrel and 27% of its fourth-quarter needs at $75.20. Others misread the future almost as badly. Northwest (NWAC) pre-bought 25% of its fuel for 2006's second half at $65 to $79.40, while US Airways Group (LCC) hedged 44% of its third-quarter consumption at $71.39. Only Southwest (LUV) is coming out ahead -- way ahead. Thanks to deals it signed long before prices shot up, it locked in 73% of its second-half burn at an enviable $36 a barrel.

Despite the flubs, there isn't much finger pointing inside the industry. Overall, falling oil prices are a net plus for carriers. "They may be back in the money by yearend," says Raymond Neidl, an analyst at Calyon Securities.

Get ready for RED. Bono, along with Bobby Shriver of the Kennedy clan, is bringing Product RED -- his conscious-consumer campaign -- to the U.S. in mid-October.

Judging by RED's success in Britain, where the cause-related marketing venture has become chic among millennials and hip "influencers," consumers will soon be seeing RED everywhere. In Britain a red American Express (AXP) card, which reads "This card designed to help eliminate HIV/AIDS in Africa," now carries more cachet than the elite Black card. So far this year, Britain's RED campaign has generated $5.2 million for the Global Fund.

Here in the U.S., RED is teaming up with iconic names to pump out some cool, co-branded products -- including Motorola (MOT) phones, Converse (NKE) sneakers, Gap (GAP) T-shirts, and the wraparound Emporio Armani sunglasses that Bono wore during U2's last world tour. Consumers buying the items are ensuring that up to 50% of the profits will go to the Global Fund, which fights AIDS in Africa.

RED is emblematic of the new philanthropy, which is less about handouts and more about hybrid models that mix profits with solving social problems. (Think Omidyar Network, the venture-capital-like foundation of eBay's (EBAY) Pierre Omidyar, and Google's (GOOG) for-profit charity.) With RED, companies looking to bond with consumers in an age of split-screen attention spans also get the benefit of Brand Bono.

Freakonomics author Steven Levitt has repeatedly criticized Moneyball, Michael Lewis's 2003 best-seller that says the Oakland A's used statistical analysis to win games with moderately paid players. Lewis argued that the A's won on the cheap in part by telling batters to draw walks by being patient at the plate. Levitt countered that the team's powerful pitching was the key to its wins.

Last year, Levitt rejected an academic study that endorsed the book's findings, saying it didn't prove its point persuasively enough to be published in the University of Chicago's prestigious Journal of Political Economy, of which he is co-editor. ("We reject 94% of the papers that are submitted," Levitt notes.) Authors Raymond Sauer of Clemson University and Jahn Hakes of Albion College managed to get the paper into the latest issue of the not-quite-so-serious Journal of Economic Perspectives. Sauer isn't troubled by Levitt's rejection. "He had very insightful comments," he says. "It was a cordial exchange." And it's one that may continue: So far this season, the A's have the fifth-best record in baseball -- with both a middle-of-the-road payroll and some fine pitching.

Space age marketing meets port-o-potties with Micro Target Media's new ads, which wrap around (and appear inside) portable restrooms. This summer the ads popped up at events such as the Indy 500 and Major League Baseball's All-Star Game. Up next: Munich's Oktoberfest. Toronto's MTM may be the first to use radio frequency identification (RFID) and GPS to pinpoint portable restrooms in strategic locations -- at a construction site near a new McDonald's outlet, for instance. MTM will also begin counting port-o-potty ad views in real time, using infrared beams and mechanical counters on the restrooms' doors. The company says it is positioned to put ads on about 500,000 portable restrooms worldwide.

www.cultureby.com

WHY READ IT

Because Grant McCracken -- an anthropologist and corporate ethnography consultant -- is witty, opinionated, and razor sharp. "This blog sits at the intersection of anthropology and economics," he announces to his readers. And it does. His posts filter marketing and commerce through a cultural lens and vice versa. In the process, he offers smart takes on everything from "chunky" markets (the growth in the audience that lies between mass consumers and "long tail" niches) to the branding quandary Apple (AAPL) faced when it put Intel (INTC) chips into its Macs.

Once it was the domain of bandwidth-munching cranks. Now the blogosphere is so important that business can't ignore it. But how to reach these opinionated critics?

