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Posted by Kevan Lee, May 7

Planning on taking a trip this summer? One summer ago, gas prices were at an all-time high, stay-cations were all the rage, and the annual summer getaway seemed like something out of a 1950's-era Norman Rockwell calendar. What a difference a year makes.

Now, instead of skyrocketing fuel and agoraphobic family outings, the culture of the summer vacation has changed completely. Gas prices have come down by nearly half of their previous highs. Hotels and resorts are desperate to gain customers. License plate bingo is now available as an iPhone app. There's nothing standing in the way of mom and pop throwing the kids in the car and heading off toward some random national landmark… Oh yeah. There is that whole recession thing.

But even a recession can't keep down an adventure-seeking, fanny-pack-toting American this summer. There are recession-proof ways of beating the work week blues, even for those people whose work weeks have suddenly involved a lot less work. Cheap alternatives to travel are everywhere nowadays, and most of the credit should go to auction-style vacation websites like Priceline.com and Hotwire.com.

Here's how they work: Hotels, airlines, and rental car agencies invariably have leftover inventory that doesn't sell, be it rooms or seats or smelly old Dodge Neons. Their solution is to hand the selling duties over to these auction websites so that they can move some of their stale services. The auction sites, in turn, ask customers to bid on certain packages in their destination city, and then the sites take the highest bidder. It works for the hotels, flights, and rentals because it doesn't let off the appearance of desperation or price-cutting. It benefits the auction sites because, well, people are giving them money. And it benefits Joe Vacationer because he just got a room in a five-star hotel for $179 a night.

Ah, but what would a deal be without a catch? The auction sites are great, but you have to be prepared to deal with the consequences of a decision. Purchases are nonrefundable. Actual hotel, plane, and rental names are not revealed until after you sign on the dotted line. It's a big commitment to make, but it's also a big savings to be had.

The New York Times agrees:

“With published rates already so low, travelers are finding that opaque travel deals are even better than in the past. According to Brian Ek, a Priceline spokesman, users can save 40 percent on airfare (“up to 60 percent at the last minute”), as much as 50 percent on a hotel room and up to 30 percent on a rental car.”,

But which auction site gives you a better bang for your buck? The answer might depend on what you're looking for.

Bidontravel.com has a thorough post on the differences between the two sites, and its breakdown gives the price edge to Priceline but the security edge to Hotwire. For instance, bidding blindly on a hotel for Priceline might net you a lower price, but your hotel is likely to be chosen from a wider area and there's no guarantee of where your price will land. Hotwire on the other hand lets you see the price beforehand and narrows its neighborhoods to a greater extent.

"I always compare them," travel expert Don Nadeau says, "and go with the one that gives the most quality for the money on the dates I need. You should be satisfied with either company, as long as you realize that you can’t change anything once you’ve paid and you won’t get a refund if your plans change."

Putting the two services to the test with a flight reservation supports the theory of low price versus security. Let's say you live in San Francisco and want to fly out to New York to surprise your mom for Mother's Day (replace "mom" with Derek Jeter and "Mother's Day" with Yankees game, if you'd like). Getting started on both Priceline and Hotwire is simple. The home page of each site will have you surfing curiously through prices in an instant.

The price results offer a bit more separation, though. Hotwire's featured rate is $247 round trip through something called a "Hotwire Hot Rate," which Hotwire maintains is code for a good deal on a good airline. The Hot Rate doesn't tell you for sure how you'll be flying, though. Its other prices are mostly no more than $20 over the $247 price, and they do reveal the identities of the airlines. Several United flights made the list.

Priceline's results are noticeably lower than Hotwire's. The lowest price on Priceline is $218 (plus $20 in fees and taxes) for a roundtrip ticket on a number of different carriers - Delta, American, Virgin, and U.S. Airways. The price point sure is nice. But details for Priceline's trips are a little more sparse and a lot less guaranteed than they were on Hotwire's. In one instance, the listed price of $218 was placed immediately above a price for a nonstop flight at $528. Was the lower priced fare making a stop on the LOST island or something?

