Outlier

Ethical choices in a crisis

2008-10-30T14:34:00.001+08:00

Imagine this: you are the local country head of a global, billion-dollar investment bank. Through weekly conference calls and updates, you know that your company is facing a cash crunch due to a worldwide seizure in the credit markets, and you are nervous about the company’s future. Business, however, must go on. One day, your regional boss instructs you to market a new series of financial products, to be distributed through local banks to retail investors. The financial products are themselves quite complicated and, in your opinion, rather risky, as they are essentially bets that companies will or will not go bankrupt. However, taking a look at the prospectuses and the marketing material, you see that they are couched in investor friendly phrases designed to give the impression they are safe and secure, as they are backed by the full faith and guarantee of your own bank. Your regional boss tells you to launch the products ASAP and is breathing down your neck every day for sales. Meanwhile, your own questions about the health of your own company are swatted away. What do you do?

In my last column, I explained how both the smart and ethical thing for a company to do in a crisis was to act swiftly and communicate clearly to affected customers. However, not everyone who reads this column is a company boss! What if you, a regional head or the marketing director, are given instructions contrary to ethical standards, such as an order to sell tainted milk powder where health standards are lax, or to market risky bets as safe financial investments? What are your options?

Just do your job. You may try to assure yourself and say, I’m only doing my job. Whether that is a good defense in a trial (yes, you have to start thinking in such terms) depends on your seniority in the company or your level of knowledge of the company’s policies, products and potential wrongdoings. I would say the moment you know what is going on, you can forget about this option. Also, you have your posterity and your afterlife to consider!

Compromise. This is especially attractive when any harm caused is debatable or quasi-legal. (“The fine print clearly says customers may lose all their money.”) So, in the banking scenario, while your unethical colleagues are selling Lehman Minibonds to pensioners, you target richer ones who can afford to lose a couple of hundred thousand. I don’t really think much about this option: it’s very difficult and it’s not worth it. By definition, you are compromising your ability to hit your targets, and for what upside?

Quit. Walk away. Life is not worth getting into moral scrapes which can imperil your career and, well, your soul. Throw in your resignation letter, try to get a waiver on your notice period, pay the company back if necessary, because the longer you work in a ethically imperiled company, the greater the risk of that peril extending to you. However, as Jeff Skilling, the former CEO of Enron discovered, even resigning did not save him from prosecution.

Blow the whistle. Time to burn your bridges and go to the authorities. Nowadays, even this option has various ways of doing it – from writing an anonymous memo to the boss (as Sherryn Watkins did in Enron) to going directly to the press (Citizen Nades would be your man) or, if you really want to protect yourself, going directly to the prosecutor’s office and striking a deal, in exchange for immunity. Just make sure your deal is airtight and agreed in the presence of your lawyer, and that, this being Malaysia, the company you are informing on doesn’t have, well, certain political connections, in which case your only option would be the opposition party.

If the above four choices all do not sound very appealing, its because they are not. Each has their difficulties and one’s choices would depend on one’s actual circumstances and ethical limits. The important thing to balance is doing the right thing, but also preserving your career and your personal reputation. Its easy falling into a hole. Climbing out is hard. Climbing out and staying clean is even harder.

As seen in theSun, 30th October 2008.

Marketing and Crisis Management

2008-10-20T17:23:00.001+08:00

Imagine this scenario: you are the boss of a company manufacturing infant milk powder. One day, your head of marketing and head of product quality come to you with some grave news: a hospital has contacted the company informing them that 10 babies in their ward have contracted kidney stones, and that the one common factor in all of them is that they had been consuming your brand of infant milk powder. Your head of product quality cannot explain why and he needs time to investigate the situation. Your head of marketing, after having faced a mounting number of angry calls from customers, wants to know what to do next, as, every day, your company is shipping out 90,000 tins of milk powder to retailers and exporters. What do you do?

Crisis management 101

We should be fortunate if we, through the course of our lifetimes, never have to be put in such quandaries. ‘Tough’ armchair marketers who like to talk about strategy and grabbing market share can freeze and wilt during times like these. Chances are, however, that a problem of this nature is bound to hit sooner or later, especially in mass consumer market food companies. How a company’s management and its marketing and communications department reacts to it can effectively determine its fate.

The important elements of crisis management are:

1) recognising a crisis early and dealing with it swiftly;
2) establishing regular and daily communications with customers and the public, through media sources;
3) updating the public on the company’s response and the steps being taken to arrest the crisis;
4) not focusing on blame, or culpability, and just doing all that can be done to protect its customers and, therefore, its brand, its reputation, its very future.

In the case histories of crisis management, these are the best practices that have pulled companies through those difficult times – examples include the Tylenol poisoning crisis of 1982 and, recently, the Mattel lead paint crisis of 2007.

Nothing is more important than item 1 – acting early. Just as in the case of an earthquake or a tsunami, it is worthwhile imagining a countdown clock starting the moment it happens… every second that ticks away without anything being done means more lives are lost. In the case of Sanlu, it seems it had plenty of chances to start managing the crisis – as early as December 2007, some report. But by ignoring or burying its bad news, it actually sealed its fate. Doing this tells the public that your management would choose its own image and reputation over that of the lives of its customers. Its probably fair to say that from being the No. 1 market leader in China, Sanlu is now quite finished.

As for steps 2 to 4, the various Chinese companies affected should borrow a leaf from their own political leaders. From the winter storm crisis to the Sichuan earthquake of 2008, Chinese leaders at the highest levels had been perceived to be actively involved in doing their best to solve the problem, with even Premier Wen Jiabao making appearances at crisis hit areas and addressing victims directly.

Crisis management 201

Let’s try another scenario: you are the local country head of a global, billion-dollar investment bank. Through weekly conference calls and updates, you know that your company is facing a cash crunch due to a worldwide seizure in the credit markets, and you are nervous about the company’s future. Business, however, must go on. One day, your regional boss instructs you to market a new series of financial products, to be distributed through local banks to retail investors. The financial products are themselves quite complicated and, in your opinion, rather risky, as they are linked to financial derivatives such as Credit Default Swaps (CDS’s). However, taking a look at the prospectuses and the marketing material, you see that they are couched in investor friendly phrases designed to give the impression they are safe and secure, as they are backed by the full faith and guarantee of your own bank. Your regional boss tells you to launch the products ASAP and is breathing down your neck every day for sales. Meanwhile, your own questions about the health of your own company are swatted away. What do you do?

Unlike the first dilemma, where doing the ethical thing – responding quickly – helps save the company, this second dilemma is a lot harder, as doing the ethical thing actually harms the company. Resolving this is beyond the limits of this column. Which is why it’ll be continued, 3 weeks from now. See you then!

As seen in theSun, 8th October 2008.

In Defence of Touts

2008-09-17T18:10:00.004+08:00

Picture this: you arrive at a busy, rather decrepit looking airport. You haven’t got your flight yet, so you are trying to buy a ticket back home. Looking up, you expect to see a board showing the departure times, flights and check-in counters of all the planes leaving today. Instead, all you see are flickering lights and paint peeling off the walls. In front of you are 40 different sales counters, each staffed by one person waving to you enthusiastically to book your flight ticket with his or her company. You have never heard of 90% of the companies. They are waving at you even though they don’t even know where you’re going.

Substitute the words ‘airport’ for ‘terminal’ and ‘flight’ or ‘plane’ for ‘bus’, and you get a picture of what happens daily at our bus terminals across the land, from Puduraya to Larkin to Sungai Nibong.

Is it any wonder that touts flourish in such conditions? A Malay daily reported recently that bus ticket touts can earn up to RM5,000-6,000 a month, despite the job being illegal. Typically, they earn RM200 a day, from commissions of RM2 to RM5 paid for by the bus companies. That tells you something, doesn’t it? The powers that be may hem and haw and tell passengers not to buy from touts, but the fact that they can have such decent earnings means that there is a real need and demand for them, from both the passengers and the bus companies themselves!

It’s always the same story. You arrive at the bus station, a little stressed because you want to catch as early a bus as possible. You’re possibly tired, and the prospect of combing through the different stalls looking for the right bus at the right time to the right destination puts you off. The young man who approaches you asking you “ke mana? Singapore? Penang?” could be either a lifesaver or a scammer – your inclination to buy a ticket from him depends on how knowledgeable, tired or desperate you are. Whatever the case, he promises to lead you to the right company, using the best bus, leaving at the best time. So you take your chance with him. What happens next depends on your luck and the honesty of your tout.

Nature, politics and markets all share a same trait – they all abhor a vacuum. If a need is not met, or is met badly, by the government and its regulatory agencies, you can expect private sector agents to provide an immediate alternative. A tout earns his living on the basic inefficiencies of the agencies and terminals regulating and facilitating bus transport – their inability to provide good infrastructure (clean, well-lit, comfortable terminals which are pleasant to wait in) and basic information (departure and arrival times) to match willing customers and eager bus companies. Since they can’t, or won’t do it, the tout assumes their place, a one-man matcher of supply and demand.

Before companies can engage in marketing, the markets themselves have to function effectively. It says something about the market for bus travel in Malaysia where one of the chief strategies of some bus companies is to engage armies of young men to sell their tickets illegally. Sure, most of these companies are using the touts to bypass the terminals (and their surcharges) altogether and pick up their customers on the roadside, but think about it: what is Puduraya providing anyway? A clean, organised, well-lit, airconditioned environment, with plenty of seating? If it was, these touts wouldn’t have any business.

To prove the point, look at those bus companies plying the direct KL-Singapore route - they generally avoid stopping at Puduraya and have online or phone ticketing services available; that is, they built their own infrastructure in the absence of it being available for them.

So touts are here to stay, as long as Puduraya remains Puduraya (dark, dingy, hot) and transport regulators have other agendas other than the efficient matching of buyers and sellers in mind. Perhaps we should just legalise touting and regulate them – after all, we only want them to be honest so that customers don’t get duped or led around in circles or get made to wait longer than is necessary.

Sounds wacky? Apparently, its about as wacky as the idea of a big screen showing consolidated bus departure and arrival times…

Printed in theSun, September 17th, 2008. PDF version here.

Big Radio Killed The Radio Star

2008-08-27T18:21:00.003+08:00

A cryptic banner ad appeared recently on a popular online local news web site, asking viewers whether they were “sick of Malaysian radio”. A click on the ad led to an online survey which posted various options of why one might be sick of Malaysian radio, including “too much phone-in contests”, “playing the same music over and over” or “an unduly high interest in Hollywood gossip”.

Whoever the ‘perpetrators’ of this ad and survey are and whatever good they may get out of it, I wish them all the best. For me, being three years into my thirties, I am no longer sure whether my musical tastes have changed over time due to the state of Malaysian radio or my own internal, autonomous ‘evolution’. Because, in truth, I can’t listen to any English radio station here in Malaysia for more than 10 minutes before switching to the soothing confines of my in-car MP3 player (unless, of course, I need traffic information delivered to me via the sexy husk of Priscilla Patrick).

To some extent, I’m not blaming anyone for this. Musically speaking, its tough being in one’s thirties. You can’t let go of the character-defining music of your teens and early twenties, yet you want to stay connected to the popular music of the day (even though most of it makes you cringe or gag) because of the need to be relevant and feel “young”. But seriously, there is something about Malaysian radio which makes this dislocation harder to bear.

For the youth-oriented stations, the Malaysian predilection to R&B, hip hop and rap, so evident on all our competing stations, leaves me a bit cold, not because I don’t like the genres, but because their best forms would have, well, zero chance of ever getting any airplay (how many times have YOU heard Dr. Dre on Malaysian radio?). Usually what gets played is the crowd-friendly bleah variety. The same goes for pop and rock. For the older-oriented stations, their idea of musical variety does not mean varied, different musical styles and sub-genres, but rather 20 years of bubblegum pop. I mean, seriously, how many times do I need to hear the Backstreet Boys, Jon Secada and Rick Astley in a year?

Funnily enough, my flight from this bubblegum land has found me in strange waters. Lately, its been classical music for me, especially since the birth of our baby girl. Unfortunately, Astro’s Opus only works at home (you need a decoder), which is fine for baby, but there’ll be no in-car classical music for me unless I happen to be in Johor and get it beamed from Singapore. In fact, whenever I am back there, I switch between three Singaporean stations: the aforementioned Symphony 92.4, the BBC’s World Service and the irreverent non-state owned 91.3FM. On the drive back home to KL, when the signals of these three stations start to fade into static (somewhere around Pagoh), I actually feel rather like I am leaving civilisation.

The point I am trying to make is not that radio stations should cater to my whims and fancies (although that would be nice) but to make the point that I am only a small instance of a larger trend, that this is a new era of fragmented demographic, cultural and social groups manifesting themselves in even more fragmented musical and programming tastes; an era where most people’s iPod playlists are longer than a radio station’s; an era where more new music can be found on the Internet than on the radio; an era where I believe niches are getting smaller and smaller, and therefore, Big Radio should be getting smaller and smaller.

