In business world, every cent matters! Based on making the most out of what customers are willing to pay, capitalism favors neat tricks for adding value that allows companies to charge more. Sometimes forcefully and sometimes complimentary, companies create extra values for customers to open their wallets for a little bit more.
After hearing the urban myth about how companies like GM, Ford and Chrysler sunk public transport projects in and around Detroit, Michigan and experiencing the only public transport in the city that is 4.7 km (2.9 miles) long with 13 stops and conveniently named “Detroit People Mover”, I became sceptic. Now, I believe nothing in this world is coincidence if there is a slight chance that it might work for someone else to make more money!
For example, when I was a freshman in 2010, starting my college education at the University of Michigan, I didn’t think that I would ever need a car. Born and raised in Istanbul where I became quite accustomed with public transportation and having seen Europe and major US cities like New York, Chicago and L.A., I was expecting at least something that would take me to the grocery store. But to my surprise there was nothing except cabs that charged me $40 per grocery run.
At the end of the first semester, I made a rough calculation and realized that only my grocery runs in the coming four years would cost me something around $3,200. Also when snow hit Michigan, it hit hard. For safely traveling between campuses and making to the appointments on time, visiting friends and family who live in cities close by (by close I mean at least 50 km. on average), just like every sensible (!) person, I decided that I would need a car and what is more ample than a car in the United States? Well, pretty much nothing.
I felt uncomfortable and tricked into buying a car. I had two options: taking a cab or walking 45 minutes in the freezing cold, and by freezing, I mean -29 Celsius degrees, to buy food. To visit friends however, I would have to rely on trains that might breakdown and busses that I don’t even want to talk about. Then I started to question: Why wouldn’t a nation, whose economy once relied almost entirely on automotive industry, constructs its urban planning in such a way that would force its people to buy cars? After all, creating a demand is the Holly Grail of marketing.
This realization coincided with the business classes I was taking as electives and contributed heavily to my curiosity regarding intangible values or forces that businesses conjure to simply make more money. I have created a game where I would take ordinary situations out of everyday life and try to find who might be taking advantage of these situations. I call it the “Find the Value” game. Once you think you have revealed a trick, try to quantify the effect and google it to see where it leads. It’s good for your brain too.
Next time you go to a Starbucks, think about how much you are paying for the experience (your name on the cup, smiling workers, getting in line with people that try to look sophisticated – well at least in Ann Arbor – etc.) and how much you are paying for the cup of coffee (that usually costs something around $1.30 per cup with all operating costs included according to Marketwatch.com).
Good hunting and have fun!