Knowledge at Wharton

Consumers’ love affair with expensive customized cups of coffee shows no signs of abating even though most orders consist of little more than a cup of water a splash of milk a spoonful of coffee grinds and 30 seconds of labor. Indeed Starbucks has managed to turn its customers’ craving for caffeine into a $6.4 billion a year business with close to 6 000 company-owned coffeehouses already up and running and five new ones opening each day. All of which explains why so many coffee sellers seem intent on taking away some of Starbucks’ highly profitable market share. Yet according to Wharton marketing professors some companies are so obsessed with swiping business from Starbucks or losing customers to it that they may be abandoning a niche that has already proved profitable. Hosted on Acast. See acast.com/privacy for more information.

The phrase ”free shipping” is like a siren song to many who shop on the Internet. For whatever reason a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10 says Wharton marketing professor David Bell. Bell noticed this phenomenon a few years ago while doing research for an online grocery store and the observation prompted him to look more closely at the ways Internet retailers use shipping charges -- or the lack thereof -- as a promotional tool. The result is a recent paper titled ”Free Shipping and Repeat Buying on the Internet: Theory and Evidence ” by Bell and colleagues Skander Essegaier from Koc University and Yinghui Yang from the University of California at Davis. Hosted on Acast. See acast.com/privacy for more information.

In the second of a two-part interview Azim Premji who owns more than 80% of Bangalore-based Wipro India’s third largest software exporter discusses why that country’s IT companies have done a better job at delivering services than developing products. Speaking with Wharton professor Ravi Aron he points out that customers are beginning to unbundle prices with the result that established IT and consulting firms are starting to see premiums disappear. ”Customers are trying to optimize value ” Premji says. ”The old boys’ club of closed tennis court relationships is on the way out.” Hosted on Acast. See acast.com/privacy for more information.

When James C. Collins and Jerry I. Porras wrote their hugely popular 1994 book Built to Last: Successful Habits of Visionary Companies they began by stating clearly that they did not mean to write about visionary leaders. Their goal was to find visionary companies -- the crown jewels of their industries -- and discover what made them extraordinary. Then questions arose about the extent to which the principles of Built to Last might apply to individuals. That sparked another investigation that has now led to a follow-up book Success Built to Last which will be published by Wharton School Publishing later this year. Mark Thompson and Stewart Emery co-authors with Porras of Success Built to Last spoke with Knowledge at Wharton about their book. In addition the authors are conducting a global survey on how people think about success; a link to the survey can be found at the end of this interview. Hosted on Acast. See acast.com/privacy for more information.

Roy Vagelos a highly regarded pharmaceutical executive who spent two decades at Merck including 10 years as CEO has often said that ”research remains my life blood ” and indeed he has stayed active in the industry since his retirement from Merck in 1994. For example he is chairman of the board of two small drug companies Regeneron Pharmaceuticals and Theravance and in 2004 co-authored a book entitled Medicine Science and Merck. Vagelos recently spoke with Robbie Shell editorial director of Knowledge at Wharton and Steve Guglielmi Knowledge at Wharton senior editor about the future of the pharmaceutical industry including competition from generics the impact of outsourcing biotech alliances pricing strategies and the next big drug breakthroughs. Hosted on Acast. See acast.com/privacy for more information.

Kevin Werbach a professor of legal studies and business ethics at Wharton spoke recently with David Yaun an IBM executive about the company’s Global Innovation Outlook project. According to Yaun ”traditionally companies have identified innovation with gadgets and gizmos but that thinking is being transformed.” The definition of innovation is being broadened -- it is becoming more open collaborative global and inter-disciplinary. ”The barriers to innovation and collaboration have come down dramatically ” Yaun says. This was the second in a series of interviews about themes to be featured at Supernova a conference Werbach organizes in collaboration with Wharton in San Francisco. Hosted on Acast. See acast.com/privacy for more information.

When Google announced its Gmail email service two years ago a lot of people figured the company was joking. After all Google had been known to offer up the occasional gag like saying it was starting a research center on the moon. More importantly nobody believed that consumers would tolerate Google’s plan of scanning people’s emails and then delivering advertisements to them based on the emails’ contents. Two years later Gmail has tens of millions of users. But consumers’ initial disbelief underscores the web’s knotty privacy problem according to participants at the recent 2006 Wharton Technology Conference. Consumers say they want privacy online although they often behave in ways that contradict that statement; companies insist they will protect privacy although they sometimes fail to do so. And everybody is wary of increased government regulation. Hosted on Acast. See acast.com/privacy for more information.

Everyone uses commodities such as wheat cocoa crude oil butter coal and electricity. But most investors know that speculating on commodities in the futures markets is only for the pros and no sensible amateur would bet his retirement or college funds on sugar silver orange juice or feeder cattle. But are commodities really that risky? Using the most comprehensive data on commodities futures returns ever assembled Wharton finance professor Gary Gorton and K. Geert Rouwenhorst finance professor at the Yale School of Management have reached a surprising conclusion -- that commodities offer the same returns as investors are accustomed to receiving with stocks. Gorton and Rouwenhorst present their findings in a paper titled ”Facts and Fantasies about Commodity Futures.” Hosted on Acast. See acast.com/privacy for more information.

A talking chimp arriving in e-mail inboxes speaks in its sender’s voice through a telephone connection or recites a pre-recorded joke for the boss. Burger King’s ad campaign offers a ”subservient chicken” site where viewers can type in commands to a person in a chicken suit with red garters. JibJab is developing a new site called JokeBox where consumers and corporations can post and share funny videos or jokes online. These are among the latest viral marketing campaigns that blend advertisement and interactive entertainment across informal consumer networks. The convergence may be inevitable say Wharton faculty and others but it remains unclear whether such an approach is sustainable and measurable and whether it will actually generate new business. Hosted on Acast. See acast.com/privacy for more information.

Azim Premji 60 owns more than 80% of Bangalore-based Wipro India’s third largest software exporter which had annual revenues of $1.8 billion in 2005. Forbes magazine reckons that his net worth exceeds $13 billion and it places him at No. 25 in its most recent ranking of the world’s richest people. In the first of a two-part interview with Knowledge at Wharton Premji speaks with Ravi Aron a professor of operations and information management at Wharton about Wipro’s reorganization last year following the departure of its former CEO; why the company chose to move to a new structure based on so-called verticals; how Wipro’s business operations are changing; and the challenges the company faces in building management talent. Hosted on Acast. See acast.com/privacy for more information.