So, let me provide not just one business model for a new radio station, but three, all centred on the Klang Valley, given its distinct demographic difference from the rest of the country.

a) A free-to-air classical music station
Target demographic: arts lovers, highbrow types, retirees, M2H residents, LiteFM listerners, babies
Programming: opera, classical, contemporary vocals
Advertiser shortlist: Contemporary arts events, baby products.

b) Expat Radio
Demographic: the Klang Valley expat community and the more liberal English-speaking local population
Programming: call-in programs (expats need to vent sometimes and complain about their host country), and whatever musical tastes they have (say, Keith Urban for the Aussies and David Hasselhoff for the Germans… I’m kidding, ok?)
Advertiser shortlist: just pick up a copy of Expat magazine. Or The Peak. Or Tatler.

c) Campus Radio
Demographic: local, international and foreign students in the Klang Valley
Programming: college or local bands, student interest radio-zines, allowing space for free-form expressions by students themselves
Advertiser shortlist: any youth-oriented products and services would apply.

Advertisers and marketers all over the world know that successful marketing is all about focus, focus, focus. It would be great if our media owners or - better yet - the regulators of our media owners appreciated this fact.

Appeared in theSun, August 27th 2008. epaper link here.

What's in a Number?

2008-08-09T22:16:00.004+08:00

The PIKOM PC Fair just blew through KL over the weekend. For those of you who missed it, or who have never gone for one, it’s a veritable bazaar of the latest and greatest in technology consumer products.

Faced with a bewildering array of computers, laptops, camcorders, digital cameras, printers, PDAs and their attendant accessories, the average consumer can be forgiven some confusion in choosing what’s right for him. Relying on the salesman for edification – while he is spouting rapid-fire Cantonese and brandishing his product in your face – sounds more like a recipe for uninhibited expenditure than careful product comparison..

The problem is worsened by the industries’ usage of numerical specifications. To paraphrase a well known saying, there are lies, there are damned lies, and then there are specifications.

Numbers never lie…

A curious thing often happens in the marketing of products: someone somewhere latches on to a product specification, something which has a number attached to it, and starts to emphasise it beyond all proportion in the promotional literature. That leads to an “arms race” of sorts, as rival manufacturers are sucked into this competition and need to retaliate with their own numbers.

The megapixel (MP) controversy is an excellent example. Consumers go around proudly brandishing their new 10MP cameras saying its so sharp and so clear. Actually, as photographers can tell you, megapixels have little to do with sharpness, clarity, or even the size of the image you want to blow up. As Ken Rockwell notes in his blog kenrockwell.com, if you want to shoot sharper pictures, have better technique, and if you want to print a larger print, stand further back when you take the shot. Stand 100 feet back and you can print a billboard with an ordinary 5MP camera.

I think its because marketers, especially consumer marketers, are pressured to accomplish two things: to sell and to simplify. The problem occurs when complex products are over-simplified by the marketing department in order to make the job of selling easier. The quantitative aspects of the product specifications, being easier to understand, start to replace the qualitative aspects of the product.

…but they only tell half the story

Certainly a 200 gig hard drive is better than a 100 gig hard drive, of course, but the key thing is that its better, ceteris paribus, “all things remaining the same.” In the tech business, all things rarely remain the same.

The tendency for consumers at exhibitions like PC Fair is to go spec-comparing. I think this is a big mistake. I’d rather go test-comparing. Nothing beats getting your hands and fingers on the product, working the interface, and bashing it about to simulate the real world.

To give an example, these are the “soft”, qualitative attributes I look for when it comes to laptops/notebooks:

• Keyboard layout and comfort. I can’t emphasise this enough. Nothing frustrates me on a notebook more than a non-intuitive placement of the ‘Home’, ‘End’, ‘Del’ and ‘Ins’ and arrow keys, since I use these a lot.

• Heat management. It is understandable for laptops to heat up and start to burn your laps (should you still be one of the few people in the world to take the term “laptop” literally), but when they start to burn your wrists too, it’s time to get another one.

• Screen brightness and lifetime. Bad laptops start to lose their shine, literally, after a few months or years, when the LCD backlight starts to fade. Its tough on the eyes and the bad thing is, you don’t even notice until its too late and your eyes have suffered for too long.

Now, do you see any of the above traits marketed by the notebook companies? Of course not, they’re just not as sexy as “2 gig RAM” and “1.6Ghz processor”.

Thread Counts

If you think it’s only the tech industry that creates these sorts of non-informative specification arms races, think again. For instance, would you say a 800-thread count cotton bed sheet is better than a 300-thread count cotton bed sheet?

You should know the answer to that one. If you don’t, you can Google “thread count” and find out for yourself.

Appeared in theSun, 8th August 2008. e-Paper link here.

Malaysia's Brand Unpopularity Index

2008-07-16T02:43:00.018+08:00

Last year, the Association of Accredited Advertising Agents (4As) and Interbrand collaborated to compile the “Top 30 Most Valuable Brands” in Malaysia. All 30 brands were local in origin, and were ranked according to brand value, a concept that incorporates financial information when calculating the value, reputation and strength of a brand. The accumulated value of the brands (including heavyweights such as Maybank, Petronas, Maxis and Astro) was calculated to be RM56.6 billion.

All that is very well for CEOs to pat themselves on the back, but for marketers-on-the-street like you and me, their utility is rather questionable. I mean, if I have a couple of billion ringgit in the bank and one day I have a sudden itch to buy the Maybank brand (just the brand, mind you, nothing else), I guess I know which table to look up. But until that day comes, I think I’d rather find something more useful.

Brands, Love and Hate

As a marketer, I’d rather know how much my customers love my brand or hate it. Now, love or hate is rather hard to quantify, but its still a worthwhile venture. After all, don’t you think the adoration that Apple customers have for the company and the brand has something to do with its high Share Price/Earnings ratio? And wouldn’t you say the loathing that most tech consumers have for Microsoft might have something to do with the anti-trust lawsuits brought against it in the USA, Europe and now, China?

However, gauging love and hate has been hard to do. Interviews and surveys are notoriously unrealistic contexts to get people to say what they really feel. Fortunately, there’s the Internet.

Our methodology

There are as many ways to express your disdain for something, your utter lack of respect for its features and its worth, as there are languages. In BM, you can say something is kayu, as in “referee kayu”. In English, there’s “sucks”. As in, “Beckham sucks at everything except free kicks”. Its such a simple, evocative, and for our purposes, extremely useful term.

We used Google to conduct the search “(brand name) sucks”, with all of the 4A’s Malaysian Top 30 brands, to see the number of results that got returned. This search captures the exact two words appearing together in sequence, so that we get actual complaints about the brand on the Internet.

Then, we clean up the data a little bit by eliminating repetitions, and also disqualifying brands whose names are too generic to be captured (such as DiGi, TV3 and Giant). For those brands, we restrict our searches to websites in Malaysia to ensure the actual brands are being referenced, not other things (“TV3 sucks” might refer to a news channel in Norway, for instance, but not for a website hosted in Malaysia).

You could call this research a form of Netnography, but a lurking, pure observational form. With this data, we then compile…

The Brand Unpopularity Index (BUI)

The attached table shows the abbreviated results of the index, some of which are obvious, and some, downright surprising.

First of all, I could not resist the temptation to include “streamyx”, Telekom Malaysia’s broadband product brand, even though it did not feature in Malaysia’s Top 30. I did so because I think one would be hard-pressed to find a more loathed brand in Malaysia. With a score of 10,500 among worldwide web search results and 1,440 in Malaysia web search results, it is far and away the most unpopular Malaysian brand online, and it seems to be growing in unpopularity by the day.

Among the Top 30 Brands in Malaysia, the top 5 most unpopular brands online are (in order) Astro, Maxis, Proton, Celcom and AirAsia. Maxis is a bit of surprise, but the results are unmistakable: with 397 and 174 incidences of the phrase “maxis sucks” recorded worldwide and in Malaysia respectively, it is the clear leader in online complaints as far as mobile telcos go, with about twice as many complaints as the next most unpopular brand, Celcom.

Some other interesting insights include the fact that the most unpopular banks in Malaysia are Maybank, CIMB and RHB, in that order, and that complaints about Proton outweigh Perodua by a factor of approximately 15 to 1.

Caveats and Objections

Of course, there could be some objections to this methodology. Let’s list them:

1. High market share and large number of users leads to higher incidences of complaints. It might be argued by Maxis, for instance, that all this shows is that more people complain about Maxis because more people are using Maxis than others, which gives the impression that Maxis is more unpopular when in actual fact, on a per capita basis, Maxis has fewer complaints per customer.

Answering that is simple: we can weight the complaints on a market share basis, and adjust the scoring accordingly. Now, given that the number of complaints for Maxis outnumber Celcom by about 2 to 1, it would mean that Maxis' market share would have to be twice Celcom's for its complaints to be proportionate. Anyone know Maxis' market share right now? :-)

2. English and Youth Centric. This scoring only reflects English users and more importantly youth users, since youth are more likely to use the word “sucks” or, in fact, use the Internet.

No argument there. We are talking, however, about the English Internet-using public, which is a pretty important demographic. Moreover, this scoring can be adapted to other languages as long as a term can be found that is as efficient and ubiquitous as the term “sucks”. As the Internet gets more ubiquitous, it should become more representative of the population at large.

Listening in

As we trawl through the online complaints, we get a sense of the inherent issues which plague each brand, voiced by customers who simply want to vent (sometimes anonymously) their frustration. Some of these complaints are one-off but some of them sound a recurring note, such as the fact that Astro has no toll-free customer line, that the Proton Waja’s power windows are the work of the devil, and that it is AirAsia’s delays that have generated the ill-will.

Far more important, I believe, for management and marketing executives to listen in on these customers venting than to congratulate themselves on achieving a brand value of RMx million. Listening to theses voices can result in changes both simple and fundamental, from quickly identifying problems in certain products or processes, to, who knows, complete changes in strategy.

For more details on our Netnographic report, email me. Knowing the problem is halfway to knowing the solution!

Too edgy for theSun apparently... rejected by the News Editor!

An Open Letter to AirAsia and Firefly: Why LCC's should adopt "Standby"

2008-06-25T08:43:00.008+08:00

To Tony Fernandes (CEO, AirAsia) and Eddy Leong (CEO, Firefly):

Hey, I have a question for you two. Are low cost carriers (LCC’s) interested in goodwill to customers? Should they be? After all, some might say a low, low price is goodwill enough, while others might say, you can never have too much of it from your customers.

I’ll get to the point. LCC’s are famous for one thing – low prices – but notorious for another – no changes. To be precise, both Firefly and Air Asia allow itinerary changes, normally 48 hours before departure, but charge RM50 for the privilege. If you want to change within 48 hours of your departure, too bad, you’ll have to buy a new ticket.

We don’t know how much LCC’s collect from such “punishment” fees, but it has left some of us feeling LCC’s have made it a point of profiting from people’s mistakes, a science of making passenger’s losses their gains. Its bad for customer goodwill, and I humbly offer a small way for LCC’s to regain some of it back.

Both your airlines have a standard industry practice of prices going up as capacity reduces or as time gets nearer to departure, based on a proprietary formula. The challenge to maximising revenue involves striking a balance between getting the best price per seat filled, and filling all seats, since your seats are 100% perishable – i.e. their value drops to zero the moment the plane takes off and their cost cannot be recovered. Selling empty seats just before the plane takes off, even at RM1 per seat, in theory, helps to offset the cost of that flight.

This trick is being used by, of all people, MAS, which unlike you two is a Full Service Carrier (FSC). MAS is using this argument to justify its RM0 promotion – just paying the fuel surcharge is helping MAS to offset losses from its otherwise empty seats. MAS is also saying that it is selling seats that would have been unsold anyway, presumably based on mined historical data showing spare capacity on such flights. It says it is therefore not cannibalising from its full-fare paying customers. I won’t go into the details of this perhaps arguable line of reasoning, but I will argue that just as MAS is taking a leaf from the LCC playbook, so can the LCC’s borrow a trick from the FSC’s sleeve. Its called “Standby”.

“Standby”, in the FSC sense, is a way of dealing with the problem of no-shows. No-shows are people who book flights but don’t show up, and is more a FSC’s problem than a LCC’s, since FSCs allow bookings without making payment, while LCC’s have no such thing. “Standby” passengers are people literally waiting at the airport for no-shows so they can get on board and fill those seats.

