Insurance - Is it worth it?

As some of you may know, I bought a perfectly brand new, shiny iPhone 4S the day it came out of Apple's doors on October 14th (I actually pre-ordered it, but that's another story). So you may know where this is going. Exactly one month to the day, while casually getting out of my car, my phone decided to betray me - i.e. it jumped out of my pocket and landed harshly on the asphalt. Needless to say, it now looks like this...

Talk about shattered dreams. And to make matters even worse, I had just finished downloading the new updates that quelled the notorious "battery life" problem the phones were having! Ironnnyyy.

I did have a saving grace though...or so I thought. Luckily, I was coaxed in to purchasing phone insurance by the sleazy AT&T salesman. So I'll be getting a new iPhone really soon, right?

Wrong. I had been duped. Upon realizing my misfortune, I immediately called AT&T (with the shattered, yet fully functional phone if you were wondering). Not only did it take about 20 minutes just to get to talk to a real person, but once he got on, I was told some pretty discouraging news. Yes, I had bought the insurance, the $5.99/month charge was showing up here in my records. However, due to the fact that you caused the damage to your phone, as I was told, and because it was not an inherent problem with the phone itself, my insurance was essentially void.

Say WHAT?
However, if I wanted to I could buy a brand new phone for just the initial selling price of $199. Ha, um, sure let me get my card out while you rob me blind please. NO thanks. I even tried finagling my way through the much nicer Apple customer service. Best they could do was offer me a replacement screen for $150. Basically, despite the insurance I paid for my phone, I was S.O.L.

So it got me thinking...Why do people even buy insurance in the first place? Is it ever really even worth it? My research yielded some interesting results. At least in the realm of health insurance, people tend to equate health insurance with actual health care. That is, they purchase it due to their fear of not being treated if they become sick, rather than buying it to avoid really high medical bills. Also, people tend to buy health insurance because they think it will prevent them from becoming sick in the first place. That's extremely irrational you might say, who actually does that?

A little digging into the phenomenon of negativism can answer that question. Research by Jane Risen and Thomas Gilovich has shown that generally, people are reluctant to tempt what some may call 'fate'. That is, people believe that negative outcomes are especially likely following behaviors that 'tempt fate'. As an example, a study was given that asked people to read a passage about others who did or did not tempt fate, then choose the outcome to that story. The story was either of a person who decided to bring an umbrella to work or one who did not. Surprisingly, the majority of people who got the story about the person not bringing an umbrella (the one who tempted fate), chose the outcome of 'it began raining while walking to work'. This proved that the participants judged the likelihood of a negative outcome (raining) to be much higher when people tempted fate, so to say.

Back to my poor iPhone story, this idea of negativism makes perfect sense with my purchase of phone insurance. I can remember the exact moment when the AT&T salesman asked me the question: do you want to buy insurance for your phone today? A little hesitant, he insisted that it'd be a shame if I were to break my brand new phone. I began thinking: well, knowing my luck, if I didn't get the insurance, I'd surely break the phone somehow. And so, because of my propensity to think in terms of negativism, I bought the phone insurance. But was it worth it? Is insurance really worth it? For me, at least for the phone insurance I bought, it was really not worth it at all. Even without the insurance, I was informed that Apple would replace cracked screens for a flat $150 no matter what (of course that tiny bit of valuable information was coincidentally kept quiet by the AT&T salesman. Still bitter). So no, it wasn't really worth it. However, as for health insurance, I think I would sure want an umbrella to protect me from the showers of hefty medical bills.

Giving customers what they what

With almost every new piece of technology or software released to the public, there will always be someone to hack it. While most of these hacks can be detrimental to a company’s business, there are also others that can provide the company with new ways to put value into their products.  A friend of mine hacked his IPhone. However, the hack is not so that he can pirate apps that require money for free. Rather, he hacked his IPhone so that he can download “tweaks” to his phone. These tweaks can range from changing the look of each icon on the phone to completely changing the look of the IPhone. Some of the trickier tweaks even require people to pay for them. The reason that such a market would even exist is because there are demand for these tweaks on the IPhone and Apple has been unwilling to provide them. However, should they decide to also release tweaks like these on their App Store, the company would be able to find a new market to raise revenues in. This would most likely help decrease consumers hacking their IPhones, which will decrease the risk of the ever present temptation of using their hacked phones to pirate legitimate Apps that requires a fee to download.