Still, working with either website can certainly cut down on the expenses of travelling. And if an auction site doesn't tickle your fancy, there are still many other options to choose from, too. Places like Orbitz, Expedia, and Travelocity claim low-price travel as well.

This summer, there really is no excuse not to hit the road or fly the friendly skies for a little R&R. Gas prices are low. Travel destinations are desperate to have you. And online travel sites have rendered the recession moot…. Well, maybe "moot" is the wrong word. You might have to settle for the three-star hotel at the two-star price.


Posted by Kevan Lee, May 5

Up until recently, music fans were charged the same exact price for the teenage crooning of Hannah Montana as they were for the timeless compositions of Ludwig Von Beethoven. Travesty? Not exactly. Cruel joke? Only kinda. Economic opportunity? Bingo.

Where most see a chasm of fundamental musical elements, online mp3 retailers and music labels saw a chance to squeeze a few extra cents out of crazed consumers. iTunes announced recently that it would be introducing pricing tiers across its catalog of songs, and other retailers like Walmart and Amazon quickly followed suit. Meanwhile, music labels placed their hands together, twiddled their fingers, and sneered, "Excellent."

It appears that the different pricing levels will be driven by consumer demand, in much the same way that record stores use the practice of charging more for their best-selling items. In online music stores like Apple's iTunes, the more popular songs will see their price jump over $1.00 apiece to $1.29. The mediocre masses in the middle will most likely remain at their current prices, and the less known tunes will essentially hit the bargain bin with prices slashed, in some cases, under 70 cents per song. For example, there's a good chance that some day consumers will be paying $1.29 for Eminem's latest, $0.99 for a track from indie group She & Him, and $0.69 for Christian cover band Apologetix's "Should I pray or should I go now?" Apologetix fans, rejoice.

What remains to be seen is how consumers will react to the changes. iTunes, Walmart, and Amazon have to be cognizant of the torrent cottage industry that many people use to get their songs for the low, low price of free. The spawn of Napster still exists in a very real way, and raising mp3 prices too far might drive whatever demand there was for another Limp Bizkit album straight to Bit Torrent for the free version.

However, the decision to raise music prices was most likely not made with these file sharers in mind. Rather, it was made with blindly loyal consumers in mind.

Apple, Amazon, and Walmart have created a customer base that is loyal to mp3 purchasing. Whether motivated out of guilt, simplicity, easiness, or vicarious justice, these shoppers are in a habit of getting their tunes from the same place. And they aren't going to mind an extra dime here or an extra quarter there. Or so the sellers hope.

One place that surely doesn't mind the higher prices is the music industry, and in particular the Mr. Burns-y music labels. In an article that appeared on Information Week, Antone Gonsalves claims that labels have been clamoring for a different pricing structure for online music, but they have only recently gotten Apple on board. As the (far and away) market leader, Apple's iTunes was key to changing the culture of online music shopping, and now more players on board, the music landscape is sure to be much different.

La La Media, which sells tunes and also offers streaming music over the Web, called the change an "industry shift."

"You will see much more variable pricing by all music retailers, with the price moving higher on some tracks and lower on others," the company said in its blog.

Music labels are happy. Online music retailers are happy. But only time will tell what consumers think of this.

Savvy shoppers may have already made up their mind, as the increased prices might drive business to cheaper alternatives. Assume that someone is out to buy the new Britney Spears album. In the good old days of, well, a couple days ago, this person could jump onto Amazon or iTunes and grab a whole album for right around $10.00. Most of the time this would beat the store prices by a couple bucks, and it would be a much easier, hassle-free experience.

But with the higher music prices for popular artists, Brit-Brit's new album will not be so cheap online. Throw in the new online markup of around 30 percent for popular artists, and the tides have suddenly turned from online mp3s being the clear winner to big box retailers looking mighty fine. Chances are good that the higher prices of certain songs will drive savvy shoppers off of web pages and into stores.

Others who are used to buying songs for just under a dollar might be a little more gun shy when decision time rolls around. It's one thing to mindlessly add $0.99 tunes to an iPod, but when the price jumps over the $1.00 threshold, all bets are off. The psychology of 99-cent pricing is a tried and true business tactic. Messing with that might mean trouble.

