strategy

Risk Acceptance
Risk Acceptance Jonathan Poland

Risk acceptance involves consciously deciding to take on a risk, often because the potential reward outweighs the potential negative consequences and aligns with an individual or organization’s risk tolerance. It is an important part of risk management, as it is often necessary to accept some level of risk in order to pursue opportunities and achieve goals. Risk acceptance is a common approach to managing risk, as it is impossible to achieve success without taking some level of risk. The following are a few examples:

Investing
Most investments involve some level of risk.

Insurance
The entire insurance industry is based on assuming risk for a fee.

Derivatives
Derivatives are contracts that derive their value from an underlying entity such as exchange rates. They are often used to transfer risk between businesses for a fee.

Projects
Projects are an investment that a business makes to achieve its goals such as launching new products or services. Projects involve risks such as the potential for cost overruns.

Business Equity
Any equity you own in a business is typically at risk. Such risks are accepted in return for potential profits from the business.

What is Knowledge?
What is Knowledge? Jonathan Poland

Knowledge is the understanding, skills, and expertise that humans acquire through experience, education, and research. It can take many forms, including information that can be expressed in words, data, or images, as well as intangible skills and understanding that are difficult to capture or transmit to others. Knowledge can encompass a wide range of subjects, including storytelling, data visualization, and various other areas of human experience and understanding. The following are a collection of knowledge types, concepts and knowledge management practices.

Types

  • A Posteriori
  • A Priori
  • Dispersed Knowledge
  • Domain Knowledge
  • Independent Knowledge
  • Know-how
  • Known Unknowns
  • Myth
  • Qualitative Data
  • Situated Knowledge
  • Tacit Knowledge
  • Unknown Unknowns

Concepts

  • Artificial Knowledge
  • Half-life Of Knowledge
  • Information Asymmetry
  • Knowledge Capital
  • Knowledge Economy
  • Knowledge Product
  • Knowledge Velocity
  • Outside Context Problem
  • Pessimistic Induction

Intellectual Property

  • Defensive Publication
  • Prior Art

Failure

  • Anti-Information
  • Disinformation
  • Filter Bubble
  • Knowledge Loss
  • Knowledge Waste

Knowledge Management

  • Body Of Knowledge
  • Data
  • Knowledge Processes
  • Meta Knowledge
  • Storytelling

What is a Superior Good?
What is a Superior Good? Jonathan Poland

A superior good is a type of good that tends to see an increase in demand as income levels rise. This is in contrast to an inferior good, which sees a decrease in demand as income levels rise.

For example, luxury goods such as designer clothing or expensive cars are often considered superior goods because people tend to purchase more of them as their income increases. On the other hand, basic necessities like rice and bread are often considered inferior goods because people tend to purchase less of them as their income increases.

Superior goods can be either normal or luxury goods. Normal goods are those that see an increase in demand as income levels rise, but they are not considered luxurious. Luxury goods are those that are considered luxurious and see an increase in demand as income levels rise.

Here are 12 examples of superior goods:

  1. Luxury cars, such as Mercedes-Benz or BMW
  2. Designer clothing and accessories, such as Gucci or Prada
  3. Fine jewelry, such as diamonds or gold
  4. High-end watches, such as Rolex or Omega
  5. Luxury hotels and resorts, such as the Ritz-Carlton or the Four Seasons
  6. Fine dining restaurants and Michelin-starred restaurants
  7. Luxury cruises, such as those offered by Carnival or Royal Caribbean
  8. Private jets or helicopters
  9. Luxury vacation homes or vacation rentals
  10. Artwork and antiques, such as paintings or sculptures by famous artists
  11. Premium spirits, such as whiskey or champagne
  12. High-end electronics, such as Apple’s iPhone or Samsung’s Galaxy.

Pricing Techniques
Pricing Techniques Jonathan Poland

Pricing involves carefully considering various factors in order to determine a price that will maximize a company’s profits over the long term. This includes factors such as supply and demand, customer behavior, competition, and industry standards and regulations. The price of a product or service can have a significant impact on a company’s profitability and overall brand value. The following are some common terms in pricing including economics, strategy and behavioral considerations.