I would argue for LCC’s to adopt “Standbys”, but to adapt it to an LCC form of usage. I know what you guys are worried about: you’re worried people will wait until the last minute to book, taking a chance that prices might get lower by going on “Standby”. You’re also worried about not making enough from business travellers, who are willing to pay top dollar for last minute flights. I’m here to soothe your profit-making nerves. Just adopt the “Standby” rule for ticketed passengers only who want to switch to an earlier flight, and charge them a nominal admin fee for the privilege to do so (and by “nominal”, I mean less than RM50).

You see, people make mistakes one time or another. Why hold them to account, when you can help them rectify it, make a little profit and leave them happy? Allowing only ticketed passengers to go on Standby for earlier flights eliminates the purported fear of opportunists, helps to reduce losses from empty seats, allows you to re-sell seats that had been paid for, and generates goodwill for passengers who would like to fly a bit earlier and are willing to pay (within reason) for their mistake.

There are of course other questions, such as when precisely to open the Standby window, how far in advance can the ticket be, how much to charge etc. I’ll leave that to you smart guys. After all, I’m just a poor passenger, writing this at the Coffee Bean in Bayan Lepas after having waited 5 hours for my flight because Firefly didn’t let me board an earlier one even though it was clearly not full. 5 hours which robbed me of any goodwill I might have had flying to and from Subang, but which enabled me to finish this column giving you guys free, unsolicited advice.

Just another passenger’s loss turning into your gain, I suppose.

As seen in theSun, 25th June 2008. PDF version here.

Comparative Advertising

2008-06-06T09:53:00.007+08:00

Years ago, the makers of Top, a washing detergent, ran a TV ad which emphasised one of its features: it was more “liquid” in viscosity and therefore would not clog up or develop residues in customers’ washing machines, unlike an unnamed but extremely obvious competitor. Some time later, the makers of Dynamo, another brand of washing detergent, ran ads which criticised an “other” washing detergent as comprising of “mostly water” and therefore did not have good cleaning power! This continued for a few months, much to the amusement of the TV-watching public, unaccustomed to over-the-air spats between rival consumer brands.

Of course, none of these commercials ever directly named the competing brand, and that is the norm, if not the law. Comparative advertising, in which competing brands are explicitly mentioned and compared, is not expressly legal here in Malaysia, whereas it is legal (under guidelines and restrictions related to avoiding misleading disclosures) in Europe, United States, Canada, Australia and many other developed countries.

Pros and Cons

The argument against comparative advertising is that lesser-known brands are riding on the reputation of the more well-known target brands when making comparisons to them. Even if the claims are truthful, they constitute a form a trademark violation. Nevertheless, it has been judged in the West that the pros far outweigh the cons. The United States’ Federal Trade Commission (FTC) asserts that comparative advertising is “a source of important information to consumers and assists them in making rational purchase decisions”. It also “encourages product improvement and innovation, and can lead to lower prices in the marketplace”.

I certainly agree. Nowadays, with Malaysia being a developed and open consumer market, I believe our priority is to give consumers more freedom to choose, and to reduce the barriers to entry for new business players. Certainly this would be helpful in combating the inflation currently sweeping through our economy.

Comparative advertising, Malaysian style

However, without amendments to our Trademarks Act (such as those done in the UK and Australia), few companies would ever dare to embark on a comparative advertising campaign here. Still, we have seen in recent years an increase in comparative advertising of an indirect sort: witness Tesco’s advertising of their lower prices, compared with two “other” hypermarket market chains (with the “other” written in their respective font types!), and Digi using two different coloured ducks compared with their yellow ducks to signify the other 2 mobile telcos.

To me, it’s kind of like making faces at the class bully when he’s not looking, and acting normal when he turns around – fun and naughty, perhaps, but ultimately pointless.

Who should do it

Let’s imagine that if comparative advertising was legal, who should use it and how should they use it? Typically, it would be new entrants or companies with low market share, but let’s highlight two examples:

Companies seeking to exploit overvalued or overpriced brands, such as generic drug companies who are free to produce copies of drugs whose patents have expired (e.g. “proven to work just like Lipitor – for half the price!”). Lipitor’s patent expires in 2010, in case you’re wondering.
Companies’ whose products need visual side-by-side comparison of performances with competitors to create effective differentiation (anybody who saw the video comparing the 4WD systems of the 2001 Nissan X-Trail and the 2001 Honda CR-V knows what I’m talking about!).

Two elements of success

Comparative advertising campaigns have to achieve 2 elements to be successful: first, overcoming customer scepticism over the blatantness of your comparative claims by making sure the comparison appears fair and unbiased; and second, ensuring the whole ad does not backfire by reinforcing the brand recall of your targeted, competitor brand.

Probably the most famous case of comparative advertising is the Pepsi Challenge, run in the USA in the 1980’s. Consumers were challenged to blind-taste Pepsi and Coke, and name the one they preferred. Those that chose Pepsi consistently outnumbered those that chose Coke, a fact trumpeted by Pepsi for years and which helped it steadily erode Coke’s market share in the 1980’s. The “Pepsi Challenge” even became a buzzword for a confident, in-your-face, “let’s see who’s better” kind of confrontation.

Only many years later did Malcolm Gladwell in his book ‘Blink’ point out that the kind of “sip test” done in the Pepsi Challenge favoured the sweeter flavour of Pepsi, whereas a real “drink test” would even out the odds, given that the cloying effect of excessive sweetness would have time to build and thus make the less-sweet Coke more preferable. By that time, Pepsi had long climbed to being a respectable rival to Coke in the soft drink wars.

I did say you only have to appear unbiased, didn’t I? ;-)

As seen in theSun, 4th June 2008. PDF version here.

The Baby Has Landed

2008-05-10T00:29:00.004+08:00

Ever since my daughter was born 6 months ago, I’ve had many questions from my bachelor buddies about how it feels to be a father. To be honest, my mumbled answers have dissastisfied even me, as I’ve been unable to fully articulate the impact of fathering a child. Nothing like a deadline to spur the effort, though, so here I aim answer this, by presenting how one household moves, overnight, from one demographic check box to another.

I’m speaking, of course, of moving from DINK (Dual Income No Kids) to DIWK (Dual Income With Kid). Personally, I prefer the typical Malaysian variation of DIWK, which is DIWKOM (Dual Income With Kid, One Maid). But more on that later.

Bye, bye, disposable income

The concept of disposable income, long a treasured hallmark of the DINK household (treasured among marketers who target them anyway), needs to be, well, disposed of. Somewhere between the Avent bottle steamer and the Graco car seat-stroller combo, the idea of disposable income got tossed out with last night’s used Mamy Poko diapers. Disposable income used to be something we as a couple would spend on ourselves, as a treat. The problem is, when one has a kid, one has to think on behalf of a 5 kg bundle of limbs and gurgles whose needs, in the eyes of baby product marketers, are limitless.

I’d written in a previous column that all consumer decisions were motivated by either fear or greed (“Dealing with Fear and Greed in Marketing”, The Sun, 19th September 2007), but the intensity of this exploitation in baby products gets taken up a few notches: those who worry about SIDS or “cot death” can purchase Respisense monitors which detect and warn parents within seconds of baby not breathing, while parents who want the next Einstein on their hands can splurge on Japanese flash card systems that cost more than RM2,000 per set!

Faced with this onslaught, new parents quickly learn a few skills or risk slipping into debt: the first is bargain-hunting (“Diaper promotion at Jusco! Must go!”), and the second is a more nuanced form of prioritising. I’ve noticed that more mature parents recognise that while a newborn certainly brings in new expenditures to the household, baby’s needs are actually quite simple and revolve around 5 basic areas: sleeping, eating, bathing, playing and passing motion. Ensuring these proceed smoothly, and that baby is healthy, remains the main priority.

Outsourcing and consultants

No dual income household, except perhaps with the help of kind grandparents, can afford to care for baby without some domestic help. Having a stranger enter your lives to care for your most precious possession sounds anathema to a lot of people, but to an increasing number of working couples, there is little choice. In management-speak, my wife calls it “outsourcing the non-core functions” – the aforementioned eating, sleeping, bathing, passing motion and playing. That sounds horrendous, of course, but that principally is what baby is doing with the domestic help when mom and dad are away earning the money to ensure these activities go on!

Another corporate parallel is the bringing in of “’outside consultants” in baby care. To some more traditional households, this is still the grandparents and grandparents-in-law, or assorted well-meaning and experienced aunties. However, an increasing number (ourselves included) turn to a select few books in the booming baby-raising self-help book market. This often leads to tension when the advice differs from traditional sources: aunties have been known to somewhat sarcastically remark, during one of baby’s occasional caterwauls, “So what does ‘The Book’ have to say?”

A Different Mindset

The upshot of all this is that the consumption of a DIWKOM household comes to resemble less the agglomeration of 2 different consumers’ utility within a DINK household, and more of a corporate unit which maximises overall capability. A brief explanation is required.

Utility, which stands for pleasure, happiness, fun, is the basic unit of ecnomics – we buy goods and services to maximise our utility. But the basic kernel of economic development – whether of individuals, families, societies or nations – is that of capability, an approach pioneered by Amartya Sen, the Nobel prize-winning economist. Capability development is about being capable of doing more through a process of being more learned, more long-lived, saving time, or being more wealthy.

Put simply, there is no better incentive to capability development than having your progeny stare at you googly-eyed every day before you go to work. Parents need to take a long hard look at themselves and ask, what kind of environment do we want for our child, and what can we afford? The answer, of course, is, you try your darndest to provide the best you can.

Economic studies have long shown that married individuals outperform singles in wages and overall cumulative lifetime earnings. I assure you, my single friends, that while this may be true, it is more out of necessity rather than any God-given talent or smarts. So if you really want to get rich, stop messing around with your life, get married, and have a baby!

As seen in theSun, 7th May 2008. PDF version here.

Educating the Market

2008-04-16T13:11:00.004+08:00

The idea of educating customers is a bit of a conundrum. First of all, businesses survive on an asymmetry of information or of capability – because I as a business know something or can do something you can’t, you as a customer have to pay me for my product or service. Why would a business expend resources to reduce that asymmetry by educating customers at all, even in the most minor way?

Getting from Baffled to Buyer

That question is answered for me every time we participate in a product exhibition, which we are doing over the course of 3 weekends this month. As purveyors of solar lighting, we use these exhibitions to showcase our wire-free solar-powered lighting for homes, gardens, parks and municipalities. Most customers can understand that solar lighting is a convenient and cost-saving solution, but when we remind them that there still remains the necessity of changing the batteries within the lamps every 1 to 3 years (depending on the application), many a time they return a blank stare which reads: “you mean there are batteries in there? I thought this was solar.”

This requires a short lesson in photovoltaics, the process of solar electrification and charging of batteries for use at night, when the sun has set. Most Malaysians reference solar technology with water heaters, which use a different solar thermal process using vacuum tubes that does not require batteries.

Education therefore is a must, because while one can never underestimate the ignorance of people, one should also not underestimate their ability to learn quickly, given proper information! For new product category openers especially, to convert the universe of ignorant prospects to knowledgeable customers, education is therefore required and can be quite a large expense. The usual route is to sponsor workshops or buy advertorial space or ply the convention route, educating customers face-to-face.

Getting from Cheapskate to Snob

There is another case where it serves a company’s interest to invest in educating customers, and that is to educate them on how to be more discerning when it comes to the product category. Premium suppliers tend to do this a lot more. Ever notice that, within the diamond trade, those who extol and are eager to teach the “4 C’s” – cut, clarity, colour, carat – are the premium retailers? Naturally, they would be more eager to highlight to you such factors, which help to differentiate and price their diamonds higher.

Sometimes, though, you don’t have to go overboard on this process of education. Oral-B toothpaste, for example, is so expensive it boggles the mind: a 100ml tube costs over RM10 when other brands, weighing in at twice the volume or more, cost about RM5. A phone call to the company hotline yielded 2 explanations: the Oral-B brand name is “trusted and respected” (uh, okay), and that each tube has a 0.375% content of “stannous fluoride”, which presumably is great for teeth and very expensive.

While the phone call didn’t leave me very convinced, one cannot doubt that the marketing formula works. Unlike the competition, the Oral-B packaging is subdued, with no cartoon elements, no big bold letters, just simple, plain, almost medical themes. Coupled with the high price, it should be sufficient to signal to discerning customers its better quality.

Forums - the new frontier

Nowadays, customer education can happen even with no effort made by the company. Curious customers congregate voluntarily on the Internet in online forums, sharing what they know about your product and searching for clues or tips on using them. A friend of mine who recently bought a German car discovered a rattling noise emanating from the passenger door and decided to go online to a forum in search of answers. The good news is, he discovered a community of others with the same problem; the bad news is, all off them reported it would cost too much to fix and were grousing about it!

For those businesses in a position to do so, creating an online forum alongside their usual standard web site is a simple and cost effective way to manage the education of and communications to their more enthusiastic customers. (It sure beats having them complain elsewhere!) Just be prepared to interact more with potentially unhappy ones.

