Recently in Reputation Category

The hottest housing market: Information

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Michelle Singletary:

In the real estate world, there was one word that used to be the cardinal rule: location, location, location.

Just about anybody -- the informed and uninformed -- could buy a house in a good location and easily make money by flipping, selling or refinancing the home, sometimes after just a short ownership.

That was then, before the Great Recession.

This is now, and the new cardinal rule of real estate is information, information, information.

"For decades, the real estate industry has operated under the principle that the less information buyers and sellers have, the better it is for agents, lenders, title companies, and all the other folks who eat from the trough," writes Ilyce Glink in "Buy, Close, Move In: How to Navigate the New World of Real Estate -- Safely and Profitably -- and End Up with the Home of Your Dreams." "But the real estate tide seems to be turning, as the housing and credit crises of 2008 have heightened awareness in Washington, D.C., and on Wall Street about the catastrophic consequences of a closed information loop."

I have no doubt that many professionals in the real estate industry will take great exception to Glink's observation. But the evidence is on her side. We ended up in one of the worst housing market collapses because far too many borrowers were uninformed, ill-prepared and overly optimistic about potential gain because of bad information they received and gladly embraced.

The Financial Times posted several articles on "Google's Black Box" this week:

Richard Waters:

In an office in Santa Monica, wedged between downtown Los Angeles and the Pacific Ocean, the future of the media industry is being drawn up.

Demand Media is a company created specifically for the Google Age. It tracks the queries entered into search engines to find out what users are interested in, then hires freelance writers at rock-bottom rates to rush out articles to meet the need.

To make sure these articles appear high up in the results when similar searches are done in future, it uses the techniques of search engine optimisation - the term given to the art of designing a web page so that it is accorded a higher ranking by Google's algorithm. It also makes money by displaying adverts alongside its articles from Google's advertising system.

The fact that content factories are being created to ride on the back of search engines highlights an uncomfortable paradox.

Google's search engine formula marks an ambitious attempt to model the real world in mathematics, identifying its users' needs and desires and delivering the best information from the web in milliseconds. But as its influence across the web grows, Google's algorithm is starting to shape the world it describes.

Tom Foremski:
Groups magnify chances of Google hits:
Companies with a high page rank are in a strong position to move into new markets. By "pointing" to this new information from their existing sites they can pass on some of their existing search engine aura, guaranteeing them more prominence.

This helps companies such as AOL and Yahoo as they move into the low-cost content business, says Mr Bonnie. "They can use their Google page rank to make sure their content floats to the top," he says.

Google's Mr Singhal calls this the problem of "brand recognition": where companies whose standing is based on their success in one area use this to "venture out into another class of information which they may not be as rich at". Google uses human raters to assess the quality of individual sites in order to counter this effect, he adds.

I've known about this for several years but wasn't able to get anyone from Google on the record. These Google employees have the power to promote or even completely erase a site from the Google index.
Scott Cleland:
Wow. After a decade of passionate public representations that Google's vaunted search algorithm is "neutral' and unbiased, we now learn it has substantial regular human intervention to discriminate what site gets what ranking, who gets found and who does not, and who wins and who loses in the business of online content.
The explosion in mobile apps, including our broker iPhone/iPad/iPod app, is changing everything online.

Uzma Khan:

The finding: Denying people access to a product will make them desire it more and work harder to get it--but will also make them less likely to keep it.

The study: Uzma Khan and her colleagues Ab Litt and Baba Shiv awarded a gift card to an electronics store to people who completed a word puzzle. Half the recipients earned the prize on their first try; half had tried to win it before but failed. Before receiving a card, all were asked how much they'd pay to obtain it. People who'd previously been denied the prize were willing to pay much more but then were more likely to trade their card away when offered the chance to exchange it for a different card.

The challenge: Is the assumption that we want what we like and we like what we want flawed? When a product is hard to obtain, do we lust after it more but like it less once we get it? Professor Khan, defend your research.