"Most consumers are aware of `99' prices and why firms use them to make prices look cheaper," says Vicki Morwitz, a marketing professor at New York University's Stern School of Business and co-author of the research. "But because of the way the human brain reads, processes and codes numbers, we're still influenced by them."

There's no telling for sure how the common consumer will respond to an increase in digital pricing, but at least there is a silver lining for a certain portion of the public. Those who enjoy under-the-radar music couldn't have asked for better news. Instead of paying the 99-cent price along with everyone else browsing and buying on Top 40 lists, this eclectic bunch will be able to get their music on the cheap. At the very least, Apple's decision should drive more purchases from this group of buyers.

As for the rest of the music-loving public, the jury's still out. Online music retailers have a lot of things going against them, from greater competition to price-point psychology (and don't forget about the timing; it is a recession, after all). Only time will tell if the tiered system is one that consumers will figuratively and literally buy into.


Posted by Kevan Lee, Feb 24

Expect the unexpected when it comes to business in this economy. Case in point, Amazon and EBay.

Two of the web's premier online stores are going in opposite directions, both in the sense that their revenue and income are increasingly dissimilar and that they are producing opposite results from what conventional wisdom might expect.

Let's begin with the former. In fourth quarter earnings reports released at the end of January, Amazon and EBay were headed different ways - Amazon decidedly going up and EBay going south. Amazon's fourth quarter revenue was up 18 percent and its income rose nine percent. On top of that, industry experts predict a rise in first quarter revenue and a relatively rosy outlook for the Seattle-based e-store.

Its online counterpart didn't fare nearly as well. EBay took a drop of seven percent in revenue and a plunge of 31 percent in income. It lost customers at a rate of three percent from totals last year, and it may struggle to keep revenue losses from falling even further in the first quarter of the new fiscal year.

With these figures for Amazon and EBay in mind, it is interesting to note the expectations for each business in the current state of the economy. In Amazon's case, retail businesses nationwide are struggling immensely, and it would have been understandable if some of the consumer hibernation had an impact on Amazon's figures. With the population getting thrifty when it comes to retail purchases, Amazon was expected to feel a hit.

EBay, it stood to reason, should have found renewed life as gun-shy citizens turned to cheaper means of acquiring the toys they used to splurge on. Ebay's auction-style market seemed perfect. People could unload the items they found excessive and pocket some much-needed money. Those in search of a good deal would have a bevy of options on Ebay's pages to scrimp and save.

Only none of this happened the way anyone expected. Amazon rose; EBay fell. And experts scrambled for an explanation.

The best they could come up with was that Ebay's user experience did not meet the needs of a consumer base that preferred traditional, dependable e-commerce like that found at Amazon. EBay excels in offering a wide variety of products (thanks to third party sellers), but they lack the polished, direct selling style of their competition. Buying a product on EBay has risk associated. Granted the risk may be negligible depending on the quality of the third party seller, but even an ounce of negligible risk - for instance, in the condition of the product, the speed of the shipping process, or the possibility of a scam - is more risk than one would find buying items off Amazon. Plus, when you throw in Amazon's customer service, competitive pricing, discounts, and convenient shipping, the Amazon experience would appear to come out the clear winner.

To test this phenomenon, I went shopping on EBay and Amazon, curious at what I might find. I consider myself a relatively unbiased participant: I don't have a preference for either site, and I shop online with fair infrequency. My object of desire: a Dark Knight Blu-Ray DVD.

Searching Amazon's site was a breeze. Other than a distracting Kindle letter on the front page, I was able to type in my search parameters (Dark Knight blu ray), and my movie was the first result on the next page.

Ebay's experience was a little more stressful. The searching was easy. I typed in the same "Dark Knight blu ray" text (both sites had a helpful auto-complete feature), but the results I was given came across as horribly confusing. The first result was a 500GB PS3 for $400.00. I did not want this. There were multiple listings of this PS3 throughout the page, but I found myself overwhelmed by the amount of Dark Knight DVDs that were for sale, too. Telling them apart was a chore. I finally decided on one that had a "Buy it Now" option because I did not have time to wait a day and a half for an auction to end.

