Nickels & Dimes Keep Airfares Low

“Air travelers love to gripe about fees: $25 to check a bag; $34 for early boarding; $129 for a few more inches of legroom,” writes Rafi Mohammed in The Wall Street Journal. “The challenge for this kind of model is managing perceptions … Customers may feel nickeled and dimed, but the a la carte model gives them the option to save money. Theoretically airlines could bake the cost of amenities into the base fare and then offer ‘discounts’ for giving them up. But that isn’t intuitive: Take $9.95 off if you don’t use in-flight Wi-Fi?”

“American Airlines recently charged $22 for ‘preferred’ seating in the front of the cabin—but with no added legroom. Internet access on some flights costs $40. Is this gouging? No, travelers who pay for these extras are subsidizing low fares for the rest.”

“In 2014 airlines generated $38 billion in ancillary revenue, according to a study by IdeaWorks. That money keeps base fares low. And airline profits are far from outrageous. The average net margin for all scheduled U.S. carriers was 4.4% in 2014. Even in the first three quarters of 2015, after oil prices had plummeted, the average net margin was only 14%.”

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Airlines & Flyers View Prices Differently

The Wall Street Journal: “American, Delta and United have new pricing rules that could easily raise the cost of many trips. Think of it as making a six-pack of soda twice as expensive as buying six cans individually.” For example: “For a May 4 trip from Chicago to Des Moines, Iowa, with a May 5 return flight from Kansas City, Mo., back to Chicago, American offers a fare of $522. But if you buy those flights individually, you’d spend $107 to get to Des Moines, then $65 to fly from Kansas City to Chicago, or a total of $172.”

“Airlines look at pricing through a different lens from their customers. Instead of adding up the fare from each flight on a trip, airlines look at each starting point-to-destination trip as its own market. Airlines want the ability to set pricing for a Kansas City-Honolulu trip as a unique product, not simply the sum of flights from Kansas City to Los Angeles and Los Angeles to Honolulu.”

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Fashionably Moo: The Rise of the Microdairy

“Add milk to the long list of traditional foods that are being rediscovered by young entrepreneurs and reintroduced in small-batch — and often high-priced — form,” reports The New York Times. “As historically low milk prices leave many mom-and-pop farmers struggling, some are choosing to ride the wave of the nation’s new food awareness … bottling their own milk (and ice cream and yogurt) and selling it directly to customers. And they are heralding the various ways it may be different from conventional milk — whether unhomogenized, organic, from grass-fed cows or locally produced.”

“Now many restaurant menus cite the provenance of their dairy products in the same way they boast of grass-fed rib-eyes and hydroponic tomatoes. And consumers are willing to spend more for boutique milk at farmers’ markets and upscale grocers … Manhattan Milk, a small distributor in New York City, evokes the days of the milkman, delivering glass bottles of grass-fed, organic milk from dairies in the region to doorsteps as far away as Greenwich, Conn … Customers of 1871 Dairy, in Wisconsin, “want more than the word organic slapped on a label; they want the satisfaction of knowing the milk was made close to home, in small batches rather than industrial vats.”

“Customers want to learn the story behind the food to see if it’s the values they hold,” says Joe Miller, the marketing director at Trickling Springs Creamery, a small dairy in Chambersburg, Pa. “The more you open the door for them to see behind the scenes, the more comfortable they feel with your product.”

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Philz Coffee: The Value is in The Experience

A San Francisco coffee house called Philz plans to challenge Starbucks with a different kind of experience, Forbes reports. “At Philz you won’t find the fancy brewing equipment of an artisanal coffeehouse. Beans are ground to order and then splashed with 205-degree water in pour-over funnel brewers. The coffee is good, but it is not cheap–a small coffee costs almost twice as much as Starbucks’ equivalent. Philz proponents say the value lies as much in the experience, or in what (founder Phil Jaber and his son Jacob) call ‘Grandma’s House,’ as it does in the coffee.”