Khan: This jilting effect is big. People who initially failed to win a gift card said they'd pay 43% more to get one than people who hadn't, but only 22% of the initially "jilted" group decided to keep the card instead of trading it. In the group that wasn't previously denied access, 57% of the people--nearly three times as many--kept the card. And in a follow-up experiment, the effect transferred to the company's other products. We told half the subjects that they could win Guess sunglasses, contingent on supplies. They were later told we had run out of glasses. In a product evaluation, those people then rated Guess watches lower and Calvin Klein watches higher than the other half of the subjects, who hadn't expected to win glasses and didn't experience the stock-out. Oddly, when we asked the people who'd been denied the glasses which watch they'd like to receive, they chose the Guess watches more often than the Calvin Klein ones.

Facebook's Culture Problem May Be Fatal

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Bruce Nussbaum:

Facebook's imbroglio over privacy reveals what may be a fatal business model. I know because my students at Parsons The New School For Design tell me so. They live on Facebook and they are furious at it. This was the technology platform they were born into, built their friendships around, and expected to be with them as they grew up, got jobs, and had families. They just assumed Facebook would evolve as their lives shifted from adolescent to adult and their needs changed. Facebook's failure to recognize this culture change deeply threatens its future profits. At the moment, it has an audience that is at war with its advertisers. Not good.

Here's why. Facebook is wildly successful because its founder matched new social media technology to a deep Western cultural longing -- the adolescent desire for connection to other adolescents in their own private space. There they can be free to design their personal identities without adult supervision. Think digital tree house. Generation Y accepted Facebook as a free gift and proceeded to connect, express, and visualize the embarrassing aspects of their young lives.

Then Gen Y grew up and their culture and needs changed. My senior students started looking for jobs and watched, horrified, as corporations went on their Facebook pages to check them out. What was once a private, gated community of trusted friends became an increasingly open, public commons of curious strangers. The few, original, loose tools of network control on Facebook no longer proved sufficient. The Gen Yers wanted better, more precise privacy controls that allowed them to secure their existing private social lives and separate them from their new public working lives.

Investing in the Shopper Experience

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Ben Ball and Ray Jones [PDF]:

Defining "the shopper experience."
The sum total of everything the consumer encounters on the journey from identifying a need to filling it -- this could serve to define "the shopper experience" in the broad sense. But for the purposes of our recent RETAIL:NEXT survey of retail and CPG industry professionals, we concentrated on the elements of that process that surround the fundamentals: product, price and customer service. Within this realm, we saw: store design and ambience; the availability and use of technology, such as digital signage and self-scan; and other elements surrounding the purchase process, such as how Green or socially responsible the retailer is. In short - our survey looked at the shopper experience in terms of the things retailers do to differentiate an otherwise common purchase experience.

The shopper experience is critical to retailer success.
The impact of the Great Recession on consumers' shopping behavior is still with us. And as we noted in the second survey of the RETAIL:NEXT series Fad or Trend, many of those behaviors look to be permanent. So the first question we asked in the Shopper Experience survey was aimed at understanding just how important the "shopper experience" is to overall customer satisfaction. The answer was unequivocal: every respondent group in the survey had the shopper experience either first or second in their ranking of importance to overall customer satisfaction.

So what influences the shopper experience? What has the highest ROI?
To design this survey we polled a sample of the RetailWire BrainTrust to tell us what they believed to be the key contributors to the shopper experience. The twenty-six elements we wound up with fall into two basic groups. The first, aspects of the store environment itself, from the basic store design to what kind of signage and navigational aids are employed. This group further divides along the lines of technology. For example, signage and navigational aids can be either traditional or newer technology-driven iterations, such as digital signage and electronic shelf labels.
The second grouping encompasses things that influence the shopping experience, but are not physically present in the store. Examples would be inventory management systems that drive breadth of assortment, or shopper buying history which can be used to tailor offers to the store's best customers.

...And the winner is?
Of course we could not resist asking the RetailWire community which retailers they believe are doing the best job maximizing the impact of the shopper experience. They selected their three favorite from among 60 candidates. (Can you guess the top three? Results follow...)

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