I wouldn't be surprised if a lot of consumers just give up on EBay at this point. I nearly did. Pressing forward to the product pages only further served to test my patience.

Both Amazon's and Ebay's pages were busy with ads and links and information I was pretty sure I didn't need to know. This was the first thing I noticed. The second thing I noticed was the price. Amazon's Dark Knight cost $23.99, marked down from $35.99 for a savings of $12.00, Amazon made sure to tell me (I appreciated Amazon's doing the math for me). Ebay's price was a plain-and-simple $15.26. Point, EBay.

At face value, EBay won the price battle, but below the surface there was doubt brewing in my wary consumer thinking. Why was Ebay's price so much cheaper? Is there a problem with the item? Am I sure I'm even buying the right thing? And why $15.26? Who sells stuff at such a specific price? The whole EBay page just seemed fishy with seller rankings and graphics and logos that I didn't understand. Amazon explained why its price was so cheap. EBay just left me to wonder.

I continued through on both websites, clicking the "Buy it now" link on EBay and the "Add to shopping cart" button on Amazon. Ebay's page redirected me to a sign-in screen. Amazon's added my item to a cart and suggested other movies I might want to try. Point, Amazon.

The checkout process for each was similar enough that there was no clear-cut favorite. But the overall story was different.

Amazon won, and the only thing keeping it a game for EBay was the price. Had Amazon's Dark Knight been five dollars cheaper, my decision would have been a no-brainer.

After seeing both online stores firsthand, I can see how Amazon's style might succeed in a down economy while Ebay's might suffer. Amazon seems more organized, more reputable, and it appeals to a consumer experience in more ways than EBay does. If I had been looking for a rare collectible or a secondhand item, I may have had more success on EBay. But when the buying comes down to a group of similar products at similar prices, Amazon takes the cake.

And it's no surprise anymore why they're taking the market share, too.


Posted by Kevan Lee, Feb 5

Welcome your new fast food overlords.

In a down economy, the titans of industry have thus far proven to be the ones living under golden arches and doling out two all beef patties, special sauce, lettuce, cheese, pickles, onions, on a sesame seed bun. McDonald's and its fast food brethren are enjoying success in light of failure all around them, as consumers flock to cheap eats while money is tight.

Last week, McDonald's announced an 80 percent rise in net profit for last year, ballooning from 2.3 billion dollars to 4.3 billion. They were one of only two companies in the Dow Jones industrial average to see a rise in share price in 2008 (Wal-mart and those nutty rollback prices being the other).

The AP quoted McDonald's chief executive Jim Skinner as saying, "2008 was a strong year for McDonald's." It may have been the biggest understatement since the Arch Deluxe sandwich.

McDonald's' success bodes well for the future of other fast food restaurants as well. Many of the same principles that helped build Mickey D's into a powerhouse - value, efficiency, quality - are shared by other fast food luminaries such as Wendy's, Jack in the Box, and Burger King. Each of these restaurants should stand to gain with the economy turning for the worse. Those consumers who aren't satisfied with McDonald's can easily turn to any number of other quick options for the cheap grub they desire. Things are looking up for the Carl's Jr.'s of the world.

The secret weapon for these big players in the battle for Americans' dollars is the value menu, that bastion of calories and affordability. Some places even choose to call it the Dollar Menu or the 99-cent Menu, just to make it clear to consumers how serious they are about offering cheap eats. McDonald's made the value meal (a historic collection of burger, fries, and a drink) famous, and they are leading the charge for a la cart options, too. Their radio ads and commercials are a constant reminder that the economy is a lot less bleak with a $1.00 hot fudge sundae. What recession, says the dollar menunaire.

If affordability is the name of the game when it comes to dining out, then it is no wonder that the restaurant biz and the scores of high-priced eateries are struggling. As money grows tighter, there is a trickle-down effect that happens in fine dining: the steak-and-lobster crowd visits more chain eateries, the chain crowd visits more diners, and the diner crowd visits more fast food restaurants, and the fast foodies order more Big Macs. It's survival of the fittest (and cheapest) in a way that would have made Darwin proud.