Customer Behavior
Cognitive and emotional factors in pricing.

  • Bargaining Power
  • Price Sensitivity
  • Sticky Prices
  • Willingness To Pay

Pricing Models
Structures and methods of pricing.

  • Customary Pricing
  • Flat Pricing
  • Market Price
  • Premium Pricing
  • Price Optimization
  • Price Points
  • Price Promotion
  • À La Carte

Pricing Strategies
Common pricing strategies.

  • Algorithmic Pricing
  • Decoy Effect
  • Dynamic Pricing
  • Everyday Low Price
  • High-Low Pricing
  • Loss Leader
  • Price Discrimination
  • Price Leadership
  • Price Skimming
  • Revenue Management
  • Sales Promotion

Pricing Economics
The basic forces of pricing driven by supply, demand, consumer perceptions and competitive behavior.

  • Commoditization
  • Equilibrium
  • Inferior Good
  • Marginal Utility
  • Market Value
  • Pricing Power
  • Snob Effect
  • Superior Good
  • Value
  • Veblen Goods

Competition & Pricing
The effect of competition on prices.

  • Benchmark Price
  • Commodity
  • Competitive Advantage
  • Competitive Parity
  • Monopoly
  • Perfect Competition
  • Predatory Pricing
  • Price Competition
  • Price Umbrella
  • Price War

Compliance & Ethics
Pricing related regulations and ethics.

  • Price Fixing
  • Price Gouging
  • Sale Above Advertised Price

What is the Snob Effect?
What is the Snob Effect? Jonathan Poland

The snob effect refers to the phenomenon of a brand losing its prestige and exclusivity as it becomes more widely available or popular. This can happen when a brand engages in aggressive discounting or when it begins to appeal to mainstream culture, leading some individuals or subcultures to view it as less special or desirable. Luxury brands often try to avoid triggering the snob effect by carefully managing their brand image and avoiding mass production or discounts. However, the snob effect can also be driven by customers feeling that a brand is no longer a good value at full price when it becomes more widely available or heavily discounted.

Some examples of Snob Effect:

  1. A high-end fashion brand that starts offering frequent sales or discounts may see its prestige diminish among its core customer base, leading to the snob effect.
  2. A luxury car brand that introduces a more affordable model may risk losing its status as an exclusive and prestigious brand.
  3. A luxury home goods brand that starts selling its products at mass market retailers may see its exclusivity and desirability decline among its original customer base.
  4. A high-end beauty brand that starts offering its products at discount stores may see its prestige decrease among its core customers.
  5. A luxury watch brand that starts producing lower-priced models may risk losing its status as a top-tier brand.
  6. A high-end restaurant chain that starts offering cheaper menu options or discounts may see its prestige decline among its original customer base.
  7. A luxury hotel brand that starts offering discounted rates or packages may risk losing its status as an exclusive and high-end destination.

Veblen Goods
Veblen Goods Jonathan Poland

Veblen goods are a type of consumer good that is perceived as being more valuable or desirable because of its high price. These goods are named after economist Thorstein Veblen, who first described this phenomenon in his 1899 book “The Theory of the Leisure Class.”

Veblen goods are often associated with luxury or prestige products, such as high-end fashion items, expensive cars, and exclusive vacation destinations. The high price of these goods is often seen as a sign of quality, exclusivity, or status, which can make them more attractive to consumers.

There are several factors that contribute to the perceived value of Veblen goods. One is the concept of “conspicuous consumption,” in which people use their purchasing decisions to signal their wealth or social status to others. Another is the idea of “snob appeal,” in which people are drawn to products or experiences that are perceived as rare or exclusive.

Veblen goods can be an effective marketing strategy for businesses targeting high-end or prestige markets. However, it is important for businesses to be mindful of the potential for price sensitivity among consumers and to ensure that the value of the product or service is perceived as being worth the high price.

