Blogonomics

Welcome back to another week of Blogonomics. This week, I have selected the following videos to show you the importance of marketing. As you watch these famous TV personalities, think of their target markets and how they differ from one another. Do we really need their products/services? Can you describe their target markets? Why do they excel in any economic environment? Find out about their past and how they got to where they are today.
VIDEO 1
VIDEO 2
Both videos include a short web commercial of about 15 seconds at the beginning. Make sure you watch the full video.

Welcome back! I hope you all enjoyed your long weekend. Some great ideas last week, we will be discussing many of them in class this week.

I found years ago that economic adversity can bring opportunity. Back in 2002-2003, the Dow was in the middle of another bear market and the so called do it yourself investors realized it took more than free charts and chat rooms to manage a portfolio of investments. It was during this time that most clients came to me looking for help and advice. It seemed that during good times, anyone could make money in the stock market; however, during the bear market of 02-03, it was quite easy for the self directed investor to lose money. It was out of need that they sought my help. Furthermore, given my expertise in financial planning, it was during the same period that I introduced the business planning services for small business owners. In 2003, the unemployment rate surpassed 6%, high compared to the 4% we faced on January of 2000. Highly qualified entrepreneurs who had lost their jobs in the technology field were starting their own business and were in need of business planning to obtain financing from the Small Business Administration and other lenders. Throughout the years, I continued to introduce or modify services to fit the needs of my target market. Last winter, I introduced the live chat to provide advice to individuals online off business hours. Later, I introduced the 401K review and reintroduced the business planning services as federal funding was allocated to help small business owners thru the Small Business Administration. It is during difficult economic times that many of the most successful ideas have been introduced (do a little research, you would be surprised!). If you can find a solution to society’s problems and can reach the right target market and price your product or service accordingly, you are bound to be successful.

You will have until Thursday, February 25, 2010 to complete the following blog assignment. Please don’t complete this assignment until we get a chance to discuss it in class.

Think about your answer to last week’s blog prompt. Think about the conditions you posted could make a business successful in this economic environment. Do a little research using the Wall Street Journal or Yahoo Finance resources and find one small business that currently trade in a US stock market that meets the criteria you posted was needed to succeed in this environment. Provide three reasons to support your claim. (We will discuss this prompt in class)

I am very pleased with the blog results last week. Most of you were able to post your comments without incident and many of you approached the issue from different perspectives. Keep up the good work!

However, there were a few students who plagiarized, perhaps without knowing. Remember to give credit when you use someone else’s work, and use quotation marks when you state someone else’s work word by word or with minimal changes. In addition, many of you expressed your opinions but forgot to back them up with facts. In the future, comments lacking supporting facts will not receive credit.

With regards to the increase in GDP of 5.7% for the 4th quarter of 2009, once you remove the change in private inventories, the real final sales of domestic product is only 2.2%. Restocking of inventories contributed 3.5% to GDP growth in the 4th quarter of 09. As expected, business inventories tend to increase as the economy comes out of a recession. Nonetheless, a 2.2% increase in GDP is in line with sustainable economic growth in the United States. When you consider the decline in government spending during the 4th quarter of 09, the rise in GDP must be credited to the consumer. Of course there were some government incentives that contributed to the increase and we will have to see if the consumer can continue to carry GDP growth over the next few quarters once government incentives begin to wane and inventories return to historical averages.

On a different note, productivity, or change in output per hour, was up 7% in the 4th quarter following increases of 8.1% and 6.9% in quarters 3rd and 2nd, respectively. Good for business, bad for unemployment since employers were able to get more out of every worker; and therefore, delayed hiring new workers. Consequently, the 5.7% increase in GDP did not result in a significant decline in the unemployment rate. However, over time, each worker reaches his or her maximum potential and further increases in GDP will result in new employment.

Furthermore, the unemployment rate declined during the month of January to 9.7% from 10% in December, and the broader measure that includes discourage workers fell to 16.5% from 17.3% in December. Historically high numbers, but it seems that unemployment has remained stable since last summer. And again, if GDP continues to grow at a modest pace, once productivity is maxed out, unemployment should go down.

As a business student, think about the opportunities this economic environment offers new businesses. With unemployment close to 10%, what kind of product or service can a new business offer in this marketplace? Be creative, think outside the box.

Hint: If you got a chance to watch the Super Bowl game, did you notice the commercials?