The ultimate business differentiator

There’s an old saying in business that goes: “The more you tell, the more you sell.” The willingness to educate your customers so that they can make informed decisions is the true mark of a responsible business that is confident its products and services bring value to its customers. In that sense, it does not matter whether the company is at the premium end or not, it should invest in education as long as its wares are competitive in the marketplace.

Appeared in "The Sun", April 16th 2008. PDF version here.

Marketing in an Election Campaign

2008-04-15T16:10:00.003+08:00

The Malaysian General Elections of 2008 have come and gone and the results are there for all to see. Doubtless they are being analysed with a fine-tooth comb by political analysts, but I thought it would be interesting to review a few of the marketing tools deployed - whether consciously or unconsciously - and the challenges faced by the various parties and candidates in the campaigning that are similar to those faced by marketers.

Positioning

Arguably one of the concepts that created the discipline of marketing as we know it, positioning is about placing your company or your product in the mind of the purchaser, relative to other competitors and competitor features. For BN, the banners and ads were everywhere, and every where, they said the same, consistent message: “Security. Peace. Prosperity.” BN’s TV ad campaign had “testimonial” style monologues about how Malaysia was a harmonious and free society under the BN.

Effective positioning requires an understanding of the market being targeted and your own existing image within that market. Amongst the educated urban voters of Malaysia, the videos came across as over-produced and somewhat strained. The campaign was cynically derided as scaremongering, and urban voters overall seem to have responded negatively. In hindsight, however, there seems little the BN could have done differently, thus elegantly representing a classic marketing dilemma: when you’re number 1, you have less freedom to re-position yourself and you need imagination and daring to do so.

On an individual basis, DAP candidate for PJ North Tony Pua positioned himself through speeches, blogs and interviews as an intellectual heavyweight relative to his BN opponent, that he would be an effective policy maker who would be able to bring some rigour to debates in parliament, and therefore much more than an MP who simply catered to the basic needs of the constituents. This must have struck a chord with the educated, relatively affluent neighbourhood of PJ North, given the results that came out.

Emotional vs. Rational

The BN took out numerous ads in both TV and print media, highlighting development achievements and economic statistics. Attention was drawn to, among others, subsidised health care, GDP growth and the provision of JPA scholarships to non-Bumiputras since 2000. While it certainly may have swayed some voters, it ignored a basic tenet known to experienced marketers: purchasing, like voting, is often an emotional decision. Something about the mood on the ground, especially in the states that went over to the oppposition, was misread and ignored in the churning out of statistics and figures which were un-meaningful to the man on the street. It’s like telling your customers that your new model baseline car has improved its 0-100km/h performance from 12.9 seconds to 11.5 seconds. Big whoop.

Consumer apathy

Marketers are faced with a constant challenge of consumer apathy; for politicians, sometimes even more so. As one lady commented to me during a dinner party last week, “I’ll register to vote when there is someone worth voting for.” Not a sentiment to be sniffed at: this election, there were 10.9 million registered voters, but there were still over 4 million unregistered voters. Couple that with an estimated turnout of 75% and you have about 7 million eligible voters out there who didn’t care to vote for anyone, for one reason or another.

I think the appropriate marketing analogy is about product categories prior to being ignited by product “blockbusters”. For instance, there was bottled water before there was Evian, and there were sexual enhancement drugs before there was Viagra, but look what they did to the category after they launched. In this case, a political candidate “blockbuster” combines vigour, charisma and inspiration, and it takes a politician like Barack Obama to smash both electoral roll register and donation records. In the absence of that blockbuster, the voters/consumers will simply stay at home, literally.

Marketing can only do so much

This might sound like heresy coming from a writer of a marketing column, but all marketers know that sometimes, it doesn’t matter how much is spent in a promotional campaign or how well executed it is if the product does not deliver or is perceived not to deliver on its promise. In fact, the phrase “a triumph of marketing” is often used disparagingly about a product which is successful beyond what it is entitled to be, according to objective measurements of its benefits. In this case, BN certainly needed one such triumph but the campaign that was created could not turn the tide of disaffection that had grown over the last 4 years.

Appeared (?) in The Sun (? date). Sorry, was in South Africa at the time, and didn't catch it.

A test of solidarity: forming a Shadow Cabinet

2008-03-11T16:34:00.002+08:00

When the dust settles, the euphoria dies down and we all go back to our business, I hope the opposition led by the PKR does one thing: form a Shadow Cabinet.

I don’t mean to say this is an easy thing. It’s not. In fact, let me articulate how difficult it is: the opposition parties have 82 seats in parliament giving them 37% of the total seats. PKR has 31 seats, DAP has 28 and PAS has 23, meaning to say that none of the component parties has even an outright majority within the Opposition, even though PKR has the most number of seats. Trying to craft together a Shadow Cabinet, presumably one led by PKR, would mean that the other 2 parties are willing to play ball. The resulting Shadow Cabinet needs to be competent but must also be seen to be inclusive in terms of parties, of race, of religion and of State representatives. The mere effort of trying to form one may precipitate internal splits within the Opposition coalition.

Nevertheless, a Shadow Cabinet must be formed. It will force the issue of whether the opposition can effectively devise their own method of power sharing in the appointment of Shadow Ministerial positions. Having a Shadow Cabinet provides a serious and effective platform for the Opposition to call out policies or projects proposed or executed by the BN, and provides avenues for leadership positions within the fledgling opposition movement.

Most important of all, having a Shadow Cabinet also enforces to the Malaysian public that the Opposition is serious about grabbing the reins of the government eventually and that, following this political tsunami of 2008, the tide does not roll out too far back in the next general election!

There should be no question that the opposition party with the most number of seats in Parliament, which is PKR, should have the honour of forming this Shadow Cabinet, just as its leader has the honour of being Leader of the Opposition. Moreover, since the real Cabinet has grown into a multi-headed hydra in the preceding decades, it might be a good idea to have a Shadow Cabinet much leaner than the real one, combining some dubiously created and rather ineffective ministries.

As a concerned public citizen who welcomes true multiparty democracy, I do want a viable opposition and an improved BN that a viable opposition would bring. In this way, the people will ultimately benefit. Having a viable, functioning, competent and critical Shadow Cabinet will be one step towards achieving that goal.

Since this election started as a groundswell from the people, I would like now to ask everyone: who would you nominate for Ministers in this new Shadow Cabinet, amongst the MPs and leaders of of the Opposition?

Why Store Brands Don't Work

2008-02-15T10:10:00.008+08:00

One of the prevalent anxieties of the day is inflation, that the prices of products and services, especially basic foods and household products, will spiral out of control. Having spent this lunar new year in my home town of Johor Baru, I heard on the radio that the prime minister of our neighbour Singapore had this bit of advice in his new year message for his fellow citizens – choose house brand products over branded products in order to reduce the cost of daily expenditures. A follow up survey of lower- to middle-class consumers, however, reported that only 5 out of 10 people would purchase house brand items, and of that, predominantly only non-food items, even in the face of inflation.

We learn, therefore 2 things: one is that socio-economic micro-management is still alive and well amongst the leaders of our neighbour down south! More relevant to this column, however, is another insight: that pricing and the human psyche have a more complex relationship than given credit for.

Nobody knows their wine

A recent study by academics at the California Institute of Technology highlights this. In the experiment, 20 volunteers were given 5 sips of wine each. The volunteers were told that the 5 sips of wine corresponded to 5 different wines at 5 different price levels, from $10 to $90 a bottle. However, what the volunteers did not know was that they were actually only being served 3 wines – and that 2 of the wines were being served twice, once with a fake price and another time with its true price.

While sipping their wines, the volunteers also had their brains scanned to monitor the neural activity in the medial orbitofrontal cortex - an area of the brain believed to encode pleasure related to taste, odors and music.

The result was simple and stark: inflating the price of the bottle enhanced a volunteer’s pleasure at drinking it, as shown by the neural activity from the brain scanners. When the experiment was repeated without price information to the volunteers, they reported differences in ratings in line with the 3 “real” wines and no difference between the ones served twice – which means pricing was the key variable which affected their pleasure cortices.

And if you still think that’s because lay people don’t know their wines, the experiment was duplicated with volunteers from the Stanford University Wine Club with similar results.

Evolutionary explanations

Most media reporting on this research have basically homed in on the simple extrapolation: in certain products, you can make your customers enjoy them more, simply by increasing the price. The Economist, however, probes deeper into the question of why this occurs, drawing from evolutionary perspectives. In conversations with Dr. Antonio Rangel from the research team, it is postulated that pricing is an efficient mechanism for learning quickly from the collective wisdom of the community: what is good is in higher demand and therefore has a higher price; in the case of what is bad, the opposite is true.

This is the same mechanism which explains why queues that form around eating outlets, whether they be humble rojak vans or high-priced doughnut stores, tend to lead to even longer and longer queues. “If there are so many people eating there, then it must be good,” goes the collective wisdom.

Another possible explanation is that higher priced, exclusive products provide avenues to show off, projecting a higher status and, of course, increased mating opportunities – the “power and sex” argument. This would explain how certain establishments can get away with charging exorbitant figures for set meals, especially on Valentine’s Day, with customers still claiming to have enjoyed the experience.

Marketing implications

Either or both of these explanations may be true. The Economist’s review of the research ends on a coy note: “[this] research also has implications for retailers, marketing firms and luxury-goods producers. It suggests that a successful marketing campaign can not only make people more interested in a product, but also, truly, make them enjoy it more.”

BMW owners out there can certainly attest to the cerebral pleasure of seeing a well-produced BMW ad on TV, complementing the visceral pleasure of actually driving one. But since this column started with the house brand discussion, let us end with 2 somewhat rhetorical questions on their effectiveness:

1) If a retailer chooses to sell house brand items (such as tissues, canned food, water and other necessities), is it pursuing the best strategy by packaging it in bland, plain, boring colours which signal “cheap, cheap, cheap” to customers, therefore robbing them of any sensory pleasure or confidence in the product, no matter how small?

2) In this era of food scares, lead and cadmium contamination, does a retailer have any business selling anything that is unbranded and brought in by a margin-hungry purchasing department buying directly from China manufacturers without a quality program in place? The bottom end of the market is sometimes as dangerous a place to be as the top end.

Retailers out there, good luck. Solving this problem may boost your profits while serving the greater good of reducing inflation.

As appeared in "The Sun", 15th February 2008. PDF version here.

Pricing Your Service Optimally

2008-01-23T08:36:00.001+08:00

The following is a transcript of an interview with Professor Irene C. L. Ng, Associate Professor of Marketing, Director of the Centre for Service Research and Head of Postgraduate Studies at the School of Business and Economics, University of Exeter, UK, who is back in her native Malaysia for regional conferences and lectures.

Gabriel Ng (GN)
Thank you for taking the time to speak with me, Professor.

Professor Ng
(Prof Ng)
My pleasure.

GN
We’re here to discuss your new book, “The Pricing and Revenue Management of Services: A Strategic Approach”, recently published by Routledge in their ‘Advances in Management and Business Studies’ series.

Prof Ng
Done your homework, I see.

GN
Always. Let me get right to the point: your research in this book is exclusively about services. Why? What makes services so different from products, that you want to highlight them in your book?

Prof Ng
There is very little understanding of pricing generally and even less for services as they are usually intangible, perished upon production, simultaneous in consumption and production and often inconsistent in delivery. Services that exhibit such characteristics pose a huge challenge to pricing.

GN
Your book features 11 service strategies for higher revenues through pricing and revenue management, probably of most interest to marketing practitioners. Care to take us through a few of them?

Prof Ng
That’s quite a bit to go through and I’m afraid we won’t be able to fit all that needs to be said. Suffice to say that they provide managers with innovative ways of pricing. The book is part of the Routledge ‘Advances’ series so you would expect cutting edge service strategies to help companies get ahead.

GN
Hmm. And here I thought that “First world services at Third world prices” was all one needed to know about a service strategy here in Malaysia.

Prof Ng
Only if you want to be less profitable! Services have a big potential to increase their revenues. Some of the companies whom I work with, and who have traditionally been in manufacturing, are now earning greater revenues from services. For example, Rolls Royce revenues are 54% from service, and BAE Systems are also 50% service. What they, as well as other companies, hope to understand is how to price based on value and how to grow their revenues from service.

GN
So who do you think in Malaysia would have the most to benefit from reading your book? Don’t be shy, now, you could be identifying potential customers.

Prof Ng
Any company interested in value-based pricing and innovating in service.

GN
Not rising to the bait, I see. Fine, then. Why is it so difficult for service firms to price optimally?