In summary, Veblen goods are consumer goods that are perceived as being more valuable or desirable due to their high price. These goods are often associated with luxury or prestige products and may be marketed to high-end or prestige markets. However, it is important for businesses to carefully consider the value of the product or service and the potential for price sensitivity among consumers when pricing Veblen goods.

Customary Pricing
Customary Pricing Jonathan Poland

Customary pricing refers to the pricing practices that are considered typical or normal in a particular industry or market. This type of pricing is based on the prevailing market conditions and the expectations of buyers and sellers. Customary pricing can be influenced by a number of factors, including supply and demand, competitors’ pricing, and the cost of production.

There are several types of customary pricing practices that may be used in different industries. One common type is called “list pricing,” which involves setting a fixed price for a product or service based on the manufacturer’s or seller’s costs and desired profit margin. Another type is called “negotiated pricing,” which involves negotiating the price of a product or service between the buyer and seller based on the value of the product or service to the buyer and the seller’s costs and desired profit margin.

Customary pricing can have both advantages and disadvantages for businesses. On the one hand, it allows businesses to establish a reputation for fair and consistent pricing, which can build trust with customers and encourage them to continue doing business with the company. On the other hand, customary pricing can be inflexible and may not allow businesses to respond quickly to changes in market conditions or to take advantage of opportunities to increase profits.

In order to determine the most appropriate pricing strategy, businesses should consider a number of factors, including their target market, competitors’ pricing, and the value of the product or service to the customer. It may also be helpful to conduct market research to gather data on pricing trends and customer expectations in order to inform the decision-making process.

Overall, customary pricing can be an effective way for businesses to set prices and build trust with customers, but it is important for businesses to remain aware of changes in market conditions and to be prepared to adapt their pricing strategies as necessary.

Perfect Competition
Perfect Competition Jonathan Poland

Perfect competition is a theoretical market structure in which a large number of buyers and sellers participate and no single participant has the ability to influence the price of a good or service. In a perfectly competitive market, all participants are price takers, meaning that they have no control over the price at which they can sell their goods or services and must accept the market price.

There are several characteristics that define a perfectly competitive market. These include:

  1. A large number of buyers and sellers: In a perfectly competitive market, there are so many buyers and sellers that no single participant can influence the market price.
  2. Homogeneous products: All participants in a perfectly competitive market sell the same product, so there is no differentiation between the goods or services being offered.
  3. No barriers to entry or exit: In a perfectly competitive market, there are no barriers to entry or exit, so new firms can easily enter the market and existing firms can easily exit.
  4. Perfect information: In a perfectly competitive market, all buyers and sellers have complete and accurate information about the market, including the prices and quantities of goods and services being offered.

In a perfectly competitive market, the market price is determined by the intersection of the supply and demand curves. As the price increases, the quantity supplied by sellers increases and the quantity demanded by buyers decreases, leading to a decrease in the market price. Conversely, as the price decreases, the quantity supplied by sellers decreases and the quantity demanded by buyers increases, leading to an increase in the market price.

While perfect competition is a theoretical concept and may not fully reflect real-world markets, it serves as a useful benchmark for understanding how markets function and how price is determined.

Inferior Good
Inferior Good Jonathan Poland

An inferior good is a type of consumer good for which the demand decreases as the consumer’s income increases. In other words, as the consumer’s income rises, they are less likely to purchase inferior goods and are more likely to substitute them with higher-quality or more expensive goods.

There are several factors that can contribute to a good being classified as inferior. One factor is the availability of substitutes. If there are good substitutes available, then the demand for the inferior good is likely to decrease as the consumer’s income increases, since they can choose to purchase the substitute instead. Another factor is the consumer’s taste and preferences. If a consumer has a preference for higher-quality or more expensive goods, they may be less likely to purchase inferior goods as their income increases. These goods may be less expensive than higher-quality brands, but they may also be perceived as being of lower quality or less desirable. As a result, consumers may choose to purchase higher-quality brands as their income increases, leading to a decrease in the demand for inferior goods.