An example of a company taking advantage of the hacking community to improve their product would be Microsoft. The release of their motion sensing device for the Xbox 360 game console, Kinect, created a frenzy for the hacking community. The moment a hacker showed the way to hack Kinect, the whole hacking community started to create unique ways of utilizing the device’s potential. One creative hacker was able to turn any pole-like object (a broom for example) into a light saber from Star Wars.

 Another person was able to create the illusion that you are walking on water through the use of Kinect.

Microsoft never meant for these applications to be possible. However, instead of condemning the hacking community for violating the product’s terms of services, Microsoft embraced the infinite possibilities their customers can create from their product. The company has created a competition for these hackers to develop creative ways to use Kinect and the top 10 will be chosen and invested in for further development and, eventually, commercial use. By doing this competition, Microsoft may be able to see how they can apply their product and ways they have never thought of. Also, the can get a glimpse into what the consumers want on their product that they can provide. Other companies should probably take a leaf out of Microsoft’s book and try listening to a different part of customers that they most likely would never even try to acknowledge in the past. 

--Hang Lin

Black Friday-Why Not Just Wait Until Cyber Monday?

I’ll join in on the recent posts about Black Friday.

I made a mistake. I somehow winded up at Wal-Mart on Black Friday. I wanted to pick up some golf tees that night, so I wouldn’t have to deal with the foot traffic in the morning. Looking back,  I would have been significantly better off going to a small sporting goods store the next morning. But I had no idea what to expect. I ‘knew’ Black Friday was packed, but I never understood the magnitude of the phenomenon. This was my first experience with Black Friday, and it will also be my last. What I saw absolutely shocked and amazed me. Each of the 25 check-out lines had 20 or more people in it. Each of those 20 or more people in line had a shopping cart full of discounts and offers. Certain shoppers even got to the store at 10 p.m. to be able to put special items into their shopping carts, even though they could not check out until midnight when the specials officially started. People were literally killing time in Wal-Mart for an hour and a half before getting in the 20 person line.

It's really that easy

The concept of Black Friday seems contradictory to the world we currently live in. Today, we see retailers being replaced by ecommerce sites such as Amazon or iTunes, or supplemented by their own sites such as BestBuy.com. We go to these sites for very simple reasons. They are available 24 hours a day, and we can access them from the comfort of our own home. Ecommerce rates continue to rise. They increased 9.8% from 2009 to 2010, and double digit growth rates are anticipated to grow from 2010 to 2011. Given this fundamental truth of our society valuing convenience and technology, why do we as a society participate in Black Friday when we have Cyber Monday? We live in a world where Blockbuster has gone bankrupt and Netflix has thrived because we would rather have DVD’s/digital options come straight to our home, rather than having to drive 3 miles down the road. Another example of this occurring can be seen in the book store industry. Borders is no longer existence thanks to the dominance of Amazon.

The reality is that the deals on Cyber Monday are very similar to those on Black Friday. Research has shown that people who shop on Black Friday also shop on Cyber Monday. That doesn’t surprise me, but it still is shocking that people will go through such lengths as waking up at 3 am to go to the mall to wait in line. Do people just not realize that the deals are similar? Do they want the instant gratification as opposed to having to wait for their items to be shipped? Consumers don’t desire instant gratification throughout the rest of the year, so I don’t understand why they would mandate it now. Clearly I appear to be in the minority on this issue given how many people go shopping on Black Friday, but I would just love someone to explain to me why they don’t just participate in Cyber Monday. 

Robert Reinhard

Black Friday--What Nightmares are Made of

Let me preface this post by saying that I am a shopaholic.  It’s no secret that I love fashion, and my idea of therapy is retail.  I love to go shopping, and can't resist a good sale.  That being said, there is one day of the year that I fear more than anything—Black Friday.  Most people would think I would partake in the shameless shopping madness that begins at midnight, but in reality I stay as far away as I physically can.  This year, as I tuned into the news to see how many shoppers were quite literally trampled to death in pursuit of a $10 toaster oven, I found myself wondering what kind of culture we have created.

If someone told me that I should drive to Target at midnight and wait in a crowded line for 3 hours with crazed housewives and eager shoppers, all for the privilege of spending my own money, I would tell them they’re crazy.  But year after year, never fail, the day after Thanksgiving continues to be the country’s biggest shopping day of the year.  The word “sale” has become gold to Black Friday shoppers.  It entices them to set their alarms for 1 am, actually risk their lives as they fight their way through the mobs of shoppers, and spend more money than they have.  If this isn’t the craziest consumer behavior our country has created, then I don’t know what is.

