Water is just too cheap

Driving up to the Bay Area the other day, I was struck by the large amount of flowering (and pretty) almond trees in the Central Valley. Knowing that almonds are thirsty little buggers, I found the many signs posted by growers, complaining about the cost of water (during the worst drought in recorded California history), seriously at odds with what they elected to grow.

So what is the real story? The real story is that grower don’t even pay the cost of having water delivered and roughly only 10% of what we in households pay for water. It is substantially subsidized by the state. Maybe that is a good thing. May be it is not. It certainly makes for a lot of low paying jobs to be created, many who are immigrants (legal and illegal) from Central and South America. Many who send most of the little money they make back home.

So how bad are almonds on the needs for water? Well, not nearly as bad as beef and milk, and the Central Vally also has wast, stinking, feedlots, fattening up cows for slaughter.

So what would happen if growers actually had to pay the real price of water? Food prices would go up – especially beef and milk – and maybe that is a good thing. Some growers would relocate to places where there is enough rain water, some would close down, some would change what they grow to more drought resistant crops (legumes, beans), some would find more efficient ways to water their crops and some would invest in technology that can reuse water, desalinate water as the ROI for such technology will become more attractive. More people will be out of jobs.

Anyone wishing to read more, here are links:








TVA plans to change the way it prices electricity

After revamping its pricing structure four years ago for the first time in two decades, the Tennessee Valley Authority is again preparing to alter the way it prices the electricity it produces.

The latest change, which will be implemented in October, will continue TVA’s attempt to better reflect how the cost of generating power fluctuates depending on the time of day and year.

In 2011, TVA replaced its previous end-use pricing schedule that charged customers simply on how much energy they consumed each month. In its place, TVA adopted a demand-and-energy pricing system that sets prices based both on how much power is consumed and when it is consumed.

TVA is giving a required six-month notice to its local power companies that it will again modify its pricing schedules when the TVA board adopts a new budget in August for fiscal 2016.

“We want to better match the costs of generation with its price,” said Dan Pratt, vice president of pricing and contracts at TVA. “We’ve been meeting with customer groups over the past two and a half years to work on getting agreement on the cost of service and how we should tweak the changes we adopted in 2011. Customer input has been factored into the process at every step.”

The collaborative process should help lessen the friction between TVA and its distributors over the price changes.

“We’ve spent a great deal of time trying to reach a consensus,” said Jack Simmons, executive director of the Tennessee Valley Public Power Association, the Chattanooga-based trade group for the 155 municipalities and power coops that distribute TVA power. “Not everyone may be totally happy with the end result, but this has been better process for our members than in the past with some other rate changes that have been made.”

The new Strategic Pricing Plan is designed to provide more clarity on TVA’s long-term direction for seasonal, interruptible and time-of-day pricing. New technologies with smart meters are allowing more customers to manage not only how much energy they consume but when they use power.

The cost of power gets more expensive to TVA when consumption rises and TVA has to turn to less efficient sources, such as combustion turbines or the oldest coal-fired units.

TVA gets nearly 10 percent of its power at virtually no cost from hydroelectric generating stations at its 29 power-producing dams on the Tennessee River and its tributaries. But as demand goes up, the marginal cost of power gets more expensive as TVA turns on less efficient generators or has to buy more expensive power on the grid to meet the higher demand.

Pricing signals that help to levelize TVA’s load and trim its expensive peak demands would help both TVA and its customers.

Pratt said the price changes are designed to be more flexible for changing markets, predictable and consistent to drive customer investment confidence and sustainable for the most efficient use of TVA resources.

A comprehensive cost of service study was conducted to help shape the new rates.

TVA will bring a recommended long-term plan before the TVA board for a vote in August 2015. If approved, the plan will be effective on Oct. 1.

“We want to make sure that we are in the right place for cost of service and to make sure that our base charge is covering our fixed costs in a fair and appropriate way,” TVA President Bill Johnson said.

Industrial customers have complained that TVA is no longer as competitive as it once was with its electricity prices compared to other utilities in the South. While TVA rates remain below the U.S. average, other Southern utilities have offered better rates, in some circumstances, than those of TVA.

“We want each class to pay the cost that they are imposing on the system,” Johnson said. “We know empirically that our rates are top decile (in 10 percent best for customers) overall in the country, but we also know we also are in the most competitive neighborhood,” Johnson said. “I would say right now that we are competitive in this region, but we are not the low cost provider.”

Keeping major customers is key since TVA estimates about two thirds of its power costs are fixed — that is, they don’t go up and down as power consumption rises or declines.

