Marketplace - American Public Media

AirAsia tragedy introduces U.S. to an iconic CEO

Mon, 2014-12-29 12:31

The disappearance of AirAsia flight 8501 is a story with lots of sadly familiar questions: What exactly happened, and where and how? Is there any hope for survivors?

One less-familiar element has been the quick response by the company and its CEO, Tony Fernandes, who has been talking to family members and taking to Twitter with the latest news.  For U.S. audiences, the story has been an introduction to an iconic Asian CEO and the innovative company he created.

In Jakarta this morning to communicate with Search and Rescue. All assets now in region. Going back to Surabaya now to be with families.

— Tony Fernandes (@tonyfernandes) December 29, 2014

In 2001, Tony Fernandes took over AirAsia and its enormous debts for 29 cents. He had a new idea: a budget airline for Asia.

It’s like Spirit Airlines in the U.S. — super-low fares, zero frills — but without the customer unhappiness that has become almost a trademark for Spirit. AirAsia’s gets great ratings for customer satisfaction. The difference is the customer that AirAsia serves.

"They’re really grabbing passengers who have never flown before," says Vinay Bhaskara, a senior business analyst with Airways News. "And they’re very transparent about their business model. You’re going to have to pay extra if you want extra."

For many AirAsia customers, flying itself is a huge upgrade, as reflected in the airline’s motto: "Now, everyone can fly!"

"That's an amazing concept — bringing air travel to the masses," says aviation consultant Michael Boyd, president of Boyd Group International.

By 2013, AirAsia was a network of regional airlines, and Fernandes was starring on an Asian version of “The Apprentice.” 

"All of these young business people were dying to work with him because of the mystique, and because of what he had actually accomplished," says Richard Turen, a luxury travel agent and a senior contributing editor for Travel Weekly.

Fernandes has branched out in other ways. He has a majority stake in an English Premier League football team and he's opened a chain of budget hotels that Turen says fill a new niche — something like a bridge between a hostel and a resort.

"It's like, 'Yes, you can go to a resort, and no it doesn’t have to be stuffy,'" he says. "'And no, you don’t have to pay $70 for breakfast.'"

As the weekend’s tragedy unfolded, Fernandes sent out multiple emotional tweets, calling the event his worst nightmare.

Corporate Twitter accounts try to be bae ... and fail

Mon, 2014-12-29 11:00

Bae, for those of you who don't know, is a favorite word of kids these days. I had to ask my 23-year-old colleague for a definition. Basically, "bae" is a term of endearment.

Now brands are getting in on the bae action, trying to be bae with everyone on social media. In response, the Brands Saying Bae Twitter account makes fun of corporate accounts that try to act cool. 

Accounts like Pizza Hut:

Basically this says that anyone who voluntarily follows Pizza Hut is too stupid to get a pun without an explanation. pic.twitter.com/RhMZzmD3aG

— Brands Saying Bae (@BrandsSayingBae) December 28, 2014

... and Whole Foods:

I wonder if Whole Foods CEO Walter E Robb IV tweeted this. pic.twitter.com/VNMHUhZ1db

— Brands Saying Bae (@BrandsSayingBae) December 29, 2014

Really, Whole Foods? We tweeted "bae" before it was cool:

Sequester cuts to squeeze BAE, overseas defense suppliers http://t.co/SwmYiHGmd2

— Marketplace (@Marketplace) February 21, 2013

Backlash over standardized testing expected to continue

Mon, 2014-12-29 11:00

One of the big stories of 2014 was the backlash against standardized testing. Teachers, principals and school boards protested against the number of tests their students had to take.

As most states gear up for the first big round of Common Core tests in 2015, more protests are expected.

"Teachers say it’s disruptive to the school day," says Marketplace’s education correspondent, Amy Scott. "And that spending a lot of time preparing for tests is not the same thing as learning."

So will we see fewer tests in 2015? Scott seems to think so. She says some states have already moved to reduce the amount of tests students have to take. And the No Child Left Behind Act of 2001 is long overdue for a rewrite.