Looking past the danger of literally losing your life while shopping (because obviously a sale is worth endangering yourself), I find myself most confused by the reasoning that these customers seem to hold on to.  With sales of up to 80%, and deals on every item in almost any store countrywide, consumers focus on how much money they save.  However, they fail to recognize that these Black Friday sales really just entice customers to purchase things they do not need and were never planning on buying in the first place.  Maybe the force of the almighty sale is just too powerful, or maybe consumers have yet to figure it out, but I am going to lay it out for you all right now—buying something, even if it is on sale, still costs money. 

Just let that sink in for a minute.

I get it, and you get it, and maybe even the quintessential Black Friday shopper gets it, but once November 25 rolls around, all logic seems to go out the window. 

So even if this behavior is crazy (and I believe it is) it is clearly not going to change.  What does this mean for retailers and stores around the country?  Consumers have come to expect ridiculously low prices on Black Friday.  If it’s not at least 25% off, they’re probably not going to buy it, and if your store doesn’t have some kind of sale, you can forget about selling any merchandise on the country’s biggest shopping day.  So as a store, it is your responsibility to give in to this madness if you want to see your products fly off the shelves.  My only worry is that consumers are going to start to demand these low prices more than one day a year—and when that happens, the losing battle of a price war starts.  But so far retailers have done a good job of limiting their sales to November 25—which allows those hardcore shoppers to search for the best deals at 2 am, and lets me shop without the fear of being trampled on the other 364 days of the year.

-Raquel Scharyj

Sampling marketing

About two weeks ago, I went to the ABC store to purchase some drinks for my party. While I was passing through the Vodka aisle, I saw an unusual discount for Grey Goose; which is one of the best Vodka brands. Not only was it was on sale, but it also came with a free shaker in a box. As a consumer, I was really tempted to purchase Grey Goose Vodka instead of buying Smirnoff Vodka, of which I usually buy for parties. What has motivated me in switching brands?

In my Marketing Communication class, we talked about sales promotion tools of which businesses use as marketing strategies in order to stimulate consumers in their decisions. Examples of tools that businesses use frequently include contests, coupons, and sampling. Personally, I have never heard of Grey Goose until I tried the free sample that the cashier gave away last year.

Today, more and more businesses use free samples as promotional marketing strategies. Even though free samples may be expensive, they are one of the cheapest marketing tools available. In my opinion, sampling is the most effective marketing strategy to get consumers involved and give consumers a chance to try the company’s products. Free samples also help buyers in building trust and increasing consumer awareness.

Many different types of businesses also use samplings. By distributing free samples, companies will not only improve their brands, but also give them new opportunities for people to talk about. In my opinion, sampling is a great marketing strategy for building a strong brand especially if the company is new. If new companies do not give free samples to their customers, new companies will instead need to compete with low prices and compelling offers. Moreover, if companies use sampling methods, they may build significant trust for their customers. Consequently, this will lower their marketing costs, increase their prices, and expand the margins.

-Fraser Song

Is that why they call it "Black Friday?"

Every year for as long as I can remember, I have woken up at an ungodly hour of the morning on Black Friday (usually between 2-3 AM) to go shopping. Me and my dad used to go every year to get some stocking stuffers and various good deals (and of course, I was always in it for the free giveaways). I was such a dedicated Black Friday shopper that two years ago I woke up at 4:00 AM and walked 6 miles to the Hanes Mall with a group of friends so that we could get our slice of the sales. Last year I didn't really see any great sales, so I decided not to go- and then this year, I was given the choice of whether we wanted to flock out with the crazy shoppers to try and buy anything special.

We walked to Harris Teeter to buy the Thursday paper with the huge packet of ads, and brought it back to the house. I then looked through all the ads to see what would catch my eye. And once again I was somewhat disappointed- where were all the offers for free giftcards and ornaments and free rebate items? My friends, I regret to inform you, Black Friday has changed...it has taken a turn- a very dark and mind-boggling turn...