Prof Ng
Unlike goods, services are often sold before production/consumption, so it’s often sold in advance. This implies that risk and uncertainty is always associated with the pricing of services, and having to price while taking into account customer perception of risks in purchasing services makes it even more difficult. Marketers still think that cost-based pricing is still the way to go. In services, cost is meaningless – almost all of it has been sunk and are fixed costs and marginal costs are negligible. The way to price services is based on value, moderated by the capacity of the service.

GN
Like Air Asia? The ticket prices increase as the capacity fills up?

Prof Ng
That’s only the capacity half of the story. The other half (value-based) is still not well understood which is a large part of the 11 strategies in the book

GN
Sometimes, when I’m on an Air Asia flight that’s full, I feel like standing up and asking everyone what they paid for their flight, just to compare and see. What do you think about that?

Prof Ng
The power of value-based pricing is that customers are willing to pay different prices. No one is holding a gun to their heads. In the end, they buy at the price they are willing to buy, whether at $5 or $100. Understanding how to price a service from a value perspective helps firms increase revenues and make customers happy too. It might sound like its too good to be true but the book will explain why and how.

GN
Last question: I’m a columnist and therefore a service provider. How do you think I should increase my revenues?

Prof Ng
You have a limited capacity to write, time-wise. If you have 4 publishers vying for your time, your revenues should increase as your capacity reduces, if you price it right. However, you also can choose what you wish to write about, and if your content contributes value to the publisher, you will also be able to increase your revenues. Capacity-based and value-based pricing have tensions, and you should know how to manage the tension optimally for your own benefit!

GN
Hmm. I was thinking, “Ask for more money”, but I guess that’ll do! Well, that’s all the space we have for this week. Thanks for your time, Prof!

Disclosure: Gabriel Ng has worked in consumer marketing for 8 years, but has been Professor Irene Ng’s brother for much longer. Find out more about Professor Ng’s new book, her research and her consulting work at the University of Exeter at http://www.ireneng.com.

Unedited version of column that appeared in "The Sun", 23rd January 2008. Edited PDF version here.

New Year’s Resolutions for the Malaysian Marketer

2008-01-02T12:21:00.000+08:00

It’s the new year, and you, dear marketer, are still bleary from all the partying over the weekend. Now you’re drinking copious amounts of Americano while trying to drag your fuddled brain back to lucidity, pretending to read this newspaper. The idea of new year’s resolutions is laughable at this point. Fear not. Here they are for you, carefully selected from observations of some marketing gaffes of 2007.

I resolve to responsibly oversee the copywriting on my print advertising if I am qualified or have it professionally vetted if I am not, and not to surrender it to my MS Word’s spell and grammar checker. Not everybody can come up with bad copy that sounds good, like Samsung’s “World Best” tagline of yesteryear.
I resolve not to schedule the same radio ads for more than 2 weeks in a row, and certainly resolve to pull the plug after 1 month. Especially on peak hour morning shows when repetitive radio ads are as annoying as the slow traffic on Jln Tun Razak.
I resolve to strenuously encourage my marketing and sales executives to change their strange adopted English first names to something less cringe-inducing. I am referring to those who call themselves, for instance, Coma Tan, or Season Wong or Winky Teh.*
I resolve not to cave in to my CEO’s sometimes off-hand, uninformed and unhelpful pronouncements when vetting ad campaigns, in spite of my appointed advertising agency’s strenuous efforts to actively solicit them. I resolve to do my level best to end the era of egocentric ad campaigns in my lifetime.
I resolve not to use billboards that can be seen from the North South highway which are not run by Big Tree since they are, well, not on the North South highway. (Unless they are waaay cheaper and are legible for at least 3 seconds by a person with 6/6 vision driving at 110km/h, so what if they are lurking at the edge of oil palm plantations).
I resolve not to copy the Petronas TVCs since they are in a class of their own and my efforts would seem pedestrian in comparison.
I resolve not to pander to my advertising agency’s penchant for constructing ads which appeal to “opinion leaders” which are invariably modelled after their A/X clad, pinot-noir drinking selves and have very little to do with the Malaysian public.
I resolve to try originating my brand propositions and messaging in Bahasa Malaysia or in Chinese and then only translating them to English, since Nielsen reports that only 4% of the Chinese population and 2% of the Malay population speak English as their most often used language. Of course, that might end up breaking resolution #1 (please see above). Life, after all, is a series of trade offs.
I resolve to try to incorporate some number crunching rigour to my marketing budget, such as those fancy marketing ROI tools being bandied about around town by some ad agencies and consulting firms, and also to make sure any allocation for purchasing them comes on top of my existing budget.
I resolve to stop using scratch cards or fake “winning lottery tickets” in my promotional mailers because, while they are depressingly effective, they do so much to bring down the dignity of what it means to be a human being.

There you go. Now, email me who you think “inspired” those resolutions above and I’ll send you a mystery gift. ;-)

* These are not real people and any resemblance to any person, living or dead, is unintentional and coincidental. And also, well, slightly tragic. Although I must admit “Winky” is kind of cute.

(as seen in "The Sun", January 2nd 2008. e-paper link here.)

Spoil Market!

2007-12-05T11:16:00.000+08:00

Title says it all, doesn’t it? Surely in one’s working life, one has heard the phrase, “Don’t spoil market, lah”. According to the lexicologists at a satirical Singapore website, this refers to the actions of “someone who does his work so well, he makes his colleagues look bad.” However, that is surely only one way to interpret it, and so let’s bring some intellectual rigour to this diaphanous, oft-used phrase.

Market “spoiling” on 2 fronts
The most obvious way the phrase can be alternatively used is when you buy something and are deemed by others to have overpaid for it. This often happens for services since there can be more ambiguity in how services are priced. (“I went to Ah Yap yesterday for a massage. It was sooooo good I tipped her RM10.” “What? You really spoil market lah!”). We can call this demand-side market spoiling.

The implication seems to be that you are spoiling the market for others who are less willing to pay the price that you paid, and that the supplier of the service may increase price and seek out other high-paying customers like yourself while ignoring low-paying customers like them completely.

Similarly, in the labour market, an employer can also be deemed to spoil the market when he overpays or provides extraneous benefits to pampered employees. (e.g. overheard at HR offices around town: “Did you see those pictures of Digi’s corporate office? It’s like the Google campus! Got waterfalls and free food! Really spoil market!”)

The second type is supply-side market spoiling. Like the example of the overeager worker above, companies can also do the same when they supply their goods and services. No one can ignore the market spoiling power of such brands as Wal-Mart, Air Asia and Dell when they first brought their low-cost wares to market.

“Spoiling” their day
When people say “you spoil market”, it is often passed off as a joke, but also as a scolding. In this sense, it is important to be clear on the reason for your “spoilage”.

Dumping is often the suspected motive behind supply-side market spoiling. Companies that are overstocked or want to aggressively gain market share often muscle in by offering ultra-low prices. This grouse is probably legitimate, but it should be noted that there is a very fine line between this category of firms and those who are actually able to sell their wares at a cheaper price and book a decent profit, such as the low cost leaders mentioned above.

Poor information is often an accusation for demand-side market spoiling – you overpay because you don’t know better. But what if you do? Are the kinds of benefits purportedly lavished on Digi employees a result of corporate vanity or because, at half the headcount of rivals Celcom and Maxis, Digi staff are simply more productive and therefore can be treated better? Would one say other companies with exemplary service records like Shangri-La, Direct Access and Singapore Airlines are “overpaying” their staff?

The ugly side
As a marketer, beholden to your bosses/shareholders, your justifications for “market spoiling” are your own and usually subject to financial inspection – your bottom line will be your conscience. However, I have a personal observation on why the phrase “spoil market” persists to this day in popular usage. It actually reveals 2 ugly sides to our behaviour.

Demand side accusations of “spoil market” are really a reflection of our unwillingness to reward good services rendered. For instance, there is a poor tipping culture here in Malaysia, since most people assume it is covered by the standard service charge of 10%. However, in more developed countries, where services form a larger part of the economy, service charges are usually unstandardised and tipping is wholly discretionary, ranging from 10% to 25% or more depending on how pleased the customer is.

On a larger scale, corporate clients often balk at firms who price their services accurately and deliver on-time and on-budget, thinking they will be guilty of “market-spoiling”. Instead, they prefer to go for less responsible firms who throw attractive lowball prices but who hide behind “unforeseen” future overruns which end up costing the same or more. Sound familiar?

Supply side accusations of “spoil market” are a reflection of our tendency to collude. It is no secret that Malaysian companies in similar industries, even “fierce” competitors, like to gather together for regular meetings to catch up, share news on the market, shop talk. I’m not saying that anything bad goes on at these meetings (picture eyes rolling here), but let’s just say that in many developed countries, such regular interaction between competitors would inevitably lead to a visit from investigators in the domestic trade ministry.

For marketers, this poses a two-pronged challenge: first, should you focus on what your rivals are doing or on what your customers want from you?; and second, especially for those in service industries wanting to climb up the quality ladder, it can be supremely difficult searching out customers who are able to recognise and reward quality when they purchase it, instead of those customers on the endless look-out for the chimera known as the “cheap and good”.

Which way should your firm go? Now, telling you would really be spoiling the market!

(reprinted from The Sun, December 5th 2007. e-paper link here.)

To G1 or to G2, that is the question.

2007-11-14T14:27:00.001+08:00

I’ve just become a father. It’s usually one of the biggest steps in a person’s life, becoming a parent, but lately, what has been troubling me (other than preparing the checklist of things you need to buy) is whether I should raise my daughter as a G1 or G2.

Oops. Maybe I need to backtrack a little.

About a month ago, an opinion piece in The Star from members of INSAP, the MCA’s think-tank, introduced the concept of 2 distinct groups of Malaysian Chinese, the G1 and G2. According to the article, the G1 are Chinese-speaking, Chinese-schooled and comprise about 85% of the Chinese population, while the G2 are English-speaking, English-schooled and comprise 15% of the same. The G1 subscribe to the notion of the three pillars of Chinese society – namely Chinese schools, Chinese associations and Chinese media, whereas the G2, well, they are the Christians, peranakans and “part of the Lions and Rotary Club set”.

The article was unusual in its candour, doubtless expressing a widespread stereotype latent amongst many Malaysian Chinese. From a demographic standpoint, it is interesting that one’s preferred language is being endorsed by the MCA as a form of social delineation.

G1, G2 or G1½?

Talk to Malaysian Chinese and you’ll often find that they are comfortable with BM and their dialect, but they then lean heavily towards either English or Mandarin/ Cantonese/ Hokkien. G1’s do read Chinese papers and want the government to leave them alone, while G2’s do read English papers and tend to vote Gerakan (their words, not mine!). This was the basis of INSAP’s argument for the delineation.

Stereotyping, however, is a blunt instrument, in the sense that it often hides as much as it reveals. A respondent to the commentary took issue with the G1/G2 profiling, claiming he had written 2 Chinese books, married a Chinese-speaking wife but was English-educated and spoke English at home, and therefore called himself a ‘G1½’.

Life in a G1½ household

I’m probably G1½ myself. I think and write in English. However, Mandarin is my ‘primal’ language since I was brought up speaking it in my home and I often slip into it unconsciously when speaking. In our ‘rojak’ society, it is almost impossible to be monolingual during the course of the day, anyway.

I also married a G1½. My wife speaks better Mandarin than I, and has a more natural aptitude given her family is Mandarin-speaking. Still, she studied the humanities in school and talking to her, you would not think she aced English Literature and History during her ‘A’ levels

Our household consumption is a hodge-podge of Eastern and Western brands. Chinese herbs sit beside our stash of Nurofen. Birds’ Nest from Eu Yan Sang. Illy Coffee. ‘Shin’ Korean noodles. The TV we tune in to runs the entire gamut of English and Chinese offerings available on Astro from Wah Lai Toi to the History Channel to Channel ‘E’.

Defying Stereotyping

Concentrating so much on the G1/G2 divide may lead one to miss the trends affecting our society, which is that there are more and more G1½’s every day. The younger generation is largely more clued in to what is needed to succeed in today’s world, and you will find effective trilingualism, or even quadrilingualism, amongst the best and brightest of the young. For instance, a foreign visitor that I entertained recently observed that the average Chinese executive speaks 4 languages during the day: a) BM to Malay colleagues; b) Mandarin to Chinese colleagues; c) English to the boss; and finally d) dialect (Hokkien/Cantonese etc.) at home with the family.

The smartest are able to weather this cacophony of languages in their head with ease. Usually, these are children of far-sighted parents who are compensating for an in-built bias – either they deliberately stressed Chinese education because they spoke English at home, or vice versa. INSAP’s dismissal of G2 parents sending children to Chinese schools simply because of a perceived higher quality of education misses this point, and misses also the increasing number of G1 parents sending their children to ‘international’ schools. Parents like these want to make sure that the best possible choices are available for their children when they grow up, and that means an inclusive, broad-minded and multilingual education. When it comes to marketing in Malaysia, there is no such divide: you’re either multilingual or you’re not in marketing.