“When you lose a large industrial customer and power user, that makes the price of everybody else’s power go up,” Johnson said. “This is a high fixed cost business — about 67 percent of our costs are fixed. So if you lose a customer or a load, the best you can do reduce the costs they were imposing by 33 percent. That fixed cost has to go somewhere to be recovered so if you lose a customer, everybody’s else share of those fixed costs go up.”



How can retailers optimize their product assortment for customer satisfaction?

How to Develop A Customer Focused Inventory Assortment 


Do you have a case of slow-moving inventory? The symptoms consist of low sales, constant discounts, and probably a couple of cobwebs in your warehouse. If you have any of these symptoms, then it’s time to take a step back and take a better look at your assortment situation. Sure, you have invested in awesome inventory analysis software, efficient repricing software, and even accept different payment options. But none of this is useful if your assortment is not what you customers are looking for.

The solution to a slow-moving inventory takes you back to square one of your business: what you’re selling. You could provide the most incredible customer experience at prices that can’t be beat anywhere else, but all of that is useless if your customers just don’t like your products. So how can you prevent this from happening? The answer can be found in your competitors, your selling environment, and your customers.

Look to Your CompetitorsBefore you build a catalog of products, you should take a look at the competition’s assortment. If everyone has a certain item, you should probably carry it as well. Understanding where you overlap with your competition and where there’s a gap in your product assortment can help you optimize your product offerings. If someone goes to your website looking for a certain product that you don’t have, there’s a 77% chance they will leave your site and go to a competitor’s instead.

The belief that you should keep your friends close and your enemies closer has never been more relevant to the world of retail. Analyzing competitor data can help you determine your own optimal assortment by showing you the bigger picture. You can be missing out on an incredibly hot trend if you don’t know what your competitors are carrying. Another way you can focus on the customer’s needs when it comes to your assortment is observing external factors happening in the marketplace.

Look to Your Selling EnvironmentIf you don’t already, look for manufacturers that are in the news, whether it is good or bad. If people are realizing the ingenuity of a product, make sure you add it to your assortment. If people are realizing a product’s failures, it might be time to look for a different manufacturer and lower that product’s price (if you have it.) If you have a product that’s been getting a lot of buzz, increase the price and supply to meet demand.

It’s also important to understand your products’ lifecycles. If your assortment consists of outdated products, that should raise some red flags in your merchandising department. Put those products on clearance, and look for newer, more efficient products that are trending and getting a lot of media attention. The best time to source a product is during its growth phase of the product lifecycle. Manufacturers are constantly innovating, and retailers need to anticipate that continuous innovation consistently. Purchase a small amount of buzzworthy products to meet initial demand, and decide to continue or discontinue selling the products based on the results and reviews.

Look to Your CustomersCustomer data is a goldmine of information for retailers no matter what answer they are looking for. The best kind of customer data that will be useful to optimize assortment is measuring your customers’ behavior on your website. If your customers are trashing your products in their reviews, it’s time to discontinue those items. It’s also important to look at customer traffic and conversion rates. Disappointing traffic rates on a product page might go beyond a poor layout, and instead might be throwing you a red flag about carrying that product. If customers aren’t visiting that page, they probably don’t want it. Offer it at a discounted price or bundle it with a complementary product. If it’s still receiving poor conversions, it is time to drop that item from your assortment.

Customer reviews are extremely important to analyze. Gather the most common words featured for each product, whether they are positive or negative, and use them to your advantage. If the review is positive, you know to keep it. If the review is negative, use the most-frequently used words to get an idea of what they are looking for exactly. Use these words and analyze product reviews on competitor websites that consist of those words. Good reviews on products you don’t have can point you in the right direction, and once again your competition will ultimately help you.

For success in a world where information is so easily accessible, retailers need to keep an eye on their competitors, an ear to the ground, and an ear in the air for customers, which can take a lot of work. When it’s done correctly, however, it can yield incredible success for your product assortment. Because you can juggle different automated software services all you want, but it’s all meaningless if your products don’t match your customers’ needs.

How else can you develop a customer-focused assortment?

Contributing Writer: Brian Smyth



TELUS added 110,000 new wireless subs in Q4

TELUS continued its financial winning streak last quarter with an earnings per share of $0.51 on revenue of $3.13 billion CDN. Net income was $312 million, up 7.6% from the same period a year ago.

Overall, there was nary a negative stat to mull, as TELUS posted boosted wireless revenue of $1.55 billion, an 8% increase over last year thanks to a larger customer base, higher ARPU from increased LTE data usage, domestic roaming agreements with companies like WIND and Rogers, and the transition to “higher-rate two-year plans.”

