Page 6 - Griffenomics

GRIFFENOMICS ISSUE 1
6
BUSINESS STRATEGIES
FACT: ACCORDING TO AN NPR REPORT, THERE ARE 74476 REASONS WHY YOU SHOULD ALWAYS BUY A LARGE-SIZED PIZZA
Have you wondered about weird
decisions by renowned busi-
nesses and shops? Some of them
seemingly go against the most important
business principle - maximising profits,
while some of them seem to havemotives
that are unknown to us outsiders. So,
what exactly is going on in their minds?
Are they weird or wise?
WHY DO BARS OFFER
FREE SNACKS BUT CHARGE
FOR WATER?
If you have been to a bar, you may have
noticed something interesting: they
charge you for bottled water, sometimes
as much as £3 for a glass, but free snacks
such as bowls of salted peanuts are al-
ways within easy reach, on every table
and refillable when needed. This seems
to be counterintuitive, given the fact
that the money cost of supplying snacks
is relatively higher than that of water.
Shouldn’t bar owners do it the other way
around?
Truth is, a bar’s main income comes
from selling alcoholic beverages; they
want to focus on selling as much alcohol
as possible in order to gain profit. Snacks
such as salted peanuts and crisps can be
seen as complements to alcoholic drinks,
they are consumed together (sometimes
they make you thirsty for even more
drinks!). Moreover, snacks are relative-
ly cheap while each alcoholic drink sold
contributes to a relatively high propor-
tion of the bar’s profit, so it is no surprise
that bars are happy to provide more than
enough free snacks.
Conversely, bottled water can be seen
as a substitute to alcoholic drinks. One
can only put so much liquid into one’s
stomach, and the more water, the less
beer, vodka, and rum. Most bars realise
that in order to keep the demand for al-
coholic drinks high, they have to charge
for water to discourage its consumption.
But, come on, who goes to a bar to drink
water?
WHY DO COMPUTER
MANUFACTURERS INCLUDE
VALUABLE SOFTWARE IN THE
COMPUTERS THEY SELL?
Nowadays if you buy a computer, not
only will you get the computer itself, but
it will often be equipped with the latest
software. Some of this software includes
Microsoft O¢ce, Norton Internet Secu-
rity, and other music and photo editing
software. Funnily enough, this software
is also available for sale in the market at
somewhat high prices. For example, Mi-
crosoft O¢ce & Home 2013, which in-
cludes Word, Powerpoint, Excel, Outlook
and Onenote, costs a whole £220. The
question is, why would computer man-
ufacturers provide such expensive soft-
ware in their computers, when they can
sell them as separate software for good
sums of money? Some may say that the
computer manufacturers would’ve in-
corporated the price of the software into
that of the computer, but there is actually
much more to it than that.
Product compatibility is the crucial
element here, life is much easier if diƒer-
ent members of a presentation group use
the same software to produce their pre-
sentation. Likewise, it would better if you
and your colleague use the same word
processing software. We can see that the
more people using a particular software,
the larger the benefit is to owning and
using it. Knowing this, computer manu-
facturers will do almost anything tomake
its software more widely used, increase
its market share, and make it di¢cult for
other software companies to break into
themarket. It canbe seenas anattempt to
monopolise themarket. Oneway of doing
this is to put free software into comput-
ers. For example, several computer man-
ufacturers are willing to include Norton
Anti-virus into their computers since it is
a selling point. Norton not only get more
people to use their software, but will also
have higher demand for related products
and upgrades under its brand.
WEIRD OR WISE?
We unravel the seemingly strange behaviour sometimes seen in the business world.
POPULAR For every 10 drinks sold in a pub, seven of those are beers while the other three are wine, spirits and cider