Here are some examples of inferior goods:

  1. Generic or lower-quality brands of food: As a consumer’s income increases, they may be more likely to purchase higher-quality brands of food or to eat out at restaurants, leading to a decrease in the demand for generic or lower-quality brands of food.
  2. Lower-quality clothing: As a consumer’s income increases, they may be more likely to purchase higher-quality or more expensive clothing brands, leading to a decrease in the demand for lower-quality clothing.
  3. Used cars: As a consumer’s income increases, they may be more likely to purchase new cars or higher-quality used cars, leading to a decrease in the demand for lower-quality used cars.
  4. Public transportation: As a consumer’s income increases, they may be more likely to purchase a car or to use a ride-sharing service, leading to a decrease in the demand for public transportation.
  5. Cheap or low-quality household items: As a consumer’s income increases, they may be more likely to purchase higher-quality or more expensive household items, leading to a decrease in the demand for cheap or low-quality items.

It’s important to note that these are just examples, and not all consumers will behave in the same way. Some people may continue to purchase inferior goods even as their income increases, while others may switch to higher-quality or more expensive brands regardless of their income level.

Examples of Capital Intensive Jonathan Poland

Examples of Capital Intensive

An industry, organization, or activity that is capital intensive requires a large amount of fixed capital, such as buildings and…

Upselling Jonathan Poland

Upselling

Upselling is a sales technique that involves encouraging customers to purchase higher-priced, add-ons, or upgraded versions of products or services…

Settlement Risk Jonathan Poland

Settlement Risk

Settlement risk is the risk that a trading counterparty will not deliver a security or asset as agreed upon in…

Ingredient Branding Jonathan Poland

Ingredient Branding

Ingredient branding, also known as component branding or parts branding, is a marketing strategy that focuses on promoting the individual…

Preventive Maintenance Jonathan Poland

Preventive Maintenance

Preventive maintenance is a type of maintenance that is designed to prevent failures and extend the lifespan of assets, including…

Brand Risk Jonathan Poland

Brand Risk

Brand risk refers to the potential for a brand to lose value or for a new brand to fail in…

Beautiful Words Jonathan Poland

Beautiful Words

Beautiful words are words that have a mysterious, wondrous, or charming quality. They can also have a dark or conflicted…

Quality Management Jonathan Poland

Quality Management

Quality management is a process that ensures products and services meet certain standards of quality before they are released to…

Media Analysis Jonathan Poland

Media Analysis

Media analysis is the study of the structure, content, and methods of communication in various forms of media. This involves…

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Exchange Rate Risk Jonathan Poland

Exchange Rate Risk

Exchange rate risk, also known as currency risk, is the risk that changes in exchange rates will negatively impact the…

Refinancing Risk Jonathan Poland

Refinancing Risk

Refinancing risk is the risk that a borrower will be unable to secure new debt to replace an existing debt…

Cultural Norms Jonathan Poland

Cultural Norms

A cultural norm is a shared belief or behavior that is considered to be acceptable or appropriate within a particular…

Strategic Partnership Jonathan Poland

Strategic Partnership

A strategic partnership is a relationship between two or more organizations that is characterized by mutual cooperation and the sharing…

Soft Launch Jonathan Poland

Soft Launch

A soft launch is a product launch that is limited in scope, such as a release to a small group…

Work Quality Jonathan Poland

Work Quality

Work quality refers to the value or merit of the work that is being performed by an individual, team, or…

Team Objectives Jonathan Poland

Team Objectives

Team objectives are specific goals that are established for a team in order to guide their work and track their…

Media Analysis Jonathan Poland

Media Analysis

Media analysis is the study of the structure, content, and methods of communication in various forms of media. This involves…

Praxeology Jonathan Poland

Praxeology

Praxeology is the study of human action, particularly as it pertains to decision-making and the pursuit of goals. The term…