I confess I would want my daughter to be like that. But then again, I’d also want her to critique Plato and Confucius with equanimity, to know how to spot a fake Louis Vuitton from 30 metres, and to know how to steam a ‘soon hock’ for her father when she grows up. All very reasonable, I think.

(reprinted from The Sun, 14th November 2007. e-Paper link here.)

*Update. INSAP's reply here. More on INSAP here.

Marketing in the Facebook Age

2007-10-10T17:42:00.000+08:00

To paraphrase a book review of Lord of the Rings, the English-speaking world is now divided into two – those who are part of Facebook and those who will be. If you’ve been wondering what the fuss is all about, Facebook is essentially social networking done right. The developers have cleverly isolated the key elements that people want from such a website – re-connecting with old friends, keeping in touch and interaction – and pioneered a unique approach to satisfying those needs in such a way that surpasses previous attempts from Friendster, LinkedIn or Myspace.

One may sniff at such an incremental improvement, but one should remember that Google “only” improved upon Yahoo’s search capabilities and look where it is today. Facebook’s global membership has grown exponentially since opening its doors and has reached a roster of 43 million active users after 3 years of operation. Locally, the statistics are also impressive: from virtually zero in the 1st half of the year, the ‘Malaysia’ network of Facebook has grown to 70,000-odd members, and is growing at the rate of roughly 30% every week.

Why Facebook is better

Virtually every Facebook joiner has the same experience – you are bugged by friends to register, you do so, you find a few friends, but soon you are inundated by other friends who have somehow found you and then you spend copious amounts of time “catching up” by reading other people’s profiles. Such is the genius of their profile layouts that a friend you have on Friendster suddenly seems more interesting when he’s on Facebook!

Secondly, Facebook is an uncluttered environment which emphasises what its membership base most wants to do – stay in touch. It consistently strikes a satisfying balance between privacy for oneself and curiosity about others. In Facebook, a member’s home page is a veritable news feed of all the important things happening to his community, and similarly every significant action or comment you make on Facebook is reported to your community. Are you getting engaged? Got a new job? Having a tough day? Or just simply going some place tonight? One brief update and *click* all of your friends will know.

Thirdly, Facebook structures interaction through the sharing of hobbies, games and interests. It has cleverly outsourced this to 3rd party developers who create applications on the Facebook platform that integrate well into the user’s profile page.. Whether its music, games, hobbies, religion or others, all have applications which automatically seek out those friends with the same interests. The combination of such applications, on top of Facebook’s already potent user-generated content, creates a compellingly “sticky” environment where half of all registered users log on daily or more just to see what is going on in their world of friends.

Marketing Implications

But what does this mean for marketers? Google rewrote the book on web advertising with its AdSense application and its promise of targeted advertising leveraging on its ubiquitous search engine. What about Facebook?

In its current embryonic stage, Facebook may best be understood as word-of-mouth writ large. Any campaign with a viral marketing component has to consider Facebook for efficiency reasons. Case in point: an expatriate’s leaving do was recently held at a Mexican restaurant on Jln Semantan. I know this because I was notified in my community news feed that a friend of mine attended it. The point is, its not just the invitees, but all the friends of the invitees that now know there’s a Mexican restaurant on Jln Semantan. Do they serve grilled fish tacos there? I don’t know, but I’m certainly going to find out.

Furthermore, Facebook aspires to bring some demographic order to web advertising. Although as a user it is possible to have a blank profile up, half the fun is actually sharing what your interests are and what you do. That translates on a massive scale to a potentially powerful meta-database for larger advertisers. Facebook is holding out the promise of targeted Internet advertising that does not rely on search for the targeting but rather location and demographics – a long-held dream for advertisers who want a more active campaign rather than a passive keyword-based one such as Google’s.

Finally, Facebook is being seen as a poster boy for Web 2.0 with its infrastructure for shared web applications, and is in fact being spoken in the same breath as Yahoo or Google when it comes to that coveted ‘portal’ status. With the 6th most trafficked website currently in the USA, it is no wonder, then, that the shareholders were offered US$1.6 billion for the company by Yahoo and still had the gall to turn it down. Its early days yet but the future of web advertising may again be turned on its head by the Internet’s newest kid on the block.

(reprinted from The Sun, 10th October 2007. e-Paper link here.)

Dealing with Fear and Greed in Marketing

2007-10-07T16:07:00.000+08:00

A very senior sales professional once wrote to me, when I was a wee trainee fresh out of school, “Fear and greed motivates almost all buying behaviour. No, wait, that’s wrong. Take away that word ‘almost’.”

Many of you must have heard one variation or another of that old saw before. Fear and greed are indeed two of the most powerful human emotions, motivators of our actions since caveman days to avoid risk and acquire what looks rewarding. The literature on these two emotional drivers in decision-making is quite lengthy, but it is commonly discussed in the world of investments, less so in marketing and consumer buying behaviour.

Is it true?

Do we truly buy things only out of greed or fear? Throw all kinds of products up in the air and you do find that they fit… if you stretch the concepts of fear and greed a little (ok, a lot). Rice, bread, cooking oil, milk and other necessities? Yes, we buy such necessities out of fear of running out of them. Computers, handphones and laptops? Sure, we buy them out of ‘greed’ for the latest gadgets and what they can do for us. Luxury cars, yachts and planes? Classic greed. Insurance, home alarms and vitamin supplements? Classic fear. The list goes on and on. Try it with the product or product category your company operates in, and you will find fear and/or ‘greed’ is around the corner in some guise or another as a simplification of the buyer motive. (perhaps ‘acquisitiveness’ would be more euphemistic instead of ‘greed’?)

New perspectives on Fear and Greed

If you accept that these two primal emotions play a huge part in consumer buying behaviour, a new book taking a neuroscientific look at fear and greed and their effects on investing may have some valuable lessons for marketers. Jason Zweig’s “Your Money and Your Brain” (Simon and Schuster 2007) highlights several important facets of our brains’ reaction to fear and greed, but for the purposes of this column, I’ll mention two.

First, anticipating a reward is much more powerful than actually getting one. This is the ‘thrill of the chase’ which we are all so familiar with, and this thrill is actually much more powerful than the pleasure received when the quarry is ‘caught’. Functional magnetic resonance imaging (fMRI) scans of experimental subjects show that neuron signals fire more significantly during expectations of payouts than they do when the payouts are actually received. This partly explains why lottery ticket sales increase dramatically when the jackpot rolls over week after week – millions of people become excited at the prospect of winning hundreds of millions (as opposed to mere millions) and the lottery ticket sales skyrocket.

Secondly, another insight with regards to fear is our brain’s inability to measure risk in proportion to probability. Instead, explains psychologist Daniel Kahneman, "we tend to judge the probability of an event by the ease with which we can call it to mind." Hence, people tend to fear nuclear reactors much more than sunlight, even though the worst nuclear accident in history, Chernobyl, killed fewer than 100 people, whereas 8,000 people a year die of sun-related skin cancer.

Local lessons

Brain scans and new books are one thing, but experienced business practitioners probably know these things intuitively through experience. What are some examples of local marketing which address these 2 issues of anticipated reward and fear of the improbable?

A recent buka puasa trip to a well-known local restaurant at Mid Valley Megamall was an interesting experience. Mounted around the restaurant were LCD TV’s displaying mouth-watering videos of the preparation and garnishing of the restaurant’s signature dishes, which no doubt helped customers to decide what to order but also definitely whetted their appetites as they waited for their food. Overall, this provided a much more enhanced dining experience.

As for fear of the improbable, you may notice around KL billboards which advertise the services of a cord blood bank. A cord blood bank stores the cord blood of a newborn baby, as it is rich in stem-cells and can be used for life-saving transfusions in the future in case of diseases such as leukaemia and other blood or autoimmune disorders.

The advertisement features a butterfly on the nose of a cute baby boy, with the words: “Don’t let it fly away, mom!” This single picture succinctly draws attention to the ultimate beneficiary of the service (the baby), the fear of letting something potentially precious and life-saving slip away, and, allegorically, the comparative low cost of making sure that precious thing is saved (just catch that butterfly…).

The approaches of both these companies also illustrate that appealing to the emotions of fear and ‘greed’ is not straightforward, and requires subtlety and creativity in today’s consumer market. For instance, in the case of the cord blood bank, the fear of letting something precious slip away was highlighted, which is something everyone can relate to, instead of the fear of the diseases which might strike our children, which would be much too negative in a nationwide advertising campaign.

Interesting? Effective? A final disclosure: I’m both a customer of that cord blood bank and a regular at that local restaurant, so the strategies must have worked on me!

(reprinted from The Sun, 19th September 2007. e-Paper link here.)

Bill and Warren's Donations

2007-05-31T10:09:00.000+08:00

Here's an interesting 1+1=2.

Warren Buffett recently donated US$37 billion to Bill Gates' charitable foundation. This is on top of the US$31 billion that Bill (yeah, we go way back) already gave before, making a total of US$68 billion.

Warren (I knew him through Bill) has already given most of his fortune (his estimated net worth is US$44 billion). Bill has another estimated US$50 billion to go.

So let's assume Bill will give most of that too and add another US$40 billion of that to the total, and so we have about US$108 billion.

Here's an interesting comparison.

The number of people the World Bank classifies as living in poverty just dipped below 1 billion this year, down by over 250 million since 1990. How do they arrive at the classification? Those that live on less than US$1 a day.

I think you kinda see where I'm going.

So let's say we take Bill and Warren's money and put it in a mix of T-bills, equity, loans and deposits. We take a blended return of about 7.5% and we arrive at returns of US$8.1 billion a year.

Divide that by 365 days and you have approximately 22 million.

So, basically, the charitable donations of 2 people are enough to double the daily income of 22 million people, without even affecting the value of those donations.

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I dunno, I just thought that was interesting.

Singapore the Corporation (Part 2)

2007-05-16T10:03:00.000+08:00

What is Corporativism, in a Singaporean sense? Search around on Google for "Corporatism" or "Corporativism" and you’ll find a few definitions. For brevity's sake, here’s Wikipedia’s:

“an authoritarian state, through the process of licensing and regulating officially-incorporated social, religious, economic, or popular organizations, effectively co-opts their leadership or circumscribes their ability to challenge state authority by establishing the state as the source of their legitimacy.”

As you can see, most people look at corporativism negatively. Marxists (all 18 of you out there in the world) compare it to Fascism because of the idea of class co-operation vs. class struggle - eg. all workers registered under one "trade union congress" which effectively kowtows to government dictates. On the other hand, liberals scream at the absence of individual rights in such a regime, the lack of transparency of the operations of the state, and the stifling of free enterprise.

But thankfully, Singaporeans are neither marxists nor liberals. They are simply pragmatists, and so, this blog entry will be an exercise in political framing, in a language all pragmatic Singaporeans can understand. Yes, Singapore is one big corporation, and therefore, you are all shareholders of that one big corporation. You figuratively and literally have a stake in the accumulated income of Singapore Inc., and should press your rights in such a fashion.

Certainly Singaporeans must get the message by now that the government prefers this arrangement. Two rounds of disbursements have occurred – the New Singapore Shares (NSS) in 2001 and the Economic Restructuring Shares (ERS) in 2003. A brief check at the combined NSS-ERS website shows this year’s dividend rate at 10.9%, a good return in any given year in terms of equity and a stellar one in terms of safer asset classes (presumably a claim on a country’s income is a safer asset class?)

However, from what I understand, the quantum of shares out there are miniscule and hardly worth a sneeze at. If I were a Singaporean, I’d smell an opportunity and use this avenue to pressure the government for more, as well as a higher dividend policy. Currently its 3% + the real GDP growth rate of the previous year. I’d say go for 5% and increase the entitlement. The question is, what level of ownership (i.e. the quantum of shares) is enough to create that sense of ownership in the average Singaporean, set at an optimum level which would not impede the cashflows of the state for crucial re-investment? (presumbly the Singapore government knows this and is not talking)

If the people of Singapore understand their country as a corporation and themselves as shareholders, then many things would become clear. Minister wages make sense. Rents and tolls make sense. The COE and the ERP make sense. Even taking care of expatriates, giving foreign customers better service, and $500 fines for spitting and littering all make sense. And then, Singaporeans would be able to press for reforms that the administrative elites of Singapore would also understand, because reforms would be along the lines of corporate governance and shareholder rebellions, not democracy (corporate governance as a rallying cry has the whiff of Enron; democracy, unfortunately, has the stigma of Tiananmen).

