Explaining a Decline in Hot Dog Sales

If you have time, check out this Bloomberg BusinessWeek article looking at the decline in hot dog sales in recent years.

There are a number of great lessons to learn – covering marketing, demographics and economics – to explain why frankfurter sales fell more than 3% in 2012 compared to a year earlier.

Some of contributory factors highlighted in the article:

• Americans are having fewer children, which shrinks the market since kids are the biggest consumers of hot dogs.
• Immigration patters could play a factor.
• Raw material costs for wieners are rising, particular beef. That increases the cost at the grocery story and slightly undermines the product's status as the perfect recessionary food. This makes me think about price elasticity of demand.
• Still, the overall sales price of a hot dog is low. As a volume-driven business, the factors listed above are vital to revenue

The story notes that hot dog sales remain brisk at baseball stadiums. The last time I went to big league game, I was at Fenway Park and ordered a bowl of clam chowder.

Cable's Conundrum: Why Charging More Doesn't Work

Paul Davis

Cable companies are really struggling.

I'll start by sharing my own experience. Earlier this week, I received a letter from Time Warner informing me that my next cable bill would include a 17% rate hike. They tried to put a positive spin on the increase; the bill could have gone up by 41%.

I was so excited about my "great new rate," as the cable company's letter put it, that I finally decided to call Time Warner and cancel my cable altogether. Talk about great monthly savings!

I'm not alone. Based on data from SNL Kagan, a research firm in Charlottesville, Va., roughly 7.4 million people scrapped cable between 2007 and 2011. Cable operators, desperately in need of revenue, have responded by jacking up rates.

Over the same 2007-2011 period, residential revenue for cable companies increased by an average of 4% annually. Monthly revenue per customer, which I will loosely compare to an average bill, went from $63 in 2007 to $82 in 2011. 

Charging loyal customers more to make up for defections is a ill-advised strategy. Cable companies are attempting to add more products and services, but they are continuously losing ground to Internet sites, Netflix, etc. They are in danger of becoming as obsolete as Blockbuster.

I decided to crunch some numbers for the cable industry, using SNL Kagan's 2000-2011 data as a guide. Over that period, cable customers defected at a 1% average annual rate, with defections accelerating in the last few years. Using that number, along with the average rate hikes I mentioned earlier, I built a chart showing what the cable model would look like if those changes were constant:

The cable industry's revenue model looks quite precarious over the next decade.

If the cable industry fails to rethink its business model, monthly rates would have to top $160 by 2022 in order for operators to maintain the same revenue trajectory of recent years. My research also indicates that these retention numbers are generous; in the last decade each $1 rise in monthly rates has correlated with the defection of roughly 250,000 customers. So defections would likely accelerate even more in the next decade.

The cable model is clearly unsustainable and in need up an upgrade. Promotional rates are no longer a solution. Digital options and shows on demand are nice, but people will reach a point where they are unwilling to pay up for those types of services. Cable companies will have to find a way to provide more services as a free added value or reduce overhead.

The only real way to retain customers is to keep rates in check, and that just isn't happening. The good news for me is that I will likely spend more time blogging and less time watching senseless cable programming!

Michael Jackson: The Power of Social Media

Paul Davis

For years, Michael Jackson set a standard for “big.” 

When at the top of his game, the Gloved One produced big hits, made big music videos, staged big concerts, and set dance and fashion styles that quickly overtook the elementary school I attended. Regardless of the medium, he seemed to own it with a unique style, talent and presence that I still do not fully understand.

By the time I reached high school, his popularity waned and his behavior become more bizarre. I was surprised when he unveiled plans at 50 to resurrect a career that many had relegated to a bygone era.

Even the press conference Jackson attended (video included below) seemed surreal and I was convinced the man behind the podium could not be the real Michael Jackson. I seriously doubted he would ever be “big” again. I was wrong.

www.wikipedia.org

What I remember about June 25, 2009, was how Michael Jackson's death introduced me to the power of social media. I had been contemplating an online venture tied to my upcoming MBA program, and had even set up a Twitter account, but wondered if there was legitimacy to it. 

Sure, I knew a number of social media enthusiasts but I doubted the ultimate popularity and reach of the medium. 

Much of my longstanding bias was shaped and molded by a career that had included stints in TV, radio and print media, and a belief that the Internet was something with potential though no one had figured out how to harness and direct it. I really needed a catalyst to fully buy into social media.

Those concerns quickly went away with each Facebook post, tweet, and blog account that without delay updated people on Jackson’s condition and death. My doubts about social media vanished with every celebrity and average Joe who responded to the news, outpouring their emotion or sharing their fondest memories. At least one last time, he was “big” by commanding a communication medium. Social media sites locked down over the volume of information passing through the system. It was stunning.

