Thanks Gilles for the comments!
I haven’t found any outrage from customers in terms of data use — I would believe that the Ritz uses data tastefully, and only in ways that surprise and delight guests (i.e. a circumstance that would make it less likely that customers would be upset).
In terms of financial returns — some of these softer operational excellence features have been shown to directly correlate with financial returns. For example, Gallup has data showing that consumer engagement (which the Ritz excels at) correlates to better financial returns. (I don’t have the exact numbers for this, unfortunately!)
Thanks for your comment, Mark! I think you raise two great points. I don’t have the answer to either, but will venture a guess.
(i) Part of this is the hiring process – the Ritz makes sure to hire folks who can uphold its service standard. Afterwards, they utilize language like ‘Ladies and Gentlemen’ to elevate the attitude employees have towards all staff, and continue training on language, lifestyle, etc. One can argue that this might not be sufficient, but I don’t think this is different from any luxury service (e.g. black car service, flight attendant on an Emirates first class flight…).
(ii) I -believe- the Ritz runs its operations independently from other Marriott hotels. From my understanding of Starwood (which I presume operates similarly to Marriott and other hotel lines), hotel brands runs their own operations independently while headquarters / centralized functions consists of HR, finance, and brand management. The primary conflict I would see here is how HQ decides to allocate its marketing budget amongst various competing brands, not the operations itself.
Thanks for sharing! Very interesting.
Given your diagnosis of the situation, do you think Lenovo’s business in Brazil is salvageable? There appear to be some straightforward fixes – e.g. planning to have the factories be located closer to the distribution centers, or better technology to facilitate sales planning, KPIs, and employee feedback — but all of these fixes require significant investments of capital and time. This, combined with your assessment of the current market (i.e. highly competitive, and concentrated retailers, who likely would not react well to a hiatus or change in operations as Lenovo fixed these internal issues) suggests to me that there’s a chance Lenovo would pull out of the market… or risk significant losses.
Really interesting article – thanks!
JD’s business model makes a lot of sense to me from the consumer standpoint – having same-day-delivery, better customer service and easy returns are very attractive in a market where fraud and trust are enormous issues. My primary question is whether JD.com will be able to sufficiently -supply- the marketplace — i.e. satisfy the producers / brands who sell through e-commerce.
Alibaba currently remains 59% of China’s e-commerce marketplace (http://www.wsj.com/articles/alibaba-vs-jd-com-executives-weigh-in-1439793927). It has entered into many exclusive partnerships with brands — a feat that is possible given the dominance of the site. This means that consumers, even if they prefer the service of JD.com, might opt to buy a product on Alibaba, simply because that is where the brand is being sold (and switching costs are practically nonexistent). As someone who has never bought products through China’s e-commerce platforms, I do not know how large of an issue this brand exclusivity is… and I imagine that there will be a certain tipping point as JD.com continues to grow, whereby brands will be incentivized to offer products on both sites. However, until that point, JD.com may need to tailor some of its operating model to be as attractive to suppliers as they are to consumers.
Great article – thanks!
While I agree with Trang that the revenues from the guides are not protected (given how many people forward the guides to friends for free), I believe Kayla has a significant opportunity to capture value outside of this overt revenue stream.
Kayla’s primary opportunity is capitalizing on her captive audience of 4 million Instagram followers. Similar to how Facebook makes money by providing a free service to consumers and charging advertisers, Kayla has the opportunity to charge advertisers to market to her Instagram following. This can be particularly attractive because Kayla’s captive audience is of a very specific demographic — of young girls (and more recently, mothers who have just given birth) who are interested in living a healthy and fit lifestyle. This demographic provides a fertile opportunity to market clothing brands, athletic wear, healthy food brands, etc. Top Instagram accounts these days can rake in serious money by posting sponsored photos. According to one LinkedIn post, based on Kayla’s following of 4M followers, she could be making ~$20K+ per photo (https://www.linkedin.com/pulse/how-much-do-top-instagram-accounts-make-kwai-chi).
It is unclear whether Kayla is currently charging for advertising on her Instagram feed, but the opportunity certainly exists to make money on her countless posts of new Nike sneakers. Her guides and world tours can simply be a method of value creation (i.e. creating a community of captive Instagram followers), while value capture can be through advertising.