How can the sit-down restaurant compete in today's economy? By being more like McDonald's, of course. Change and adaptation are necessary; it would appear, judging by the numbers released last week from the National Restaurant Association (the other NRA). Their restaurant index - a measure of factors like sales and traffic, extracted into an all-encompassing report - has been setting record lows on a monthly basis, and there are no signs of stopping.

It may be time for a value menu or two. Cheap prices are one of many ways that restaurants are trying to boost business and save money. Other trends include smaller portions and a reduced staff; restaurant owners are desperate to try anything that works. Perhaps starting a fast food franchise would have been a better option.

Their growth could not be more opposite from the struggles from the traditional sit-down restaurants. McDonald's recently ran off a string of 55 consecutive months of increases in global same-store sales, a remarkable feat considering the world economy's current state. Traditional restaurants are getting left in the dust, and the success of McDonald's and other fast food chains begs the question: What will the future hold for these heavy hitters?

It is interesting to think that the nation's food industry could soon be run by fictional folks like the Hamburglar and Dave Thomas' daughter. Depending on how long the economic crisis drags out, the fast food restaurant may be the last restaurant standing once the dust settles. So when the economy builds itself back up, the Dairy Queens and Chick-fil-a's may suddenly find themselves calling all the shots.

In this fast food future, we may see our first fine dining Hardee's, complete with dinner reservations and a coat check. The posh downtown restaurant that hosts executive dinners and high-powered business lunches might have its own ball pit and refillable soda station. Weddings and anniversaries might be catered with Whoppers, street vendors might be hawking Jumbo Jacks, and dear old dad might be cutting the Thanksgiving Baja Chalupa.

The more popular these fast food chains become, the quicker we are to realizing a fate similar to this. And who's going to stop it from happening?

Even still, who's going to object?

A world in which Ronald McDonald rubs elbows with the surgeon general is a world that Americans would not necessarily hate at this point. We have no one to blame but ourselves for the French fry avalanche that we've begun. McDonald's reports that the average number of customers their restaurants serve each day has reached more than 58 million. Add to that number the diners at other fast food stops like Burger King and Wendy's, and it is easy to see how prevalent these fast food giants have become.

McDonald's and Co. are here to stay. They are posting big numbers, they're growing with customers, and before we know it, they might just take over the restaurant biz.

So long as they keep the special sauce coming, don't expect anyone to complain.


Posted by Kevan Lee, Feb 3

In the Super Bowl battle between the Pittsburgh Steelers and the Arizona Cardinals, the Steelers came out on top by the slimmest of margins. The battle between the game and the commercials was not nearly as close.

For millions of fans watching the Super Bowl from the comfort of their couch, the game is as much about the commercials as it is about the football. There are people who enjoy the game despite not knowing any names, players, or even teams. Their satisfaction comes from monkeys selling online investment banking and from the universal appeal of broad physical humor.

And most times, they get to see a better show than the football fans.

But Super Bowl XLIII was different. A great game overshadowed a merely solid lineup of ads - one that would have outshone Buffalo Bills blowouts of years past but couldn't top the thrill of Cards-Steelers. Immediately after the game, the impact of Pittsburgh's last-second touchdown could be felt across the country. Santonio Holmes' touchdown provided a clear winner. As for the commercials' best? Time will tell.

There were several good spots, several mediocre ones, and several bad ones involving Clydesdale horses. For a closer look at just how effective the Super Bowl ads were, you would need to ask the average consumer which ads really struck a chord. Fortunately for the purposes of this article, I am an average consumer. Here then is my analysis of some of the Super Bowl's biggest and most memorable commercials. (To see the ads, visit hulu.com.)

Budget meeting by Bud Light: Batting leadoff for Super Bowl commercials is no easy task, but at least Budweiser didn't strike out. On the contrary, to carry on the baseball metaphor to unnecessary lengths, they drew a walk or reached base on an error or had an infield single. In other words, they did their job in entertaining the audience (throwing a man out the window), surprising viewers (throwing a man out the window), and making their point (being a teetotaler gets you thrown out of windows). But it didn't really "wow."