The company added 110,000 net wireless customers — growth of 118,000 in postpaid and a drop of 8,000 in prepaid — and decreased postpaid wireless churn to 0.94%, down three basis points from the previous year and but slightly higher than the previous quarter. Overall churn was slightly higher than the previous quarter at 1.33%.

Though smartphone ownership now comprises 81% of TELUS’s postpaid base, up from 80% in the previous quarter, blended ARPU dropped slightly to $64.20 from $64.51 last quarter. The number is still considerably higher than the same time last year. The company’s total wireless subscribers now sits at 8.1 million, excluding Public Mobile, which TELUS plans to relaunch this quarter as “Canada’s most cooperative network.”

The company, looking forward to 2015, predicts “modest growth in both subscribers and ARPU,” as it converts more prepaid customers to postpaid. As an increasing number of subscribers finish three-year plans, TELUS also sees higher wireless revenue from the transition to two-year contracts, “partially offset by lower voice revenue.”



How to Increase your Profits with Pricing Intelligence

One of the key reason for people buying from online portals is the easy access to better pricing and options to compare prices. It saves both their efforts and time in correspondence to price checking, obviously saving their money too.

To continuously explore your competitors product prices with in-house team is a time consuming, complex and expensive exercise. Today, online product prices alter in no time, getting updates periodically with manual efforts is not a feasible idea in actuality.

Also for an online portal managing and handling its product catalogue is a baggage of problems. The catalogue keep on changing with products being added and removed frequently. Also tracking and monitoring competitors new products, product categories, expired products or new branded products introductions is not easy on both strategic and operational levels.

All the above reasons take you to Pricing Intelligence. Using Pricing Intelligence Solution you can track and monitor competitiveproduct pricing and take advantage of your competitors by then setting the best prices.

Having competitive pricing intelligence about products and prices gets you better knowledge of market and consumer dynamics. You can better understand your customer behavior and judge how they think & react to price movements.

Some key points for online portals to add value & use Pricing Intelligence to increase profits:


  • Focus on those products wherein your competitors sell more. Do a gap analysis and optimize the product assortment which will surely help you in taking competitive advantage
  • While offline retailers can’t change prices along the day, online retailers can do. Automated price comparison can assist you benchmark against your competitors and incorporate automated intelligence to your pricing strategy
  • Real-time pricing or near to it can definitely assist online portals of all sizes and domains keep their prices competitive and more profitable
  • The current market and consumer behavior suggests online portals to show the globe that they can provide better consumer experience, affordability in every product and ease in delivery by delivering products right to their living rooms

All this actions if performed at both strategic and operational levels can yieldyou better business through your online portals. With Pricing Intelligence Solutions you can not only keep up with mid-sized stores but also keep up with giants like Amazon or eBay. Using competitive pricing, you can beat competitors’ prices and stay profitable. Even using repricing tools help you to automate pricing intelligence.


Public Mobile new pricing structure

In within days after the Rogers flanker brand ChatR Wireless adjusted their plans, here is Telus’ flanker brand Public Mobile who reveils new packages.

Public Mobile is now known as “Canada’s cooperative wireless provider,” and true to the email has no retail presence. The goal is now to provide “a new kind of no-frills business.”

New, inovative “building blocks” aproach:

To keep costs low, Public will avoid retail store overhead and device inventory, offering only a bring-your-own-phone(BYOP) strategy with low-cost plans and SIM cards. The carrier will run off TELUS’ 4G LTE network and bank on building a community of experts to build out its services, rewarding them for doing so.


First, the plans are targeted to bring “fairer pricing for everyone,” starting at a 30-day model for as low as $10 per month for the SIM card. Customers can then subscriber to unlimited talk, unlimited text and data components.

Unlimited talk begins at $20/month for province-wide, followed by Canada-wide at $25/month. Unlimited Canada-wide texting costs an additional $10/month. If you’re into data then you have two choices. 1GB costs $20/month and 4GB costs $50/month. It also appears that Public may offer data-only plans, but we’re confirming this.

If you take two or three services, a $5 or $15 discount will be added to the account respectively. Voicemail and Call Display are included in all Unlimited Talk plans.

Adding everything up, it’s possible to get a 4GB data-only plan for $60 ($10/monthly SIM fee, $50 for data) which, paired with a VoIP app like Skype or Viber, plus a messaging app like WhatsApp, could make for a decent low-cost option. Thanks to the included discounts, adding unlimited Canada-wide voice and text only costs an extra $20, bringing the total bill to $80, significantly lower than the equivalent plan from TELUS (which only offers 3GB and 6GB tiers).