The NFL's 'ready, set, fire' day

Mon, 2014-12-29 11:00

The NFL's regular season ended Sunday. And that means “Black Monday" followed, the day teams take stock of their wins and losses and, if they’re not happy, fire their head coaches and their staffs.

But finding new coaches means a scramble under intense pressure. Fans can turn into critics, teams are not allowed to recruit from their competition and owners are turning to executive search firms for help.

Greece political developments stir European debt fears

Mon, 2014-12-29 09:57

Greece may have tipped Europe back into crisis.

In its third and final attempt, the parliament in Athens failed to choose a new president, and that’s triggered a snap general election next month in which a radical anti-austerity, anti-bailout party called Syriza is the favorite to win.

Some analysts fear that if the Greeks do elect Syriza, it will weaken Germany’s support for Greece’s membership in the Eurozone and bolster German opposition to monetary easing across the stagnant Eurozone.

After a quiet 2014, the Eurozone looks set once again to become a major focus of international investor unease in 2015.

PODCAST: Walgreens goes global

Mon, 2014-12-29 08:17

This morning we try to see what's in store for the markets in last days of 2014, and look ahead to 2015 with Marketplace reporter Sabri Ben-Achour. Meanwhile, Walgreens is gearing up for a merger with Alliance Boots. We take a look at what's in store for the country's largest drugstore chain.

Eileen Fisher: Timeless design 30 years later

Mon, 2014-12-29 07:57

Eileen Fisher started her clothing line in 1984 with $350 in savings and a few design ideas inspired by the kimono. Thirty years later, her company is thriving. She has 67 stores across the U.S., Canada and the U.K. and she employs 1,200 people. Fisher supports women-run small businesses through grants and is collaborating with TakePart to share the stories of 30 female entrepreneurs in a series called "In Her Company."

Marketplace’s Adriene Hill talked to Fisher about the changes she’s seen in fashion and her company since she first began.

On how fashion has changed over the years:

What I’ve found that’s very interesting is that it’s sort of come full circle. We’re actually reproducing certain styles. We’re calling them icons that we did in the very first few lines that we designed.

We do watch the trends and we do think a lot about how our concept of timeless design belongs to the moment, so there’s an attention to trend while keeping in mind what will be timeless about this particular moment in time.

On her customer base:

I think our customer … I’d like to say she’s ageless and timeless and really a broad customer. In the early days, I would say she was an artist or therapist, maybe a teacher because there’s a certain creativity in how people wear the clothes. You put them together in a lot of different ways and also the idea of being ourselves, and therapists help us do that so therapists like the clothes.

Does Eileen ever use an alias?

With a few friends sometimes I do, but I won’t tell you what it is ... it’s funny because sometimes people will comment about my clothes or say something like … if someone takes my credit card they’ll say, “you know there’s a famous designer with your name,” and I’ll say, “Yeah, I know that” and I’ll just try to go anonymous [laughter] … because they don’t think that I would be her!

"The Interview" makes history

Mon, 2014-12-29 06:53

“The Interview” seems like an unlikely film to be making history.  The screwball comedy is about a plot to kill the leader of North Korea.

But “The Interview” is reportedly Sony Pictures’ biggest-grossing online release ever.  The latest figures on how much consumers spent to download the film?  More than $15 million, and counting.  “The Interview” is giving a healthy nudge to a trend away from movie theaters.

“I don’t think a lot of people necessarily want to go to their suburban megaplex anymore and drop 12 bucks for a box of popcorn or whatever they charge these days,” says Dan Kennedy, who teaches journalism at Northeastern University.

It’s not clear how Sony shares the cash from “The Interview” with its online distributors.  But it usually splits ticket sales with theaters, 50, 50.   

Kennedy  doesn’t think the studios are cheering the demise of the multiplex.  He says if theaters go extinct, there will be one less distribution channel for films. 

But he says theaters could revive themselves with extras, like special audio effects, that would make going out to the movies a more high-end experience.

Quiz: Higher ed’s biggest losers

Mon, 2014-12-29 04:33

Enrollment at two and four-year colleges declined 1.3 percent between Fall 2013 and 2014, according to the National Student Clearinghouse Research Center.