“Unlike the corporate uniformity of Starbucks or the manicured hipster haunts like Blue Bottle, Philz has an informal charm that can be found in the mismatched couches at its original location and in the cup-by-cup approach of its baristas, who load drinks with heavy cream and brown sugar to each customer’s preference. ‘Taste it and make sure it’s perfect,’ a barista says before handing over a beverage. Details like that foster ‘an emotional connection’ for customers, says Jacob, 29, the CEO. ‘We think of ourselves as more in the people business than the coffee business.'”

“This year Philz plans to open at least two locations in Washington, D.C., the first true test of whether the company’s service-oriented approach can succeed outside California. Ultimately Jacob has visions of expanding into New York and Boston, with 1,000 stores nationwide, and “disrupting” the coffee industry … So far the company has interviewed more than 300 people, and Jacob has hired 30 … All will go through the company’s Apple-influenced Philz University training program, where they’ll be taught not to ask for customer names the way Starbucks does when taking orders. Doing so, Jacob says, is impersonal, because it suggests you’ve never met, and there’s a chance you’ll get it wrong.”

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Virgin-Alaska: Passion vs. Performance

The New York Times: The Alaska Airlines takeover of Virgin America may test whether passion or performance is paramount when it comes to creating customer loyalty. “Although Alaska has been a perennial leader in best-airline rankings, its allure comes more from its reliability than mood lighting or funny safety videos. Like Virgin America, it inspires loyalty among customers, if not the same passion.”

However, travel industry analyst Henry Harteveldt thinks Virgin America “failed to capitalize on its San Francisco hub or to build on its early innovations … The airline compensated for its financial losses by cutting flights in recent years, even as it added routes to Hawaii and elsewhere. While passengers may love the ambience of a Virgin flight, they love the ability to get where they are going more.”

“The combination of hip and practical could give the new company a competitive advantage, Mr. Harteveldt said. The smartest thing Alaska could do … would be to combine the characteristics that have made each airline popular.”

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How Gillette Delivers a Close Shave

The Wall Street Journal: Gillette employs an “elite squad of shave testers” who “assess 45 attributes of the shaving experience, rating some more obvious ones like tugging and redness, to more obscure ones like ‘blade feel’ and noise … The input helps Gillette’s scientists hone the razors it sells to three-quarters of a billion men world-wide, helping optimize coatings on blades and lubrication strips on cartridges.”

“Gillette, a Procter & Gamble Co. division, created the current panel by winnowing a pool of some 200 applicants. A visual screening eliminates guys with slow-growing beards or swirls in their stubble. To make the cut, candidates must pass sensory tests that gauge vision, touch and ability to detect subtle differences. One test involves inserting a hand in a box with three sanding blocks and identifying which is different.”

“There is usually no shaving cream. Bar soap is preferred, as it helps isolate the performance of the razors … After a pre-wash, they hold the soap beneath a stream of water set between 95 and 105 degrees. After 10 seconds, they roll the bar 10 times between both palms. Then they gently rub their hands together in 10 circles forming a lather, applied in a sweeping swirl … A timer gives them a 10-minute pause to assess their work. They repeat the process on the other half of their faces using the second razor.”

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Is Innovation Overvalued?

Aeon: “As the pursuit of innovation has inspired technologists and capitalists, it has also provoked critics who suspect that the peddlers of innovation radically overvalue innovation. What happens after innovation, they argue, is more important. Maintenance and repair, the building of infrastructures, the mundane labour that goes into sustaining functioning and efficient infrastructures, simply has more impact on people’s daily lives than the vast majority of technological innovations.”

“First, it is crucial to understand that technology is not innovation. Innovation is only a small piece of what happens with technology. This preoccupation with novelty is unfortunate because it fails to account for technologies in widespread use, and it obscures how many of the things around us are quite old … common objects, like the electric fan and many parts of the automobile, have been virtually unchanged for a century or more. Yes, novel objects preoccupy the privileged, and can generate huge profits. But the most remarkable tales of cunning, effort, and care that people direct toward technologies exist far beyond the same old anecdotes about invention and innovation.”

“Second, by dropping innovation, we can recognise the essential role of basic infrastructures … Third, focusing on infrastructure or on old, existing things rather than novel ones reminds us of the absolute centrality of the work that goes into keeping the entire world going … most of this work falls far outside the realm of innovation. Inventors and innovators are a small slice … The most unappreciated and undervalued forms of technological labour are also the most ordinary: those who repair and maintain technologies that already exist, that were ‘innovated’ long ago.”

“Entire societies have come to talk about innovation as if it were an inherently desirable value, like love, fraternity, courage, beauty, dignity, or responsibility. Innovation-speak worships at the altar of change, but it rarely asks who benefits, to what end? A focus on maintenance provides opportunities to ask questions about what we really want out of technologies. What do we really care about? What kind of society do we want to live in? Will this help get us there?”

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How Walking Influences Thinking

Quartz: “The precise physiology is unknown, but professors and therapists are turning what was once an unquestioned instinct into a certainty: Walking influences our thinking, and somehow improves creativity. Last year, researchers at Stanford found that people perform better on creative divergent thinking tests during and immediately after walking. The effect was similar regardless of whether participants took a stroll inside or stayed inside, walking on a treadmill and staring at a wall. The act of walking itself, rather than the sights encountered on a saunter, was key to improving creativity, they found.”

“It’s not exactly clear why walking is helpful to so many thinkers, but ‘it could be that the brain is focusing on doing a task it’s quite good at’ … which then allows it to free up and relax. Exercise is known to improve mood, and so it’s likely that the aerobic activity has an effect. But it’s not clear whether more intense forms of exercise has exactly the same effect as walking.”

“Barbara Oakley, engineering professor at Oakland University who wrote a book about learning effectively which includes the benefit of walking, says in an interview that we make a mistake of thinking that we’re only learning when we’re focused. In fact, walking allows us subconsciously process and think in a different way … Meanwhile, several therapists have embraced the benefits of walking, by only conducting sessions outside. Clay Cockrell, who runs a walking therapy practice in New York, says he believes the motion, as opposed to sitting on a couch, allows for more free form thinking.”

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The Gray Market: Boomers are Booming

The Economist: “Today the developed world is in the early stages of a ‘gray-quake.’ Those over 60 constitute the fastest-growing group in the populations of rich countries, with their number set to increase by more than a third by 2030, from 164m to 222m. Older consumers are also the richest thanks to house-price inflation and generous pensions. The over-60s currently spend some $4 trillion a year and that number will only grow.”

“Some firms are trying to understand older people better. Kimberley-Clark, a maker of consumer products, has built a mock-up of what a senior-friendly shop might look like in the future. Ford has created a ‘third-age suit’ for car designers to wear to help them understand the needs of older people: the suit thickens the waist, stiffens the joints and makes movement more cumbersome … Understanding is giving birth to new products and business models … Retailers are surreptitiously lowering shelves and putting in carpets to make it harder to slip … Kimberley-Clark has overhauled its Depend brand of adult nappies to make them more like regular underwear.”

“The baby-boomers have changed everything they have touched since their teenage years, leaving behind them a trail of inventions, from pop culture to two-career families. Retirement is next on the list.”

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Fisher-Price Designs Chic Toys for Stylish Parents

“Mattel Inc. is bringing in designer Jonathan Adler as creative director for its Fisher-Price baby gear and infant toys, as it seeks to reverse a prolonged sales slump at the brand,” The Wall Street Journal reports. Mr. Adler, a ceramicist turned interior designer who has produced collections for Barneys New York and other retailers, has reached a three-year partnership with the company.”

“Mr. Adler has designed a premium priced collection of Fisher-Price baby furniture, gear and apparel that will start selling in September. His design influence also will be applied to everyday Fisher-Price products that will be widely available in early 2017, which will be priced in line with current Fisher-Price items. ‘Your kid’s stuff is going to be in your life and your living room all the time. It’s the landscape of your house … It needs to look chic,'” Mr. Adler said.

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