Selling to the moneyed masses

Over the past decade, the distribution of household incomes has shifted so much that a much larger proportion of consumers now earn significantly higher-than-average incomes--while still falling short of being truly rich. As a result, what used to be a no-man's-land for new product introductions has in many categories become an extremely profitable "new middle ground." How can marketers capitalize on this new territory? The key, say the authors, is to rethink the positioning and design of offerings and the ways they can be brought to market. Take, for instance, how Procter & Gamble redefined the positioning map for tooth-whitening solutions. A decade ago, dental centers were popularizing expensive bleaching techniques that put the price of a professionally brightened smile in the 400 dollars range. At the low end, consumers also had the choice of whitening toothpastes that cost anywhere from 2 dollars to 8 dollars. P&G wisely positioned itself between the two ends, successfully targeting the new mass market with its 35 dollars Whitestrips. In product categories where it's clear the middle ground has already been populated, it's important for companies to design or redesign offerings to compete. An example is the Polo shirt. How do you sell a man yet another one after he's bought every color he wants? Add some features, and call it a golf shirt. Here, marketers have introduced designs based on the concept of "occasional use" in order to stand out. Finally, companies wishing to reach the "almost rich" can change how they go to market. Perhaps no mass retailer has made a stronger bid for the mass affluent than Target Stores, which has pioneered a focus the company itself characterizes as upscale discount. The strategy has made Target an everyday shopping phenomenon among well-heeled urbanites and prosperous professionals.     

The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty

Most researchers examining poverty and multilateral trade liberalizationhave had to examine average, or per capita effects, suggestingthat if per capita real income rises, poverty will fall. Thisinference can be misleading. Combining results from a new internationalcross-section consumption analysis with earnings data from householdsurveys, this article analyzes the implications of multilateraltrade liberalization for poverty in Indonesia. It finds thatthe aggregate reduction in Indonesia's national poverty headcountfollowing global trade liberalization masks a more complex setof impacts across groups. In the short run the poverty headcountrises slightly for self-employed agricultural households, asagricultural profits fail to keep up with increases in consumerprices. In the long run the poverty headcount falls for allearnings strata, as increased demand for unskilled workers liftsincomes for the formerly self-employed, some of whom move intothe wage labor market. A decomposition of the poverty changesin Indonesia associated with different countries' trade policiesfinds that reform in other countries leads to a reduction inpoverty in Indonesia but that liberalization of Indonesia'strade policies leads to an increase. The method used here canbe readily extended to any of the other 13 countries in thesample.     

A case against the consolidation of foreign subsidiaries’ and a United States parent’s financial statements

Generally accepted accounting principles in the United States usually require that companies which own more than 50% of the voting stock of foreign corporations prepare consolidated financial statements. The foreign financial statements must be recast into US GAAP and the foreign currency financial statements must be translated into US dollars. Alternative methods of translating foreign currency have major impacts on consolidated financial statements and on the behavior of management. Further, foreign subsidiary financial statements which are recast into US GAAP are less useful than the originals, and US users cannot analyze them without reference to the foreign environment. The interests of financial statement users are better served by alternative presentations of foreign currency denominated accounts rather than by consolidation.     

The impact on the market for audit services of aggressive competition by auditors

Supporters of direct uninvited solicitation activities argue that clients can make more informed choices of auditors when auditors are allowed to solicit prospective clients. In banned markets, auditors are allowed to submit bids to provide audit services only when invited by the client. This study provides theoretical models that examine the efficiency of client–auditor alignments in the banned and allowed market. We identify conditions under which realignment differences between the two markets occur and derive client losses in the banned market as compared to the allowed market. We also identify conditions under which independence may be impaired in the allowed market, consistent with the claims of solicitation opponents. However, we believe that, in view of the potential positive effects related to audit pricing and client–auditor alignment, restrictions on advertising or direct uninvited solicitation are not necessarily indicated. Instead, regulators or market mechanisms should insure that the independence (truth-telling) condition is so readily satisfied as to be virtually irrelevant. This can happen in one of two ways: (a) increased scrutiny, leading to an increased likelihood of discovery, or (b) increased penalties when an audit failure is discovered, leading to increased costs of an audit failure, or both.     

Myopic loss aversion and the equity premium puzzle reconsidered

Benartzi and Thaler [The Quarterly Journal of Economics 110 (1995) 73–92] offer a quasi-rational explanation for the equity premium puzzle. We reconsider their methodology and, making a simple modification to it, find that their analysis is not robust.     