Enter the blogger relations specialist. Public-relations firms are monitoring posts and chatting up bloggers to gain credibility. Blogger relations at Topaz Partners, based in Woburn, Mass., have taken off in the past six months, says Todd Van Hoosear, who oversees those relationships as "social media practice" manager. Paul Rand, chief development and innovation officer at Ketchum, says PR firms not partaking of the trend are "conspicuous by their absence."

Successful reps "hide in the weeds for three to six months, reading, occasionally posting a comment," says Sam Whitmore, who analyzes tech coverage at mediasurvey.com. They pitch, sending a personal e-mail, only after establishing ties.

Not everyone gets it right. Robert Scoble, of the popular tech blog Scobleizer, says that after blogging about his mother's death, he was cold-pitched by reps, and "it was obvious they hadn't read my blog." CEO Richard Edelman of PR firm Edelman, however, donated $500 to the National Park Service in the name of Scoble's mother. After hearing about the "ill-informed PR people," Edelman said, "I felt it was the least I could do."

As more PR agencies chase bloggers, former Apple marketing guru Guy Kawasaki has even provided a playbook on his blog. Bloggers need "stroking," he noted playfully in "How to Suck Up to a Blogger," posted earlier this year. And gifts, which "dollar for dollar" are "one of the best marketing investments."

Are today's B-schools breeding tomorrow's corporate crooks? Research to be published in Academy of Management Learning & Education found that 56% of business grad students admitted to cheating in the past academic year. That's more than the 47% of nonbusiness grad students making the same admission.

The study, co-authored by Linda Trevi??o, a professor of organizational behavior at Penn State's Smeal College of Business, looked at surveys of 5,331 graduate students at 32 schools in Canada and the U.S. Do B-school students cheat even in ethics courses? "I know of situations where that's happened," Trevi??o said.

Stores are starting to smoke out burglars -- literally. Looking for security systems beyond alarms and unsightly iron roll-up gates, some retailers are trying a newer deterrent: a fog machine. Once the system, installed in a corner or on a wall or ceiling, is triggered by someone breaking and entering, it takes just a minute to create a dense, nontoxic fog that obscures visibility. Burglars can panic, groping their way out of the store without stealing anything. That's what happened during a recent break-in at a CVS (CVS) in Florida, one of a handful of outlets at which the drugstore chain is testing the device.

The fog makers are gaining popularity, according to one distributor, Smoke & Screen Security Systems, which says its sales to U.S. retailers more than doubled last year. Although President Kevin Paul says the system isn't designed to be "a man trap," it could end up snaring a would-be thief caught in the fog, which is similar to theatrical smoke, until the cops come. (The system is linked to an alarm that summons police.) "It's like something Mel Brooks might have scripted," says John Feretich, head of security at clothing chain Rainbow USA, which is testing fog devices in some stores. (No trapped burglars yet, he says.)

At just a few thousand dollars, a fog system can be far less expensive than metal gates. But there are potential downsides. "Is it so theatrical that I could have kids standing outside and throwing rocks at my window just to see it?" wonders Feretich.

Then there's the specter of the litigious burglar who injures himself on the foggy premises and eventually gets away with much more than he came for.

Paul Wolfowitz's anticorruption drive at the World Bank, part of which involves delaying aid to poor nations, came under fire at the bank's recent annual meeting in Singapore. Should honest government be a prerequisite for receiving aid?

"Aid embargos don't stop corruption -- they only worsen the economic situation. Ensuring that aid reaches the real beneficiaries involves a reliable chain of delivery. Local NGOs are increasingly playing this important role." -- Kiran Mazumdar-Shaw, chairman and managing director, Biocon, India's largest biotech enterprise

"Corruption ought to be attacked. But an honest yet totally incompetent government is just as much a waste of money as a corrupt one. You don't walk away from a country because its leaders are corrupt. You work through other channels." -- Joseph Stiglitz, Nobel laureate; former chief economist, World Bank; author, Making Globalization Work

"It's difficult to make these trade-offs. What do you do when the top leadership is corrupt but health and education program managers are delivering at the bottom? I give Paul Wolfowitz credit at least for pushing the issue that generated this debate." -- Nancy Birdsall, president, Center for Global Development; former director, policy research, World Bank


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus