May 22, 2010 0
Ube roll
An ube roll is a Filipino pastry filled with purple yam and, as it turns out, enough sugar to keep me wired for 12 hours.
Apr 18, 2010 0
The politics of word choice: wellness vs health
Coming up with a suitable title for my thesis proposal has been an unexpected challenge. My project’s goal is the promotion of health or wellness, but which word should I use – health or wellness? If I had only read this NYTimes article earlier, I could have saved myself some time. By using the word “wellness,” I am apparently endorsing a movement that began in the 1950s that seeks, not to eliminate illness, but to maximize individual potential. Got that? Oh, the politics of word choice…
Apr 16, 2010 0
Respecting your audience
In a recent talk at Carnegie Mellon University, American statistician and professor emeritus Edward Tufte said “Respect your audience.” Pithy advice, but what does it mean?
Tufte goes around the U.S. conducting seminars on information design, so presumably he directed these words at information designers, people whose primary goal is the effective communication of information. He went on to say that, in many cases, the audience knows more about the content than the designer does. For instance, designers tasked with communicating information about the federal budget to lawmakers and economists are really designing for people who (we hope) know a great deal more about the deeper meaning of all those numbers.
Respecting your audience, then, means making an effort to understand what your audience will find obvious, and what it won’t. It means using a level of explicitness that is appropriate based on that understanding, rather than assuming your audience a) can read your mind or b) has no specialized knowledge of the domain. It means using language that your audience finds familiar and mental models that it recognizes.
Don’t worry that your work will become less accessible to a general audience. There is no general audience, just as there is no such thing as a family with 2.5 children. Faced with the choice of being unhelpful to a lot of people or being helpful to a few, opt for the latter. If more than one specific audience must be addressed, figure out what each audience wants to get out of the information and create a design tailored to each.
Below are some examples of information design I found related to the federal budget. Just for fun(?), guess who their audiences are.
What does the federal budget freeze look like?
Apr 11, 2010 0
Phipps Conservatory and Botanical Gardens: Spring Flower Show 2010
After nearly a year in Pittsburgh, I finally visited Phipps Conservatory and Botanical Gardens for the Spring Flower Show 2010. Located in Schenley Park, the conservatory is only a short walk from Carnegie Mellon University and free to all CMU students. Normal adult admission, by the way, is only $12 – cheaper than a movie ticket for Avatar 3D, and you get the scent experience, to boot. I spent a full two hours wandering from room to room, each overflowing with flowers and other surprises. Giant glass sculptures by Dale Chihuly, for instance, were interspersed throughout and blended beautifully with the living scenery. Some other highlights of my visit: making the stone animals spit water in the Children’s Discovery Garden, finding a room filled with model train sets, and learning there is a plant called Giant Dumb Cane.
Apr 10, 2010 0
Springtime
Apr 8, 2010 1
If Amazon could re-run history, here’s how it should have handled pricing best-selling e-books
If Amazon could re-run history, here’s how it should have handled pricing best-selling e-books
April 8, 2010 in Blog posts by nudgeblog | View Comments
In a recent post, the Nudge blog linked to a piece pointing out how Amazon’s pricing strategy for e-books is causing a headache for Apple. Of relevance to this example is a 1986 paper by Richard Thaler, Daniel Kahneman, and Jack Knetsch, “Fairness as a Constraint on Profit Seeking: Entitlements in the Market,” (gated copy here). In it, the authors develop the concept of a reference transaction in notions of fairness. A reference transaction is “a relevant precedent that is characterized by a reference price or wage, and by a positive reference profit to the firm.” Amazon’s $9.99 price for best-seller e-books was a money loser for the company, but that doesn’t mean its customers know that. After all, what does it cost to electronically publish a book? Blogs are free! As the authors point out, “The reference transaction provides a basis for fairness judgments because it is normal, not because it is just.” The $9.99 price has been around as long as the Kindle, which is long enough to be normal.
Reference transactions can change, and they will in the e-book world. Until then, since consumers are used to the current $9.99 price, the standard rules of prospect theory will apply. That means price increases are likely to lead to dissatisfaction, particularly since its not clear that the costs of electronic book publishing are any different now than they were three years ago. Why? Because of how Amazon marketed the first e-books.
Amazon can’t go back and re-run history, but it can learn for the future. When selling a new, or little used, product, it’s better to offer two prices. The first price is the price you’d charge for the product if it were popular and profitable. For Amazon in 2007, this might mean the price it would like to charge consumers in a 2010 world where e-books are no longer so strange. The second price is the discount price. This strategy is similar to the kinds of introductory trial prices that cable companies offer, although without an explicit time frame on it. When the company decides it can no longer keep subsidizing the product, it ends the discount. Plain and simple.
This isn’t what Amazon did, though. $9.99 wasn’t a special discount price. Amazon didn’t make a big deal that the standard retail e-book best-seller price was $16.99, and that it was offering a 40 percent discount. $9.99 was just…the retail price. Raising prices usually irks consumers. But as any good student of prospect theory knows, taking away discounts is much easier for consumers to swallow than raising prices–even though it’s effectively the same thing–because of loss aversion and some consumers’ understanding of the retail price as the reference price. This logic even applies for hot products. The original retail price acts as the reference point against which consumers judge the price increase. Since they already thought they were gaining something with the discounted price, it hurts a bit less when its taken away compared with simply jacking up the discount price when it’s not framed as a discount.
It turns out that Amazon’s actions aren’t just affecting Amazon at the moment. They are a costly externality for Apple as it tries to figure out a pricing strategy for books on the iPad. Unlike Amazon, Apple is starting fresh, which means it can adopt the two price strategy on iBooks. It hasn’t so far, but there’s still time.
Addendum: Amazon did advertise its Kindle book prices relative to the hardcover list price. But that wasn’t a useful reference point since customers did not see the two products as identical.
Tags: iPad, Kindle, loss aversion, price, reference transaction
via nudges.org
May be useful for designers bringing new products to market. *cough* shotyz! *cough*