Among other things Singaporeans should ask for:

1. Increased dividend policy as stated above

2. Natural monopolies should have break-even targets (after accounting for necessary re-investment), not profitability targets (ie. like the United States Postal Service)

3. A clear immigration policy should be spelled out, with immigration to those who have added fundamental value to the Singapore economy over years preferred above all else.

4. Public KPIs for ministers and heads of statutory boards for accountability purposes. If they're paid like the private sector, they should be liable for punishment like the private sector – susceptible to demotions, firings, retrenchments and pay reductions.

The grumblings I hear in Singapore are reminiscent of employees in big multinationals bitching about their bosses and their directors getting fat paychecks. It’s time that Singaporeans understood that while they are employees in Singapore Inc., they are also shareholders, and should act as such. It would serve them better than grousing about it on blogs.

Conversely, the state-owned media (i.e. SPH) needs to collectively internalise this political regime and start to work as shareholder advocates, rather than simply management mouthpieces (i.e. move away from being the in-house company newsletter to being the research analyst covering the company). This would give the media greater credibility than it has now, while balancing the state's desire for some control over content.

To me, that would be an interesting development in political science. A new, viable political entity for the 21st century. How's that for putting Singapore on the map?

Singapore the Corporation (Part 1)

2007-05-13T00:43:00.000+08:00

I recently passed through Singapore on the way to the United States for a product exhibition. Most acquaintances and friends I met were surprisingly vitriolic of the recent government ministers’ pay raise, and had stories to counter-point, such as the growing income disparity there.

Most were of the opinion that the PAP would face a substantial backlash in the next election and lose more seats. One was quick to point out that in the last few elections, the PAP had won as few as 51% of the total electoral vote, and that if anything, the PAP might implode in internal fissures and factionalism similar to the fates of other former one-party states (the KMT in Taiwan, the GNP in South Korea). Only in this way would democracy come to Singapore.

I think I have to disagree. Not only do I support the PAP unreservedly, I think Singaporeans should abandon the language of western liberal democracy and embark on a new political journey, embracing the Corporativist regime they have created and pull the study of political science out of history and into uncharted waters.

Everyone knows that Singapore is structurally now more a corporation than a country. The GLCs have a major if not total share of the commanding heights of the local economy. Capable and well-run, the GLCs operate in those industries which favour natural monopolies (roads, airports, ports, mass transit) or compete against each other in those that don’t (power, retail banking, telecommunications, media). The PAP is a profit maximising regime in the “New Institutional Economic” sense – it seeks to maximise profits in the form of tax revenue, returns on state investment, and rents from ownership of local infrastructure.

In that sense, one understands why foreign investment is and always has been fundamentally a favoured policy. When a company sets up shop in Singapore bringing in expatriate workers, it bolsters local tax revenue through corporate, income and consumption taxes, and also provides rent revenue to the local monopolies and employment of the local workforce. FDI-driven export revenue in electronics, petrochemicals and pharmaceuticals remains a mainstay of the economy.

Besides revenue, Singapore's education system is geared towards identifying talented, driven individuals and streaming them at an early age depending on aptitude. Properly administered, it identifies the best and brightest to serve in the civil service, the aforementioned GLCs or statutory boards.

The success of this carefully implemented model of export promotion, FDI inflows and human capital management is undeniable. From 1966 to 2006, the economy grew over 20-fold from a GDP of S$9.7bn to $209.6bn. Growth in 2007 is estimated to be above 5% and based on current extrapolations, the economy of the island of Singapore (pop. 4.5m) might actually overtake its hinterland Malaysia (pop. 25m) within the next 10 years.

Which brings us to the issue of Minister wages. The uproar over this issue betrays a mental disjunct between the angry populace and the administrators of this economy, a disjunct partially created because the language of political science has not caught up with the economic reality of the way Singapore is governed – simply put, minister wages in Singapore should be aligned to private sector wages simply because Singapore now functions as a corporation. However, Singaporeans seem unable to accept this reality, as it has not been properly framed for them by the literate elite.

And that’s where bloggers come in. To be continued.

My first poll.

2007-04-24T10:58:00.000+08:00

Vital important question.

9/11, Baudrillard and the Theory of Comparative Advantage

2007-04-18T20:06:00.000+08:00

In an essay titled "The Spirit of Terrorism," published in Le Monde two months after 9/11, Jean Baudrillard wrote that the World Trade Center attacks were the consequence of a "terrorist imagination" bred by an "insufferable superpower," the United States of America. "In the end," he concluded, "it was they who did it, but we who wished it."

I will be using Ricardo's Theory of Comparative Advantage to illustrate what the hell he's talking about.

Let's say there are 2 countries, USA and Qaeda-land. And let's say this world of 2 countries only produces 2 items, Robots and Camel Milk.

If the countries were on their own without trade, this is what they would be able to produce if they dedicated all their resources to making either robots or camel milk:

Qaeda-land can make 100 robots or 100 tonnes of Camel Milk
USA can make 200 robots or 100 tonnes of Camel Milk

Now, it seems that the USA is better than Qaeda-land, and has an absolute advantage over it. The USA can make at least as much or more than Qaeda-land in both products. You would therefore think it has nothing to gain from trade with Qaeda-land.

But Ricardo's Theory says look at the opportunity costs of production: USA's opportunity cost of making robots is higher than Qaeda-land's. There is room for both to benefit from trade, if they choose to specialise.

If both countries did not trade and chose to split their resources equally between making robots and camel milk, then this is what would happen:

	Robots	Camel Milk
Qaeda-Land	50	50
USA	100	50

However, if they specialised in producing in the item which they had a comparative advantage in producing, then this is what they would produce.

	Robots	Camel Milk
Qaeda-Land	0	100
USA	200	0

Wow, it looks like given the proper exchange rate (to be precise, the proper terms of trade), both USA and Qaeda-land could benefit from increases in production!! Notice the exclamation marks?! This is the part where economists normally wet themselves with excitement at how surprising and non-intuitive the results of specialisation can be!!

To illustrate this, the examples of Ricardo's Theory typically use a "nice" exchange rate, for instance, 75 robots to 50 tonnes of camel milk, which yields the following consumption:

	Robots	Camel Milk
Qaeda-Land	75	50
USA	125	50

Why is it "nice"? Well, because the absolute gains from trade - 50 robots - are split evenly between the 2 countries, Qaeda-land and USA, resulting in both countries having 25 more robots than they would have had without trade and specialisation.

But what if we had a "not so nice" exchange rate, for instance, of 55 robots for 50 tonnes of camel milk:

	Robots	Camel Milk
Qaeda-Land	55	50
USA	145	50

One could argue that Qaeda-land is still better off than it would have been if it didn't trade - it got 5 more robots than it would have had if it made things by itself. Economists are content to end there. Everyone benefits from specialising under the theory of comparative advantage.

But you and I know that's not the end of the story. Because the people of Qaeda-land would be living in a world where the people of USA now had 145 robots, compared to their own measly 55 robots. They might even think that they were being suckers, having specialised in making camel milk so that the people of USA could enjoy the foot-rubbing, foie gras-making and general lawnmowing services of those additional 45 robots.

And if you believe that people measure happiness in relative rather than absolute terms, you'll see that there are people out there who prefer a world without those extra 50 robots and how to divide them up fairly. They'd prefer you not to build 100-storey skyscrapers when they can only afford 20 storey-skyscrapers (never mind that that couldn't afford a tent before trade occured). They would prefer not to be "suckers". They would prefer to take you down in a race, rather than run and lose.

And that is how - as I see it - Ricardo's theory, which is the theoretical foundation of modern international free trade (and therefore globalisation and the WTO), provides some nuance to what Baudrillard meant. "[It] was they who did it, but we who wished it." Who wished it? Anyone who felt a vague sense of dizzy wonderment at seeing those 2 buildings collapse on September 11th.

You know who you are.

How to save Proton

2007-04-14T08:17:00.000+08:00

So, our Prime Minister is intervening personally in order to to save Proton, but he still can't get a meeting with the Volkswagen chairman.

Well, I've got your saving Proton right here. (Warning: this is not going to be pretty.)

Easy-peasy steps (not).

1. You got the wrong partner. Choose Ford, which owns, among other brands, Volvo.

2. Co-operate on building the Tandem, the most revolutionary new car design of the past 20 years that nobody has heard of. Tell them you'll build it for them at Tanjung Malim and buy the 1st 100,000 off the line. Just as long as Volvo shows Proton how to build it. And the vendors too.

3. Tell them you'll make it work in Malaysia because you're a National Car Company and through a combination of taxes, duties, tolls and other incentives, you can make basically everyone in Malaysia buy this car in order to get it rolling and reaching production capacities sooner. If they don't believe you, fly them in to KL and have them sit at the PLUS highway toll stand at Sg. Besi counting the Sagas and Wiras that pass by. Then tell them all these model designs are 12-25 years old.

4. Export-wise, Ford and Volvo have to take over. Proton has a basically crappy reputation in Britain, but I hear they do better in the Middle East.

The facts.

Let's just state the obvious.

1. Proton is a national car company. State-owned. Let me repeat and highlight, STATE-OWNED.

2. It is declining in market share through a combination of poor quality products, safety issues and lack of models. After 20 years of operating, it still only produces sedans, completely misreading (or perhaps not even bothering to read) the market's reception of MPVs, SUVs and crossovers. (It also over-estimated the market's reception of freakmobiles.)

3. It has a knowledge gap in manufacturing to safety standards now prevalent in the world, and is in dire need of knowledge and technology transfer.

4. It has an alleged high cost base in the inefficiencies of its vendor network.

5. It owns Lotus, a sports car marque known for the exceptional handling of its models.

And so, to these facts: No. 2 and 3 and 4 are serious problems. No. 5 is an asset, but one that's not really paying off at the moment. No. 1, well, I don't see it as a problem. Plenty of state-owned corporations do well, given the proper management and incentives. (Petronas being a very clear example.)

The challenge therefore is to find a partner what can overcome points 2, 3 and 4, maximise point 5 and turn point 1 into an asset, an opportunity. To which we arrive.

You know what a state-owned company automatically has? Three important things:

Patience.

Access to a market.

And lastly, if the formula is right: Balls.

Now, to see why this plan would address the above points, one by one:

Turning "state-owned" from problem to benefit.

1. I've written elsewhere on why I'm a fan of the Tandem. However, I recognise that as a product that needs to be marketed by a business, it's got a very slim chance. The benefits of using the Tandem are only felt the more people use it - a positive externality problem you economists out there would be familiar with. And in this case, its not like the 1st fax machine where at the least, you and your branch office could communicate even if no one else had it. In this case, a seriously large amount of people need to use it before congestion starts to ease.

This means government intervention. Governments try to regulate externalities where possible and feasible - smoking zones to get the smokers away from the non-smokers, carbon taxes on your factory emissions. These are regulations for negative externalities, but incentives to promote positive externalities also exist - for instance, California provides tax rebates to you if you install solar panels on the roof of your home, in order to alleviate the burden on its over-stretched electricity grid. In a nice allegory, the Tandem would alleviate the burden of an over-stretched tranportation grid.

For the Tandem, a whole slew of incentives would need to be provided:

- Financial: reduced road taxes, tolls, excise duties and COEs (for those in Singapore) for Tandem ownership.

- Logistical: Dedicated Tandem/motorcyle lanes only.

So, basically with the Tandem, you've turned what normally is a liability - a state-owned enterprise, uncompetitive and bloated - into (potentially) an asset - a state-owned enterprise, with patient and far-sighted shareholders who can realise benefits more than individual private enterprises. This stands to reason: governments would save the most in construction and land acquisition costs for road construction, and they should justly foot the bill for widespread adoption of the Tandem.

Synergy

2 and 5. The two issues which will be of primary importance for a vehicle of this sort will be safety and handling. Safety, because you're dealing with a much more compact automotive frame while still needing to meet safety standards. Handling, because you're dealing with a narrow profile prone to cornering problems. Volvo and Lotus are marques which have world-renowned reputations for them respectively. Lotus, Proton already has. It would only need the expertise of Volvo to finish the job.

And let's be honest - the Tandem looks at this stage like a lab project (I could be wrong, but no news has come out since the first invitation to the press to view it.) Too much government lobbying needs to accompany its adoption, as discussed above. It's something which Volvo has in their portfolio, but all it could do in the end is provide influence to their ongoing 3CC concept car, and that's it. But if someone can come along and say to them, we'll take your on-the-shelf lab project and run with it, in exchange for you providing us some technology and knowledge transfer, I think they'll go for it. Not much to lose on their part. That's synergy to me, in terms of design capability and corporate win-win.

Leapfrogging

3 and 4. One of the primary reasons for partnering with a larger, foreign auto-maker is the access to technology and manufacturing know-how that they provide. That much is obvious. On these 2 points, I can't comment that Ford is a better partner that GM or Volkswagen, but I will say this: you need something to trade with, something that will make it worth their while to talk to you. And the Tandem, overlooked and under-estimated, is precisely that bargaining chip, a chip which also happens to serve Proton's national aspirations.

