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Putting on the Economic Lenses: Branding Cupcakes
(Posted July 23, 2007)
Last week, I decided to take my mother out to brunch in the West Village (for those who don't live in New York City, a fantastic neighborhood filled with a mix of small, local vintage and luxury stores). As I left the taxi, I saw a long line of people standing outside a tiny bakery with a blue awning, otherwise known as the famous Magnolia Bakery. Made famous by the show Sex and The City, this bakery features cupcakes that will make your mouth drool (in other words, perfection).
Although I have fallen victim to the Magnolia craze, I have to admit that if these cupcakes weren't 'trendy' or famous I probably would have overlooked this shop. If Carrie Bradshaw ate a cupcake at a bakery down the street instead of Magnolia, that place would have been famous. The concept of 'branding' is DEFINITELY not new, even for cupcakes. If someone gives me 3 cupcakes, I can probably tell which one was made from scratch, came from a bakery, or was made using a packaged mix (trust me, I'm pretty well trained in the art of identifying cupcakes). We know various cupcake brands, like Betty Crocker or Pillsbury, and can taste the difference in texture, moistness, frosting, etc... So the question I pose to you is this: can and should Magnolia Bakery become like these famous companies through selling their famous mix in supermarkets and specialty stores or should they keep their exclusivity by staying in the Village? What are the pros and cons of doing so? Yes, a venture like this would make Magnolia a lot of money, but should they sell out? And more importantly, would people buy the new Magnolia Products just because it is Magnolia? Let us know on Raise Your Voice!
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Facebook
(Posted April 11, 2007)
This week, facebook changed its look...for the better. The site continues to beat out myspace, in my opinion. The new features make it sleeker and easier to find connections within your network and through your friends. I love it. I wonder how people think of ideas like Facebook and if they know they will be a huge success.
Tags: facebook, look
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Amazed
(Posted March 31, 2007)
J. Crew looks so good. Lately, I can't keep myself away from the store. The spotless displays, bright colors, and european feel draw me in every single time. Between the dresses that are irresistible and the cute prints, J. Crew. has won my heart along with many others'
Tags: J. Crew, Marketing, dress, store, mall
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Island Economy
(Posted March 17, 2007)
I'm sitting on the beach and looking to the left I see MASSIVE ships sailing up to the beach. Honestly, it hasn't hit me until now that islands and other destinations survive because of tourism. With eight cruise ships and multiple hotels, there are more than enough people to shop and eat on the island. How does a small island make room for this many people? Imagine about 3,000 people per ship all rushing off and into the town for a short period of time. Think of the money that comes onto the island in bursts. Are there always this many people coming in per week? What happens if it's the off-season? I can't really understand it. With nothing else to think about, these thoughts swim around in my head. I'm happy here on the beach staying on land...
Tags: Tourism, demand
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Girl Scout Cookies
(Posted March 05, 2007)
Have you ever realized the craze that girl scout cookies have caused? Whenever I hear those three words I jump at the chance to order them. Money really is no object. I end up with enough boxes to last me a year. I looked in the freezer yesterday and found that I still had 3 boxes that I never ate.
The demand for these cookies must soar around February when they're on sale. I'd like to know how much money the sales bring. Back when I was 10, I never thought about much more than the prize I would get if I sold over 100...
Tags: cookies, demand, girl scout, change in demand
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Is any publicity good publicity?
(Posted February 27, 2007)
Hey Fellow Econ Students and Enthusiasts!
I was walking in my town today (a very suburban one I might add) and I happened to notice the window of Victoria's Secret. I remember a couple of years ago when the store first came to my town, there was a HUGE backlash against the scantilly clad mannequins. Although this store was very popular on its own, the extra publicity happened to be very beneficial for the profits of the store. The buzz the "traditional values" alliance of my town generated helped usher in a wave of people to shop at Victoria's Secret. So, do you think the backlash against sexual and salacious advertising campaigns helps, rather than hurts, these businesses? Speak your mind on Raise Your Hand!
Tags: monopolistic competition, change in demand
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Change in South Africa?
(Posted February 27, 2007)
Last night the Oprah special on the Leadership Institute for Girls was on TV. I only saw the last 20 minutes, but I was amazed at the project she put together. These girls were so excited to go to school. It got me thinking about the gap between kids in America and kids in other countries.
Another point stuck in my mind. Oprah told these girls that if they did well, she would pay for them to go to a top university for four years. The first thing I thought: This is a huge amount of money. When a person has that much money to spend, how should they spend it? Should money be invested in these people to ultimately better their lives and allow them to change a country for the better? I think Oprah has singlehandedly started a change in South Africa.
Tags: Oprah, school, South Africa, human capital, production possibilities
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Where are the women?
(Posted February 26, 2007)
Stocks, investments, Wall Street...these names evoke images of men. Until after our recent class trip to the NYSE and Wall Street, I didn't realize how true these images are.
Standing in the stock exchange, I look down onto the floor and literally see two women. Two! As a student in an all-girls school this is very shocking. I have never been anywhere that has so few women. What does it take to get on the floor and why are more men getting there?
Tags: Wall Street, men, women, girls, NYSE, glass ceiling
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The Super Bowl... Is it really about the game?
(Posted February 05, 2007)
Even though I like football, when I watch the Super Bowl, I’m really looking for the commercials. The hype over Super Bowl commercials has grown and continues to do so. What happened to watching the game for the love of the sport? Instead companies plan and jump at the opportunity to have a new commercial premier during the event.