The challenge of the future and the institutionalization of interdisciplinarity: notes on Herman Kahn’s legacy

This article is an attempt to explore Herman Kahn’s foundational contribution to the development of what he called “broad studies”, a combination of futures research and public policy analysis. In Kahn’s view, decision making and policy processes pose two crucial problems that the scholarly research is rarely forced to face: (1) the need to have and operate with a broad, multifaceted vision of phenomena and (2) the issue of coping imaginatively and realistically with future circumstances and conditions that can only vaguely be distinguished in the present. Implied in these two is the need to develop new methods and approaches fitted to the charges imposed by them. The paper discusses Kahn’s work as an integrated solution to these problems: The definition and advocacy of broad and future-oriented studies, his concept on how these studies should be institutionalized in interdisciplinary organizational systems, and the crucial position scenarios and propaedeutic and heuristic methodologies have in this context. A special attention is given to two methodological approaches he developed to cope with these challenges: Scenario Building and the Method of Classes of Variables.When twenty years ago, on July 7, 1983, Herman Kahn died suddenly at age 61, both friends and intellectual adversaries recognized that “the world lost one of its most creative and best minds” [1] and [2]. By that time Herman Kahn was one of the preeminent and best known Futures Studies scholars, a founding father of the field, with extensive and vital contributions in Strategic Studies, an area where he was also considered a founding figure and a leader [3] and [4]. His work was followed all over the world and the directions he traced in the public debate on very sensitive issues of crucial public concern have continued to be unaltered today, twenty years after his unexpected and premature death. Yet in spite of the incessant influence of his arguments and ideas, today his intellectual legacy is still to be accounted for and the breath and depth of his contributions are still to be reviewed and analyzed in a systematic way. This paper is an attempt to explore only one dimensions of this legacy: Kahn’s foundational contribution to the development of what he liked to call “broad studies”, a combination of futures research and public policy analysis.The two decades that have passed since his death allow us today to approach his work undisturbed by the “sound and fury” of the many public debates and controversies he participated in and to focus on some of the deepest and most enduring dimensions of his intellectual contributions. However while doing that, we should keep in mind that for Kahn the public policy process shaping the future and the public debate associated to it were always the focal points and the ultimate ends of his efforts. Indeed, probably the best approach to Kahn’s work is to see it in the light of his continuous concern for the practical relevance of the social research. For him the research process was always action-oriented and its ultimate test was its relevance for policy and social action. As a result, the most promising starting point for any overview of Kahn’s thought and work should be a set of crucial conclusions he reached about the policy making process and decision makers early in his career.     

The Effect of Accounting Restatements on Earnings Revisions and the Estimated Cost of Capital

This paper examines the effect of accounting restatements on a firm's cost of equity capital. We show that, on average, accounting restatements lead to both decreases in expected future earnings and increases in the firm's cost of equity capital. Depending on the model used, relative percentage increases in the cost of equity capital average between 7 and 19% in the month immediately following a restatement. The relative increase in the cost of capital dissipates as time passes and after controlling for analyst forecast biases, but continues to average between 6 and 15% in the most conservative setting. We also show that restatements initiated by auditors are associated with the largest increase in the cost of capital, and that firms with greater leverage experience greater increases in their cost of capital. Overall, our evidence is consistent with accounting restatements lowering the perceived earnings quality of the firm and increasing investors' required rates of return.     

Globalisation and the environment: the long-term effects of technology on the international division of labour and energy demand

This paper examines the effect of the structural changes arising from the globalisation of production and innovation and from technological changes on the environment. Drawing on theories of international production from international business and innovation, we assess the impact of long-term technological change and changes in international production on the international division of labour and energy demand. We select two industrial sectors with different technological characteristics (the textile, clothing and footwear sector and the chemical sector). We examine the effects of the globalisation of production and of technological change on these two sectors on the level of industrial production and resource intensity in different regions and countries over the last 30 years. We speculate on the impact of globalisation of production and innovation in future pervasive technologies—information technology, biotechnology and nano-technology. The implications of these developments on industrial greenhouse gases emissions are assessed.     

The Balanced Scorecard: Slogans, Seduction, and State of Play

This paper outlines claims and evidence concerning the balanced scorecard (BSC) from the research literature, integrating current thinking about its substantive content and assumptions, strategic alignment, implementation issues, judgment and decision-making, organisational performance, compensation plans, and comparisons to other performance-measurement practices. In doing so, diverse localisations of the BSC are brought into view, as well as difficulties accompanying the practice of the BSC. Future directions for practitioners and researchers are indicated.