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Walgreens poised to get bigger and go global

Mon, 2014-12-29 02:00

Walgreens – the biggest drugstore chain in the U.S. – is poised to become the biggest drugstore chain on the planet. Shareholders approved the final stage of a merger with European drugstore chain Alliance Boots by a 97 percent margin at a company shareholder meeting Monday morning.

All told, the merger is worth more than $21 billion. In a 2012 deal, Walgreens acquired 45 percent of Alliance Boots. The remaining 55 percent tranche of the deal went forward in mid-2014, and following shareholder approval, it will close Wednesday. Executives from Alliance Boots will be in significant leadership positions in the merged company.

Alliance Boots has more than 4,500 stores across Europe, Asia, the Middle East and Latin America. Walgreens has more than 8,000 stores in the U.S. But, according to retail consultant Burt Flickinger of the Strategic Resource Group, Walgreens has weaker discount-programs and worse-performing stores than its rivals, and it has lost ground in the domestic market.

“This merger really allows Walgreens-Alliance Boots to pole vault past CVS or anyone else in global competition,” says Flickinger.

Meanwhile, Walgreens could benefit from some of Boots’ higher-end European offerings, says John Palizza, a retired business professor and former Walgreens executive who owns shares in the company.

“Some of Boots' private-label is very high quality,” says Palizza. “Here in the U.S., when you see private label you typically to think, ‘Well, this is second tier.’”

Selling more premium store-brands could help Walgreens, says Palizza, since it’s the items that fill the aisles in the front of the store – groceries, household supplies, health-and-beauty products – that increasingly drive drugstore profits.

Walgreens to get bigger and go global

Mon, 2014-12-29 02:00

Walgreens—the biggest drugstore chain in the U.S.—is poised to become the biggest drugstore chain on the planet. Shareholders approved the final stage of a merger with European drugstore chain Alliance Boots by a 97 percent margin at a company shareholder meeting Monday morning.

All told, the merger is worth more than $21 billion. In a 2012 deal, Walgreens acquired 45 percent of Alliance Boots. The remaining 55 percent tranche of the deal went forward in mid-2014, and following shareholder approval, it will close on December 31. Executives from Alliance Boots will be in significant leadership positions in the merged company.

Alliance Boots has more than 4,500 stores across Europe, Asia, the Middle East and Latin America. Walgreens has more than 8,000 stores in the U.S. But, according to retail consultant Burt Flickinger of the Strategic Resource Group, Walgreens has weaker discount-programs and worse-performing stores than its rivals and it has lost ground in the domestic market.

“This merger really allows Walgreens-Alliance Boots to pole vault past CVS or anyone else in global competition,” says Flickinger.

Meanwhile, Walgreens could benefit from some of Boots’ higher-end European offerings, says John Palizza, a retired business professor and former Walgreens executive who still owns shares in the company.

“Some of Boots' private-label is very high quality,” says Palizza. “Here in the U.S., when you see private label you typically to think, ‘Well, this is second tier.’”

Selling more premium store-brands could help Walgreens, says Palizza, since it’s the items that fill the aisles in the front of the store—groceries, household supplies, health-and-beauty products—that increasingly drive drugstore profits.

Staying ahead of the curve on cyberthreats

Mon, 2014-12-29 02:00

When hackers are increasingly organized and effective, what can a government do to protect citizens? Investing in open security architecture may be one option.

Addicted to TV Obsessions: Erin Mallory Long

Fri, 2014-12-26 11:37

This is the time of year that holiday-themed movies... even ones you seen dozens of times before, can feel like they're on an endless loop on TV.

For author Erin Mallory Long, The Muppet Christmas Carol is one story among many that she watched, indulged in, and maybe was obsessed with, time and again.

Erin is a regular contributor to Hello Giggles and has had work appear on CrackedxoJanetheKnowThe Toast,Thought Catalog and her own blog.

Your Wallet: New Year, New Job

Fri, 2014-12-26 10:34

At the beginning of the new year we tend to reflect on our career. Are you planning to jump start your job search?

We want to hear your story. How do you plan to stand out to potential employers in 2015?