One commercial in particular confuses me. The commercial featuring Kevin Federline rapping and dancing is very different. Not only is the commercial different, but it is for Nationwide Insurance. Who are they trying to target? I can’t imagine my parents, or anyone else for that matter, jumping to call their company for coverage after seeing this. But then again, it’s funny and his ex-wife makes him look good.
Tags: Super Bowl, commercials, hype, Kevin Federline, Nationwide Insurance, oligopoly, demand
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(Product) Red. How far will it go?
(Posted December 22, 2006)
It is safe to say that ten years ago, not many people would have imagined that we could purchase music right off of the Internet and have the proceeds go straight to charity.
One of the more reasonable ways to contribute to the Red campaign is to buy “A Great Big Sled” by The Killers off of iTunes. One hundred percent of the proceeds go to (Product) Red, but each song is only 99 cents. The utility of the song should be taken into account as well. The song is alright, but for those who want traditional, “Christmas” sounding music, this would not be a great choice.
However, for only 99 cents, anyone who is willing to help the organization can spare the money, even if he does not listen to the song.
Tags: charity, iTunes, Red, incentive, marginal utility
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Milton Friedman's Philosophy
(Posted December 14, 2006)
On Milton Friedman...
"At a conference 34 years ago, celebrating Friedman's 60th birthday, I presented a paper questioning that dictum by noting that the vast part of apparently nonprofit-oriented behavior by corporate managers was really -- and necessarily -- a profit-maximizing response to business, social or political pressures dressed up to look like something else. For such a strategy to be successful, the behavior had to appear to be nonprofit maximizing, and, of course, had to be called something like "social responsibility."
Since it was difficult or impossible to distinguish a profit motive from a charitable motive in any particular corporate action, a strong rule against corporate altruism, as Friedman was advocating, would invite judges to examine the propriety of a significant set of managerial decisions. "
-Article by Henry G. Manne (Wall Street Journal) (11-24-06)
We're not the only ones who think businesses have other motives.
Tags: Milton Friedman, nonprofit, charity, profit motive
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Would you pick up a charitable necklace for over $1000
(Posted December 07, 2006)
I’m standing behind a crowd of people watching Téa Leoni discuss the DiModolo necklace she helped to design to benefit UNICEF. This new store opened in the Short Hills Mall in New Jersey on November 30. The pendant incorporates the UNICEF symbol and is different from the other jewelry pieces in the store. She worked with one of the main designers to create a piece. There is one necklace with and one without diamonds, both around $1000. She mentioned that during the holidays, we should buy things that give back and help others. For this particular necklace, 50% of every purchase goes to UNICEF. While speaking with a representative, I discovered that they set a minimum percentage that has to be donated because of profit and cost. Ultimately, the company decides the price of the item and the final percent of the purchase that goes to charity. In addition to the necklace, 15% of all sales made that night went to UNICEF. According to the representative, she said that this is a very good amount. Honestly, you might think the charm on the necklace is pretty, but a cloth chain? If I'm paying $1000 for a necklace, I would at least expect a metal chain. Yes, this may benefit UNICEF, but is the company not using a metal chain because the money that would go to purchasing a metal chain is donated to charity? I'm not sure, but there is defintely a trade-off. Comment on Raise Your Hand!
Tags: charity, UNICEF, necklace, profit
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Do you buy things ONLY because they benefit charitable organizations or causes? Part II
(Posted December 05, 2006)
Charitable items have entered the world of small brands. For instance, a rare (yet noteworthy) example of this is Kiehl’s Grapefruit and Body Cleanser. One hundred percent of the profits go to YouthAIDS, an organization that helps children around the world combat AIDS. In addition to this, Aldo's "See. Hear. Speak." campaign, sells shoes, handbags, and jewelry benefiting YouthAIDS.
Do particular organizations choose the exact group of people they want to target? Charitable organizations want to profit, thus they want to choose a store/company that will help their needs. The chosen stores, in most cases, want profits as well. The organizations consider consumer demand when choosing designers and stores to create and sell products. Oftentimes, we fall victim to their marketing and the causes. That Gap RED sweater is still in the drawer with the tag on it. The bracelet to benefit Breast Cancer is under a pile of jewelry. Why do we buy these items? Who benefits from their sale? How many people are looking to benefit from their sale? Send us your responses on Raise Your Hand!
Tags: charity, YouthAIDS, profit motive
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Do you buy things ONLY because they benefit charitable organizations or causes?
(Posted December 01, 2006)
Consider this situation: You walk into the mall and everywhere you look there's pink. No, it’s not a total redecoration.
This flood of color sweeping the mall has been there since October 1st for Breast Cancer Awareness Month. The color runs into most of the stores, from Ralph Lauren with its Pink Pony line to Saks with Oscar de la Renta designed t-shirts. Stands scatter the floors outside of the stores selling overpriced bracelets that we buy anyway.
WHY DO WE BUY THESE ITEMS? Does the demand rise because of the charity label?
It certainly is not a change in quantity demanded because the prices are anything but reasonable. For what other reason would you pay $498 for a Black and Pink, Swarovski-Crystal Encrusted Cashmere Sweater from Ralph Lauren Pink Pony? Only about 10% of the profits of the line go to helping patients with Breast Cancer.
Countless other products, now more than ever, are on sale to benefit charities, foundations, and causes. What are stores' motives for selling these products? Do people buy them regardless of the price? How do the products differ from the others in the stores?
Stay tuned for more entries on this topic and if you have a question/comment, go to Raise Your Hand. We look forward to hearing from you!!
Tags: charity, profit motive
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