I post this not to exploit what happened four years ago. But I am continuously in awe at how freely we can communicate and how quickly news travels. It’s not just the Jackson tragedy. Just a week ago, a bank I cover restricted media access to an event, yet attendees’ tweets filled in gaps that were created by the absence of mainstream media. The same can be said for war torn areas, natural disasters, and other life-changing events now opened up to full review by empowered people to share their observations and perspective.

It is this empowerment that emboldens me to share my perspectives – both large and small – with you. In turn, I invite each of you to be an integral part of the process. If you feel compelled to post a comment … do so! This blog has never been about unilateral communication. It is, in its most sincere form, a dialogue among students, academics, and those intrigued about the business school experience.

Whether an instructional article or a free form method of discussing an experience, this blog is about uniting business school students and alumni and reaching out to those curious about obtaining an MBA. For lack of better words, this is what we do and why we do it. And in a way, I have to thank the events from 2009 for awakening me and showing me the powerful tool that rests regularly at my fingertips … and the amazing reach that it has across the globe!

Searching for Subterranean Yellow Jackets

Every June, I begin a “fun” annual ritual: searching for subterranean yellow jackets.

It is an exercise that began four years ago, when I accidentally ran over a hidden hole with my push lawn mower. The whir of the blades and the roar of the mower's engine startled them and, by the time I had walked over the opening, a swarm shot through the air and into my shorts.

All I remember is running to the house at a seemingly breakneck speed, rushing into the bathroom and shedding everything as sting after sting set in. Twelve in all. I wrapped myself with a towel, shut the nasty creatures in the bathroom and rummaged around the house for the bug spray.

I’m sure the imagery is either comical or disturbing, but there is a lesson that I learned from the experience. Every year since, I am careful to first run a reconnaissance mission across the yard. I scout the ground for any hint of yellow jackets, identify potential holes and take care of business before I start to mow. I also wear jeans when I mow.

These are little adjustments that seem to help. Yes, I still get stung occasionally, but nowhere near as much as that first year.

The broader takeaway is that we all have setbacks: in business, life and competition. Some are more painful than others. I find that the truly successful people are those who take those setbacks, pause and reflect, and make the necessary corrections to either succeed or reduce the negative exposure. I have learned my best lessons during my setbacks.

When I was in my MBA program, I ended up on an (at times) dysfunctional team. We fought. We bickered. We actually had to ask someone to leave our group. But in the end, those who remained found a way to make things work. We learned about survival and compromise, often the hard way. When we completed the program, I would dare claim that there were members of our team who were tighter than members of the teams that seemed to have no friction.

I have tried to convey those lessons to my daughter. She plays in a weekly Pokemon league. It took me awhile to learn how to play, but I managed and we now play occasionally during the week. She hates losing. But I try to instill in her a mantra to learn from the losses and to ask herself questions. What did the other player do so well? Was there a new strategy involved? Could I have done anything different to change the outcome?

I tell my daughter that there is a lesson to be had from every single game she plays. The same is true in life.

I write all of these thoughts as I stare out at my front yard. The potential underground hazards have been marked. I am watching out for yellow jackets. The grass has been cut … and no stings yet. Wish me luck in the weeks ahead.

Teaching Credit Concepts to Children

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A year ago, I wrote a blog about how my spouse and I taught our daughters about entrepreneurship. The article focused on how we helped them start their own bead craft business. We helped them develop a business plan, factored in costs and fostered innovation.

We also implemented the Bank of Dad concept, where the girls receive interest payments at the end of each month for saving their allowances and other earnings. 

So far, it has been a positive experience. I no longer feel obligated to vet each of my daughter’s purchasing decisions; if she has money in the bank, she can buy what she wants.

A few months ago, my daughter wanted to buy a pricier item but she lacked the funds to make the purchase. (For the record, my wife’s daughter is a major saver, so we have yet to face this particular issue with her.) I could have rejected the purchase, but I thought about it and decided that it was time for the 11-year-old to learn about credit.

The tricky part was balancing a real-life scenario with terms that the fifth grader would understand. The Bank of Dad was already paying a generous 10% monthly interest rate for her deposits. Don’t get any ideas; this bank only has capacity for one depositor!

So I decided to let her open up a line of credit with a credit limit equal to a month of allowance money. For her, that was $12. I also informed her that she would have to pay the money back at a 15% interest rate. She complained at first, asking why the borrowing rate outweighed the deposit rate.

“We treat the Bank of Dad as a real business,” I told her. “Just like your bead business, it is intended to make money. To do this, it has to make more lending money than it pays out holding money.”

By and large, the process has worked. Whenever she has a deficit, I take 15% out of her weekly allowance and apply the rest of the money to the debt. She can also work and earn more money, which can then be used to more aggressively knock out the loan. Since I limit the credit to a month of allowances, it only takes her a few weeks to pay off the debt.