Send us an email, or reach us on Twitter, @MarketplaceWKND

 

The science and art of stocking holiday shelves

Fri, 2014-12-26 10:07

Just a few days before Christmas, the once fresh-looking holiday aisles at a Target store in Portland, Oregon, were already picked over, complete with clearance signs.

So how did Target decide on these exact toys and holiday decorations? Not to mention how many of them the store should carry?

“It is to a large extent a science combined with an art," says Akshay Rao, a marketing professor at the University of Minnesota. Every year, retailers face this classic problem where they try to determine how much to order without fully knowing the demand, he says.

“You look at historical data, you look at trends, you look at stated preference in the marketplace through some sort of market research, and you come up with an estimate of what’s going to be hot,” he says.

For many retailers, Rao says, that’s just the first step.

“The other side of that equation is attempting to influence that demand," he says.

Retailers use tools like social media to steer customers toward certain products. They also use discounts or emphasize features, like a phone with a fancy new camera, to entice customers to buy, he says.

At the end of the day there’s still plenty of guesswork involved.

“And people who guess right are considered geniuses and are often lucky, and people who guess wrong are left holding a fair amount of inventory that then goes on sale the day after Christmas," Rao says.

But stores have a new challenge, says David Raffo, a business professor at Portland State University. Consumers are waiting longer to make decisions about what to purchase. And that’s making it harder to predict holiday sales.

“The way it use to be is that people would get signals, like Black Friday, what’s hot, what’s not, and then they’d try and get it on their shelves, more of it or whatever, as fast as possible," he says. "What are the sizes? What are the colors? What are the toys that people are wanting?”

But it’s better for retailers to have too much inventory than not enough, Raffo says.

“The cost of not having the product is lost sales," he says. "It’s not just the sale of that product, but if a retailer doesn’t have what you want, you may go to another store and do all your other shopping at that other store.”

And besides, without that extra stuff, how else would retailers be able to offer those great after-Christmas deals?

The science and art of stocking holiday shelves

Fri, 2014-12-26 10:07

Just a few days before Christmas, the once fresh-looking holiday aisles at a Target store in Portland, Oregon, were already picked over, complete with clearance signs.

So how did Target decide on these exact toys and holiday decorations? Not to mention how many of them the store should carry?

“It is to a large extent a science combined with an art," says Akshay Rao, a marketing professor at the University of Minnesota. Every year, retailers face this classic problem where they try to determine how much to order without fully knowing the demand, he says.

“You look at historical data, you look at trends, you look at stated preference in the marketplace through some sort of market research, and you come up with an estimate of what’s going to be hot,” he says.

For many retailers, Rao says, that’s just the first step.

“The other side of that equation is attempting to influence that demand," he says.

Retailers use tools like social media to steer customers toward certain products. They also use discounts or emphasize features, like a phone with a fancy new camera, to entice customers to buy, he says.

At the end of the day there’s still plenty of guesswork involved.

“And people who guess right are considered geniuses and are often lucky, and people who guess wrong are left holding a fair amount of inventory that then goes on sale the day after Christmas," Rao says.

But stores have a new challenge, says David Raffo, a business professor at Portland State University. Consumers are waiting longer to make decisions about what to purchase. And that’s making it harder to predict holiday sales.

“The way it use to be is that people would get signals, like Black Friday, what’s hot, what’s not, and then they’d try and get it on their shelves, more of it or whatever, as fast as possible," he says. "What are the sizes? What are the colors? What are the toys that people are wanting?”

But it’s better for retailers to have too much inventory than not enough, Raffo says.

“The cost of not having the product is lost sales," he says. "It’s not just the sale of that product, but if a retailer doesn’t have what you want, you may go to another store and do all your other shopping at that other store.”

And besides, without that extra stuff, how else would retailers be able to offer those great after-Christmas deals?

With 'Into the Woods,' Disney goes dark

Fri, 2014-12-26 10:01

Among the many holiday movies currently in theaters is an adaptation of the Broadway musical "Into the Woods." It’s about infidelity, sexual awakening, death and untidy endings — and now it’s a Disney movie.

Fans of the original Stephen Sondheim fairy tale mash-up worried that the Disney treatment would water down many of the dark themes that made it a departure from the typical blockbuster fairy tale. But the success of films like "The Hunger Games" has pushed studios to develop movies with more adult themes.