There's a unwritten rule in setting targets, for sales, for learning, or for anything - aim for something beyond what you actually want to achieve. Meaning to say, in order to catch up, you need to leapfrog. You can't just try to catch up, otherwise you'll never do so - you'll always be introducing a new feature 2 years after someone else has already done the same.

The Tandem represents an automotive challenge which if surmounted would elevate its manufacturer a step beyond its contemporaries, something others would have to catch up to. Such opportunities come rarely in business. Attempting to solve the real-world problems of implementing the Tandem - in a package that is safe, easy, and economical to own - would accelerate capabilities in automobile manufacturing far beyond than simple catching up, because the company would be solving problems no one is attempting to do so at the present time.

Betting the farm

You'll find examples of this sort of leap forward in history - the steamship. The 1st automobile. The 1st jet airline. The Boeing 747. The Tandem is a much more prosaic example, but its still different enough from current cars to warrant comparisons to those great icons of manufacturing. Such iconic products represent a great throw of the dice by the companies involved, an almost all-or-nothing, bet-the-farm strategy which vaulted them beyond what others were at the time.

Such boldness was what Dr. M had in mind, I think, when he started this project. If you ask me, there were lots of bumps along the way, and a lot of Malaysians have paid for Proton's foibles for the past 20 years. However, if we still want to do it, I think this is the plan that the vision would need to be attached to, and the only decent way that Proton can go beyond its current dead-end trajectory.

Told you it wouldn't be pretty.

Personal Rapid Transit

2007-04-12T10:30:00.000+08:00

In a recent Technology Quarterly from "The Economist", a report was made on Personal Rapid Transit (PRT) systems. Unlike Mass Rapid Transit systems, these would be small, 1-4 person transport pods, travelling on fixed rails, but with lower running costs, more accessible stations and overall faster transit times.

Cute. But if you're talking about overhauling transportation, reducing wait times and congestion, I prefer another solution.

This is the Volvo Tandem, a concept car being developed by the Volvo Monitoring and Concept Centre (VMCC), Volvo's design studio in Southern California. This is the 1-seater version; here's a 2-seater:

The basic idea behind this car? The driver sits in a narrow, bobsled-like vehicle while the passenger (in the 2-seater version) sits in-line behind the driver (just like a bobsled). That's essentially it.

Small Idea, Big Impact

I had an epiphany once, while sitting in one of KL's interminable gridlocks. I was looking around at the cars around me on the 3-lane highway I was on. Most had only single occupants, like me. Everyone was bored and frustrated. Some were picking their noses.

In terms of square feet of road and lane space, the average 3-car-abreast space on the road held a grand total of.... 3 people. I looked at the empty seat next to me. I thought, wouldn't it be great if we had smaller cars, that could fit just one person, so you could squeeze 6 cars in 3 lanes instead? Just chop my Proton Waja in half and presto, you're done.

As if to complete the epiphany, a fleet of motorcycles then chose this time to whiz past, in the small crevice between my car and the car next to me.

(One week later, I saw the Volvo Tandem cars you see above in a weekly paper. Oh well.)

Just imagine: the amount of road space already built in your city would double. Instantly. No need to build any thing at all. Just imagine the city you're living in, effectively doubles the size of its roads overnight, with no loss of living space. Would that traffic jam you're sitting in still be there? I'd bet not.

Just as long as some teensy-weensy problems are overcome.

Costs and Benefits.

The idea is sound, if we can get past the following problems:

1. Safety. For instance, distance between the head of the driver/passenger and either side of the vehicle (Volvo says the Tandem provides more clearance than even some vehicles today). Also, side impact and collision protection. These would all need to be enhanced in a slimmer vehicle like this.

2. Real-world problems. Can we truly achieve a vehicle with half the width of conventional cars? Can it steer? Do we need to re-sit driving lessons? How does the possible need to change 6 lanes before turning off alter driving behaviour? (quick answer: none at all. Go visit L.A., check out the 101 or 405 freeways near Downtown or Hollywood)

3. Secondary vehicle. Even Volvo doesn't say that this will replace all cars. Just that we will use such vehicles for commuting, and perhaps keep another, larger one, for holidays, camping, bringing the family out to eat etc. That means you, Mr. and Ms. Consumer, will still need that SUV, and hence you may not want to expend the cash buying what essentially is a commuting vehicle.

4. Cost. So, could a car like the above be built economically for the masses, at the same cost levels as today's Kenaris, Kancils and Kelisas? I think so.

5. Lanes, ramps and turn-offs. That's a serious amount of additional road painting that would need to be done, y'all.

However, getting past those little niggling problems above could yield huge, huge benefits:

1. Savings in public transport infrastructure. Bus lanes. MRT. Car pool lanes. LRT. PRT. All these things cost money and eat into public funds. Even in vaunted Singapore, which has most of the above, congestion is creeping up. Then think about other urban metropoles that don't have Singapore's public infrastructure. KL, Bangkok, Jakarta and Manila? This is a way to increase the capacity of existing infrastructure without governments needing to spend a dime. We're talking savings of billions and billions of dollars.

2. Middle-class aspirations. It doesn't matter how much infrastructure is built. At the end of the day, governments in this region are committed to the growth and creation of a large middle-class, and one of the pillars of middle-classhood is car ownership, especially in sprawling cities where public transport is hampered by distance and suburban fragmentation. That means governments are fighting a losing battle on this if they want to encourage public transporation past a certain point.

3. More market friendly. Adopting this vehicle would be less dramatic than governments think. All existing market-oriented transport policies - congestion pricing, road tax, parking fees, tolls, COEs - can be easily amended to adapt to this new vehicle. In fact, they could be adapted precisely to encourage using this vehicle. Wanna pay half your season parking fee every month? Wanna pay half your road tax every year? Wannna pay half the COE you would normally pay for a new car? Half the toll? OK, OK, I exaggerate, maybe it won't be half, but it will definitely be less.

4. Green. Smaller cars, smaller mass, smaller loads... less carbon emissions, less oil, less everything. Its good for the planet.

One last thing to note: Volvo says that in their study, 90% of all commuting vehicles in today's roads are have only 1 person, the driver. 77% of ALL car trips (whether commuting or not) only have 1 or 2 people.

So, to recap, that's why I prefer this car over some PRT system bubble-pod which will cost more money, won't be as convenient, and still won't help me lugging my groceries home.

For more on the Volvo Tandem concept car: Motortrend review, Car Design Online

Finally, a Malaysian rapper worth a damn.

2007-04-10T19:12:00.000+08:00

Ok, I didn't want to write about this but I couldn't resist. It was stimulated by this video.

(youtube text link)

So, I guess there'll be some out there who don't understand the 5 languages he's using so here's a rough translation. Bear in mind the 2 key things lost in translation - the puns and the rhymes - which made this rap pretty funny.

*Warning. You are reading at the risk of being offended. We are talking racial slurs here. Do NOT listen or read if you are racially sensitive. I believe this guys' heart is in the right place and he isn't malicious, so please don't "Ops Lalang" me or him. OK? He's from Muar. He knows what its like to live in different worlds, at the same time. He's a rapper. You know, like controversial? Saying things everybody feels but nobody wants to say?

MANDARIN:
Let me first say
I wrote this song
If you wanna hear it, don't be pissed off.

HAINANESE:
I'm a Hainanese kid
I speak 6 languages
You think Hainanese people
Only know how to cook chicken rice?
Drink one glass of Hainanese coffee
And even I will know how to sing

Now this song,
I am singing for all My Friends...
This song,
I am singing for all My Friends...
(whispering)
This song,
I am singing for all My Friends...

CANTONESE:
To my KL friends
Don't be too stuck up
The words I am saying here
Are all from the heart

The fact that I learn Cantonese
Doesn't mean I've surrendered
It's only for the sake of telling you
That I'm not retarded.

The Malaysian Chinese
Are mostly Hokkien buddies
But the funny thing is
Everything here is spoken in Cantonese!

I don't really give a shit
About this strange phenomenon
But on the radio and the TV
Why is Chinese not spoken?

There are many types of Chinese people
This ain't Hong Kong
Why is everything in 'Canton'?
You guys don't respect

But I'll slowly learn it all
This is called manners
And I'll slowly get used to it
'Cos I know what I'm doing.

Hey, if you really can't listen to this any more
I don't mind
Let me gift you some Teochew words instead...

TEOCHEW:
&%#^ your mom!

(chorus)

Na na na na
NA
Na na na na na

Na na na na
NA
Na na na na naaa...

(rpt chorus)

MANDARIN:
Singapore
Got independent in 1965
But after independence
A lot of shit happened

We speak the same
And we curse the same
But when the government gives an order
You don't dare do shit!

Actually I only have
One impression of Singapore
Because the buildings you build
ALL LOOK THE SAME

This kind of social order
Is basically Commmunism!
Lee Kwan Yew and Mao Tse-Tung
are basically Buddies!

Marxism is actually
Sitting heavily on you
Developing the country
Is better than developing your independent thought.

You're too scared of dying
You're too scared of losing
And the government paves a way
For your kids from young to old
Come over to Malaysia to play
And you think this place is backward
(Aiya even if we live in trees
we still take elevators to go up them - aii?)

You always take the big roads
Never dare to take the small roads
Should you dare to chew one stick of gum
You'll still spit it out here!

Little brother!
I suspect you don't actually even know how to cross a road
There may not be many zebra crossings here
But we know how to SURVIVE

rpt chorus

(Ok ah? Now the Malays' turn ah?)

MALAY:
"Talk some more lah!
You Chinese can go back to China!"
But if we all go back
This won't be Malaysia!
And I'm worried about where you're all gonna find work!

(But normally...
Malays don't like to work anyway... )

You all can go back to the jungle
Live like villagers
But if you want to play a guitar
There'll be no shops open for you
Want to become street racers?
There'll be no motorbikes for you
You'll have one less holiday
Because you won't have Chinese New Year

Don't cause a riot
Little boys open your minds
This country does not only have one race

"Chinese Pig!"

Don't say any more lah
(But to tell you the truth
Bak Kut Teh really does taste nice)

I know I speak Malay like shit
But what I say, I say with real feeling
We're already 50 years old
Everyday you're still sleeping
Look towards the future
See? It's 2020!

rpt chorus

ENGLISH:

We are friends
But we're making mistakes
Cause of (sic) I don't understand you
you don't understand me
We are friends
but we're making mistakes
If we solve the problems
Everything will be free

(machine gun fire)

End.

Highway Lane Markings in KL

2007-04-09T21:42:00.001+08:00

(L.) OK, so I can't draw worth a damn, but I think you get the idea. These be lane markings.

Jeez, bringing this up actually makes me embarassed. For everyone, myself included. Sigh. *soldiering on*

So, as you can see, this is a typical road layout with lane markings for a left fork off a major road/highway in K.L. Examples of these? Well, a notorious example, is the branch left off the Federal Highway towards Cheras, in front of Mid Valley Megamall. Next picture.

(R.) So this is what happens every evening, when the traffic builds up along the Federal Highway. The arrows show typical car movement.

Notice the little starburst? That's cars in lane 3 cutting into lane 4 in order to make the turn off to Cheras. Which forces cars in lane 4 to cut left again into a newly created lane 5.

You might think nothing is wrong, but this irks me.

First of all, its become an unwritten rule of the road that this is tolerated. Lane cutting is tolerated; in fact, the lane markings practically encourage it.

While in a traffic jam, this is paradoxically safer, as most cars are travelling at a slow pace. However, when traffic lifts, cars proceeding along the way in lane 4, unaware of this rule, fall prey to the cars cutting in from lane 3 who are aware of this "unwritten rule", which often leads to sudden braking, swerves and accidents.

You know, I come from a school of thought that says: rules regulate behaviour, but good rules make regulated behaviour easier to achieve. These are the lane markings that should be used:

As you can see, with the lane markings so repainted, there is no more cutting. All you need additionally is a road divider, with a "fork" sign. Maybe a safety barrier for idiot speeders.

You know, people would learn to follow rules more, if the rules made sense and were there to save lives. We would have less stress. Less road rage. Less accidents and death. Not to mention that such lane markings are done very sensibly in other parts of the world, which was why I was embarassed to start with.

Poor roads make poor drivers. Its a small step, but I hope this can be fixed. Here's a list of forks with these offending lane markings.

1. Aforementioned Federal Highway towards KL, fork left towards Cheras.
2. Sprint Highway Kerinchi Link towards Federal Highway, fork left towards KL - one of the most deadly roads in the Klang Valley.
3. NPE towards Bangsar, fork left towards Subang.

One Eva to rule them all. Which one?
	Mendes.
	Longoria.
	Gabor.

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