I decline her purchasing requests if she reaches her credit max, which has happened occasionally. She protested the first time this took place, but she has now gotten accustomed to watching her credit balance and is making better financial decisions.

Perfecting a Business Pitch

Paul Davis

A member of the MBA Connections Facebook group recently asked me to elaborate on how I was able to secure funding from the Wake Forest University Schools of Business to pursue my MBA. 

After taking a few days to reflect on the process, I decided to share my perspective of how I was able to make a successful pitch to Dean Steve Reinemund. I will focus on five key factors: partners, preparation, planning, persistence and precision.

*****

PARTNERS: I certainly didn't do it alone. As Jim Collins writes in his book, Good to Great, you have to have the right people on the bus.

Vaishali Shah, who is one of the most creative and intelligent people I have ever known (and my better half), motivated and inspired me early on evaluate my strengths. She also challenged me to develop something to offer Wake Forest in exchange for additional funding. I also met with Mark Tosczak, a former co-worker who works in the marketing industry, to discuss the potential of social media. There were several other individuals who served as sounding boards as I developed my idea.

PREPARATION: I knew I had the journalism skills and social media savvy to build a platform, but I had to determine early on whether Wake Forest's business school needed my expertise. I conducted an audit of their social media and identified two deficiencies. The first was inadequate search engine optimization (SEO). For instance, it was difficult to find their original Twitter account (wfubiz) because the handle didn't mention "Wake Forest" or "MBA." 

I also realized that, while numerous students were blogging independently, the business school lacked centralized coordination of those efforts. In order to have a successful pitch, I needed to identify ways to improve on those shortcomings, and my platform needed to provide meaningful value to the university.

PLANNING: Identifying some of the deficiencies in Wake Forest's existing platform gave me a foundation to develop a new system that would be different ... and better. It took a few weeks to sketch out what I wanted to do. I set up a new Twitter account (WakeForestMBA) and created a blog before I had even pitched the platform to Wake Forest. It helps to have something tangible lined up before making a presentation.

I won't go into the high grass details of my pitch, though I envisioned a strategy of using social media to chronicle the overall MBA experience in a way that would galvanize the student body. And I put together a one-page pitch and a PowerPoint presentation to walk school administrators through my thought process.

PERSISTENCE: If you truly believe in an idea, you should be willing to fight hard for it. I initially had difficulty getting Wake Forest to take my plan seriously. It received a lukewarm reception from the Admissions office, where I was seeking extra financial support in exchange for implementing my idea. The Marketing Department quickly took a pass on it. I decided to go for a Hail Mary, sending my pitch directly to Dean Reinemund in hopes of securing a face-to-face meeting.

Photo: Walmart

It worked! A week later, I sat down with the former chairman and CEO of PepsiCo and walked him though my vision. I supplemented my pitch with a complete PowerPoint presentation. Though he wasn't completely up to speed on the nuts and bolts of social media, Dean Reinemund understood and appreciated its potential. I felt confident and empowered throughout the meeting.

PRECISION: Near the conclusion of our meeting, Dean Reinemund asked me what it would take to get the platform started. I told him that I would need to enroll at Wake Forest, but I was unable to do so without securing an additional grant. I knew exactly how much I needed, taking into account how much my employer was paying, scholarships, etc.

I believe that such precision showed Dean Reinemund that I had taken everything into account. He informed me that Wake Forest had given out all of its available grants ... but he decided to instruct the marketing department to give me a job to coordinate social media. The pitch worked!

I hope that discussing my quest to implement a new social media strategy at Wake Forest will inspire others who are contemplating their own business plans. 

Four Factors That Are Quickly Changing Business

Greg Satell, a consultant and blogger who focuses on digital innovation, posted an interesting perspective yesterday that looks at how technology and other factors are quickly reshaping the notion of business.

I would highly recommend reading his entire post, which includes numerous links to other studies and reports that support his findings. He also has a blog: www.DigitalTonto.com.

Satell highlights four factors that are transforming how people run their businesses. In a nutshell, they are:

• Scale provides little to no buffer against market forces
• Technology's exponential growth rates are quickly changing how people conduct business
• Business models are no longer reliable, forcing people to emphasize experimentation over planning
• Managers can no long count on being able to control their employees. Rather, they can only hope to provide guidance and direction

Ways to Help Pay for Your MBA

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Bloomberg BusinessWeek has provided useful tips on how to finance business school.

You can access the full article, but here are a few nuggets we gleaned for the article, supplemented with some of our own observations from the application and scholarship process. Some, if not all of these tips, could prove beneficial as you tackle the increasing cost of earning an MBA.