The offering is also marginally more expensive than Koodo’s $59/2GB and Fido’s $63/2GB SIM-only plans, but comes with double the data.

The company is also applying $1/year discounts for loyalty: one year of service will see a reduction on one’s monthly bill by $1, then $2 in the second year, and so on. Pre-authorized payments will also lower the bill by $2 per month, and bringing a friend over to Public will discount one’s bill by $1 “each month for every friend you refer, as long as they stay with us.”


Where things get interesting is in the Public Mobile Community, as customers will be able to earn rewards based on participation and contribution. The most one can receive is a $10 discount on the monthly bill.

Public Mobile is not available to all at this point, noting the service is in testing. “At the moment, we’re in BETA. That means we’re only opening our doors to a small group of people, in order to ensure that everything is running smoothly before we officially launch.”

The company notes that “customers who joined Public Mobile prior to January 27, 2015, are not affected by this change and can continue to enjoy their current base plan rates and support service, including enhanced online support.”



Chatr Wireless moves beyond voice and text with new data add-ons

Chatr Wireless, Rogers’ low-cost voice and text subsidiary, has finally become smartphone-friendly. The carrier, which launched in 2010 as a way to undercut WIND and Mobilicity (and paid dearly for false advertising as a result), has begun offering a series of data add-ons to its $35 Canada-wide Talk and Text plan.


The data add-ons themselves aren’t all that competitive — $10 for 200MB; $15 for 500MB; $25 for 1GB — but they do come at an opportune time for the company.

Chatr also recently began offering low-cost smartphones in the Nokia Lumia 520 and 635, both curiously priced at $150 outright.

The single Android offering is the LG L1, an $80 device released way back in April 2013 featuring a 3-inch 240×320 pixel display and a 1Ghz single-core chip with 512MB of RAM and a 2MP camera.

Also curious is that Chatr still divides its network into zones, the same regions in which WIND, Mobilicity and Videotron operate. GTA, Ottawa, Montreal, Vancouver, Calgary and Edmonton are specified “Chatr Zones,” while the remaining swath of the Rogers HSPA+ network cost 25c per minute of talk or sent text. Such anachronisms are meant to keep with Chatr’s low-cost marketing, and avoid interfering with Fido and Rogers proper, but the high cost of operating in areas outside of arbitrarily-established “zones” is a dated way of carving out service.



Make buying easier with bundles

The well-known electronics manufacturer sold products to help their customers connect equipment to their computer networks, supporting control and automation applications. More than half their sales were single-item purchases. Research showed that customers were buying for three different buying propositions: normal expansion of existing networks, replacement of faulty equipment, and major network upgrade. Expansion of existing networks purchasers put a premium on compatibility with a variety of other devices. Replacement of faulty equipment put a premium on matching the defective part’s protocol exactly. Major network upgrades put a premium on speed, throughput and reduced latency. The company packaged its parts with documentation on how to interface with all known protocols, included a cable kit that had a variety of connection devices, and called it the Expander kit. They packaged their protocol converter with an accelerator card purchased from a third party vendor and called it the SpeedTrap. Thus the first and third scenarios opened the way to provide support for specific buyer scenarios. The price for the unit was a full 25% higher than the part “naked”.

Products and services that actually solve customer problems can be sold for higher prices. I have been shocked (shocked!), over the years, by how few executives can actually answer the question: What problems do you solve for your customers? In a way, it’s a trick question because it’s not how most companies think about their products, their services, or their customer relationships. This is reflected in their sales processes, messaging and product strategies. But customers usually initiate a purchase activity –or respond to a sales initiative—in order to solve a specific problem, and they will not always tell the vendors what that problem is.

The best way to deal with this is to orient your sales messages, your products and your services, to solving a problem as specifically as you can. When the solution involves multiple line items from your price list, or when it involved third party products or services, pull them all together into a solution bundle and offer that. Solution bundles may include high-profit items simply because you’ve taken the time and the care to figure out what is needed to solve the customer’s problem. Just the fact that you’ve engineered the solution often commands a premium in the marketplace. Bundles capture the funds companies are willing to pay to solve an important (or merely annoying) problem.

Offering bundles gives your salespeople an easy way to focus on solution selling. If there are bundles that solve the problem for the customer, the discussion is much more productive. Even if the customer has a different problem, being able to describe an important problem how your company solves it often gives the salesperson credibility in the eyes of the buyer just getting to know your company.

Per Sjofors
Atenga Inc