And so far, the move has paid off for Disney. According to early estimates, the film has brought in over $13 million since being released on Christmas Day.

New market for hack-attack insurance takes root

Fri, 2014-12-26 10:00

For the second day, the digital Grinch has stolen Christmas for gamers around the globe. Networks went dark for Microsoft's Xbox and Sony Playstation users, with a group of hackers calling themselves Lizard Squad taking responsibility.

It’s unclear if Sony or Microsoft had hacker insurance; we tried to reach them. But we do know breaches of web-based game systems come at great economic damage. And as it turns out, there is a growing world of insurance to provide protection against cyber attacks.

“The policies will typically cover the cost of notifying the affected persons, the customers, that there was a breach,” says Richard Betterley of Betterley Risk Consultants. "The cost of providing credit monitoring, legal counsel related to the breach and sometimes crisis management ... public relations campaigns, in other words.”

Like traditional insurance, if something goes wrong, the policyholder files a claim and hopes for a check.

Plenty of costs aren’t covered, like stolen ideas, stock losses and customer credit card losses. But with Xbox and Playstation joining a hacked wall of shame alongside Home Depot, JP Morgan and Target, more firms are buying peace of mind — and insurance firms are racing to provide it.

“Lots of organizations were just dabbling in this area of insurance a couple years ago,” says Larry Poneman of Poneman Institute R. “But with all of these data breaches, more and more insurance companies see huge amounts of profits to be made.”

Insurers face their own danger, though. They can’t predict hacking losses the way they can losses from tornadoes or fires.

“They are very much aware of their lack of actuarial data that underline how these policies are underwritten,” says Ted Julian of data protection firm CO3 Systems. “They could lose quite a bit of money quickly, if they’re not careful.”

Rebounding economy could mean more pay raises

Fri, 2014-12-26 09:59

For years, Americans expected an annual raise of anywhere from 2.5 to 3 percent. The recession brought that number down to 0.2 percent by June 2009, and inflation wiped out most wage gains that have occurred since. But recently, people have become more optimistic.

In December, Americans said they expect a raise of about 1.7 percent – a smidge above inflation, which seems to be running at around 1.3 percent.  

Will we actually get that raise? Hard to say.  

In December, average hourly wages jumped a fraction, around 0.4%. A promising figure, but one month of data does not make a trend. Twenty states and the District of Columbia have all raised the minimum wage, which will boost incomes at the bottom end of the spectrum.  

For the rest of wage earners, it's a question of how much slack there is in the labor market and the economy. If the unemployment rate continues to fall, workers may have the confidence to push for pay increases without having to worry about the line of people outside willing to work for less.

 

What health care in 2015 will look like

Fri, 2014-12-26 09:49

Marketplace’s Adriene Hill and Dan Gorenstein discuss how healthcare may change in 2015.

Hospital consolidations can mean a few things. On one hand, there will be potential for better convenience. Integrated medical records means you won’t have to fill out the same forms multiple times or take the same tests twice. Tom Main, a partner with Oliver Wyman's Health and Life Sciences Practice, says “I think we’re sitting at this incredible opportunity for the more connected, way more accessible, way more personalized, way more real time.”

However, if there’s been a merger in your area, it's easy to get lost in the system and you can expect higher prices. Since 1994, there have been 1,200 hospital mergers, and in certain markets, there have been 20 to 50% price increases. Carnegie Mellon economist Martin Gaynor says, “Actually those increases just get passed on to workers dollar for dollar so it actually comes home to roost directly on the backs of American workers.”

Gorenstein explains why some hospitals want to be bigger: "More and more hospitals and doctors are getting paid differently – they’re penalized for things like readmission, their requirements to have electronic health records. That stuff is expensive. Doing this stuff is new and it’s different. People are a little lost and that leaves people feeling anxious a bit, nervous a bit. Some people really believe the best way to weather this new era in healthcare is to be bigger. Bigger is better. They’ll have more money on hand and they’ll be able to do whatever they need to do to move. Others though, especially when it comes to the hospital mergers, believe the bigger they are, the more leverage they’ll have when negotiating with health insurers."

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