• Search for scholarships that you specifically qualify for. These could include gender, ethnicity, undergraduate program or desired career path. The article notes that Stanford has a fellowship program designed for Indian nationals.
• Ask other students and alumni how they paid for their degree. I hope MBA Connections will eventually be able to help with this. I secured half the funding for my MBA from Wake Forest by building and running a social media network for the marketing department.
• Give it your all during the application process. Schools often make funding choices based on exceptional essays and phenomenal GMAT scores. Undergraduate record and work experience also matter.
• Apply early. I found out that Wake Forest had a predetermined about of scholarship money set aside. The longer you wait to apply, and get accepted, the less money schools have available to award. I have never heard of a scholarship specifically geared to procrastinators!
• You can also offset the costs of preparing for business school. There is even a scholarship program built around the GMAT.

I certainly hope these tips help. I would encourage you to also make connections on our Facebook group and find out what other people have done to secure funding. Good luck!

Internships Playing Greater Role in Career Development

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Perhaps overlooked in the Wall Street Journal's streaming coverage was a article by Melissa Korn looking at how summer internships are playing an increased role in career development.

She notes that it has become common to see at least a third of MBA students turn an internship into a post-graduate career. The numbers are rising after a decline during the last recession. Korn notes that this trend "raises the stakes" for students, who are realizing that their internship selection could have significant implications on their career path.

A few interesting facts: more than 40% of students in the University of Virginia's Darden School of Business accepted full-time jobs from their internship employers. That stat, taken from last year's graduating class, compares to 25% two years earlier.

Nearly a third of graduates from Columbia Business School's 2012 class went to work for the company where they interned. Less a fifth of students in the 2010 class followed that route.

This is a great read. It can be found here.

N.C. Career Fair Set for Raleigh

MyWorkster's Recruit NC is hosting a multi-school alumni only career fair that promises to have more than 80 employers in attendance.

The event is scheduled for Thursday, June 6, from 11 am - 3 pm at the McKimmon Conference Center (1101 Gorman Street, Raleigh, N.C.).

The fair, which is being offered in conjunction with N.C. State University, is open to virtually anyone who has graduated from a North Carolina university. Standard tickets are free. VIP passes, which include exclusive and early access employers, cost $11.54.

Click here to register, find more information and a list of employers expected to attend.

How to Tackle the Dreaded MBA Application Essay

U.S. News & World Report recently posted a brief article looking at the best ways to tackle the dreaded essay question(s) included with most business school applications.

The full article can be found here, but we are going to list a few of the highlights.

• Avoid writing an "accomplishment" essay. Aim for a highly personal and self-revealing response. 
• Providing a genuine "back story" adds a nice touch.
• Try to avoid focusing on your weaknesses and flaws. If you do feel compelled to mention a weakness, put more time and effort explaining what you have done to overcome that flaw.
• Be honest, particularly when discussing areas of self improvement.

Business Schools, Wall Street Using Training Boot Camps

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A new trend is developing for business school students - specialized boot camps that teach financial analysis and Excel modeling.

Graduates, for fees that can top $1,000 a day, can take courses to bone up on skills that may have been lacking in their MBA programs, the New York Times reports. Offered by companies such as Training the Street and Wall Street Prop, the boot camps are helping prepare people for high-pressure jobs at firms like Blackstone Group and Goldman Sachs.

All but one of the nation's top 20 business schools use Training the Street, the report says.

Read the entire article here.

CEO Viewpoint: Apple's Tim Cook

A few weeks ago, Apple CEO Tim Cook went back to Duke University's Fuqua School of Business, where he is an alumnus, and had an interview with William Boulding, the school's dean. Videos of that session are now available, so we snagged them and wanted to share them. We included six of the videos below:

On the topic of collaboration:

Discussing ethical leadership:

Cook's view on inspirational leaders:

A discussion on intuition:

Career planning:

Cook discusses his three focuses (people, strategy and execution):

Precise Offers Matter in Negotiations

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The next time you are interviewing for a job of asking for a raise, think about giving the other party an atypical number.

A recent study from Columbia Business School has determined that people who provide precise dollar amounts in negotiations fare better than those who default to rounded-off numbers.

For instance, the study determined that people who offer $5,015, as opposed to $5,000, appear more informed about the true value of the item being negotiated over.

"What we discovered is there is a big difference in what most people think is a good strategy when negotiating and what research shows is a good strategy," Malia Mason says. "Negotiators should remember that in this case. Zeros really do add nothing to the bargaining table."

Mason and Daniel Ames are set to publish their findings in the next Journal of Experimental Social Psychology. The duo researched 1,254 fictitious negotiators (clever that they settled on a precise number).

Negotiators were placed in a number of scenarios for items such as jewelry and used cars. The item I read doesn't specifically address salaries, but it would makes sense that a job candidate or an established employee would seem more knowledgeable about their intrinsic value if they had a specific number in mind, rather than a rounded-off amount.