We had to drive my grandparents back to the hotel, and we got there right about 10 PM. My dad and I laughed because right across the street was a walmart, and earlier we had said the only good deal out there was the $2 dvds- so we decided to stop (we figured that since it was still Thanksgiving- it might not be too crowded). Entering Walmart at 10 PM was like entering a different world...There were lines wrapping through the entire store- people with carts filled with vacuums, blenders, and wiis- people shouting and rushing- squeezing through lines. What I thought would be a shopping experience, was more of an obstacle course race. I literally laughed at one point, because as I watched a group run to the back of the store (or attempt to), I just couldn't help but think just how crazy people were. Little did I know...

Yesterday and today I started hearing that Walmart had some violent breakouts. In fact, in California, a shooting is said to have broken out to fend of competing customers: http://latimesblogs.latimes.com/nationnow/2011/11/black-friday-walmart-violence.html

Black Friday was always supposed to be the first day of Christmas festivities (and other wintertime holidays). It's the day that it becomes socially acceptable to play holiday music and movies- the time to put up decorations, and the time to start holiday shopping. As a previous blogger points out, Black Friday is making strides online as well- however, after seeing what I saw in Walmart (which I consider a less popular Black Friday target store) I am confident in saying that in-store Black Friday shopping is not going anywhere. But I hope there is a change in what Black Friday is- I thought it used to be fun to wake up at a horrible hour to shop- but at what lengths? Why is it that people will get up and become horrible towards each other, all at the price of getting a deal? People are rude, and resort to violence in an effort to get their hands on the $20 blender. What part of that is the holiday cheer? Black Friday was called Black Friday because it was the day when all businesses were profitable- however I think these days it might better refer to the  horrid shopping habits and the scary lengths people are willing to go to in order to "get in the spirit"


Rachel Goldberg

The Black Friday Dilemma

After a day of food, family, and giving thanks, millions of people hoping to score great deals will crawl out of bed in the middle of the night to stand in the cold while waiting for stores to open. Then the shoppers will race through crowded stores where they may be pushed and shoved by people all trying to grab the same items, before they stand in long lines to complete their purchase. Many consumers will get to the store only to find the demand for the product they wanted was so high the product is out of stock.

This coming Friday is Black Friday, one of the busiest shopping days of the year in the U.S. and the day that marks the beginning of the holiday shopping season. Although dealing with sold out products and mobs of people at 4AM isn’t most people’s idea of fun, and I personally hear complaints about the shopping experience on Black Friday from friends and family each year, people are still eagerly awaiting the day. In fact, according to research from the National Retail Federation, 77 million U.S. consumers say they are definitely planning to shop in stores on Black Friday and an additional 74 million consumers might go shopping, depending on the sales offered. 

The choice seems to be not if we shop on Black Friday, but how we shop. Online shopping has become increasingly popular in the U.S. and is growing rapidly with forecasted growth of 16% in 2011, according to Forrester. Online shopping offers the comfort and convenience of shopping from your home but many customers still prefer in-store shopping for personal service, expert opinions from employees, and the store atmosphere, not to mention instant gratification and no shipping fees.

While I agree with the benefits of in-store shopping in general and enjoy shopping in-stores more than online, I do not see the in-store benefits applying to Black Friday where the shopping atmosphere is competitive and chaotic and there is little chance to ask the frazzled employees for advice or opinions. I have never been a big Black Friday shopper but in my opinion online Black Friday shopping seems like a much more attractive option than traditional in-store shopping. Many retailers offer the same or similar Black Friday deals online. The sales online often extend from before Black Friday through Cyber Monday, the Monday after Thanksgiving, and frequently include free shipping. Shopping for Black Friday deals online would allow people to avoid the chaos in the stores and to spend more time celebrating Thanksgiving weekend with friends and family. This year many stores are extending their Black Friday hours and opening at midnight Thursday, which may be an attempt to be more convenient for customers and compete with longer running online Black Friday sales.

With the option to shop online for Black Friday deals looming, why are millions of Americans still planning to brave the crowds and chaos for Black Friday shopping? Although people complain about how packed the stores are and about the lack of products available, do they secretly enjoy the experience? I believe many people enjoy the tradition of Black Friday shopping and feel it is an integral part of Thanksgiving and is as traditional as turkey, mashed potatoes and cranberry sauce. Online shopping might be easier but doesn’t allow for bonding with the people you shop with or for humorous stories to tell later.

Are you or your families planning a Black Friday in-store shopping trip? Do you prefer in-store or online deals? Do you think in-store Black Friday shopping will end in the near future as online shopping becomes more popular or do you think the tradition is here to stay? 

Claire Dunn