Car chase through the decades with the Audi A6: If I am anything like millions of other people who watched the Super Bowl on Sunday, then there were millions of people who are not friends with Jason Statham and who could not afford to buy an Audi A6 for the sole purpose of tooling around in a sports car. Never mind the fact that this commercial, with Crank star Statham hitting the streets in classic/modern wheels, makes me want to be that type of person. I'm not. So I'll just be admiring Audi A6's from a distance for the foreseeable future.

Generational movie clips by Pepsi: I thought the production of this piece was well-done, but I'm a Coke guy. Seeing will.i.am sing/rap will not change that. But thanks for spending $3 million anyway.

Baby investment analysts by E*Trade: The concept for these advertisements has always gone over my head. I never have got them, which is why I so appreciated this year's version with the kids singing campy oldies. That I can get behind. Perhaps the initial shock value of baby animation has worn off on me, too, and I can finally appreciate these ads for what they're trying to say. Message received: E*Trade can help out in tough times like these. And singing babies are effective.

Confident man by Cars.com: This commercial was destined for great things, much like its subject who rescued animals, performed open heart surgery with a pen, etc. But when the climax was our hero, sitting in his care, doing price comparisons on his smart phone, I felt betrayed. I guess cars.com was trying to say, "If this man can't buy a car with confidence, then no one can!" Thanks for believing in me, cars.com. I'm going to console myself at autotrader.com.

Alec Baldwin for Hulu.com: Confession: I love Hulu, and I love Alec Baldwin. But after seeing this commercial, I kind of love both a little less. Something about it just came across as creepy. Maybe it was Baldwin's insanely red lips or the fact that he was encouraging brain mushing or the Men in Black vibe that came out with the alien reveal at the end. It won't stop me from watching Arrested Development on Hulu, but it did stop me from admitting to my friends that I use the service.

Pigeon attack by Cheetos: That Chester Cheetah sure has turned into a dirty old man. In this spot, he encourages a Cheeto eater to incur the wrath of pigeondom on a rude cellphone-talking diner. Hilarity ensues? Is that what that was? I couldn't tell because my moral compass was compromised trying to determine whether Chester was a puppet, a cartoon, CGI, or claymation.

3D dancing players and lizards by Sobe: This 3D commercial came with all sorts of anticipation. Pepsi and Sobe had been pushing it for weeks leading up to the big game. Did it disappoint? To some, it did - mainly the ones who were expecting things thrown at them so they could go "ooh" and "aah." I was impressed simply with the depth and feel of the 3D experience, and it made me forget for a minute that Sobe Life Water tastes like a super weak juice box. I imagine that this was Sobe's strategy all along: distraction.

Any of the Clydesdale ads by Budweiser: I found them tedious and pointless. Every girl at my party found them adorable. Coincidence?

Moose head by Monster.com: The simplicity of this ad was what I appreciated the most. Monster nailed the joke: a boss with a moose head mounted in his office and the plebe worker with the moose's backend mounted over his cubicle next door. If Monster had wanted, it could have Super Bowled us over with the moose relieving himself, monkeys invading the scene for no particular reason, or a celebrity being the fauna-afflicted employee. Their restraint was admirable. I'll remember this next time I get laid off.

Mob breakfast by Denny's: Here is my Super Bowl winner. The Denny's spot really took the cake for me above and beyond any other commercial. First off, it was entertaining. I'm a sucker for spoof humor, so seeing a send-up of mob shows that I never really understood the popularity of in the first place was too much. Plus, it included a whipped cream pancake face. Does it get any better than that?

The real clincher, though, was Denny's free breakfast offer at the end of the clip (a free Grand Slam to everyone in America from 6:00am to 2:00pm on Tuesday). What greater call to action can there be? I appreciated this because it showed that Denny's wasn't wasting my time by giving away a free orange juice or something needless. They were giving away their signature breakfast, and you'd better believe I'll take them up on the offer.

Even better, as far as Denny's is concerned, if I like it enough, I'll come back for more. And that, ladies and gentlemen, is what makes a great Super Bowl commercial.

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