- Market research and historical data of all kinds are of critical importance in certain sectors which are relatively high-volume and predictable - especially those where there is no arbitrage opportunity and therefore where predictability is a stable equilibrium.
- A range of different price options is necessary for maximising revenue.
- Frequent calls to action help combat cognitive inertia, which stops people buying things even when they want them.
- It's hard to optimise for more than one goal at once: public image, winning the task, surviving the boardroom and winning the whole series are different - and often incompatible - objectives (and now that Newsnight's on, we can see Julie Kirkbride MP selling out her own husband to save her own political skin - Alan Sugar would be proud).
Wednesday, 27 May 2009
Today's economic lessons?
Do join me next week - for five exciting and excruciating interviews with the remaining candidates. In the meantime, please subscribe by filling in your email address at the top right (see what I did there with the call to action?!) and you'll get updates between now and then, and a reminder on Wednesday morning to tune in again.
If you're arriving here for the first time, please read from the bottom of the article upwards - preferably as you're watching the show on BBC iPlayer.
And the nearly-traditional space for readers who haven't yet seen the episode.
10:30 A lovely little preview of Yasmina in next week's episode - the interviewer has a copy of the accounts from her previous business. I can't wait to find out the story behind that.
10:29 You know what's really interesting? They are asking Howard's opinion on the other candidates as if he's a peer of the panel instead of just one of the players.
10:28 Margaret thinks Lorraine should have gone instead of Howard. So does Hasfa, and so does the audience - by a vast majority, which Adrian says is the biggest ever.
10:27 Rufus's tip for final two: Debra and Yasmina.
10:25 Especially with Nick and Margaret. A couple of nice moments in the last few weeks between them.
10:24 So has Debra. Four boardrooms in five losses. She ain't popular.
10:23 James has survived the boardroom four times, it seems. Not a bad record.
10:21 James of course shows up as the comedy character, but maybe there are secret strengths there too. Yasmina versus James in the final?
10:19 Rufus Hound is good at finding the 'wow' factor - and picks Debra as the "wow - why haven't you been buried in a shallow grave" candidate.
10:18 Yasmina seems to be regarded as a slow burner with hidden talents. I am slightly surprised but I wouldn't mind seeing her in the final.
10:16 Lorraine and Kate of course are in focus on the show: Lorraine seems to have survived despite lots of losses, Kate because of lots of wins.
10:15 Relative versus absolute utility, and its influence on choices - Lorraine apparently looked good when Philip was fighting with her, but not so great on her own. No surprise given what we all (I think) think about Philip.
10:12 Howard will get some good offers after this show, I think. He's obviously smart and articulate, and has shown himself to be a cut above his competition.
10:08 The You're Fired panel thinks that Howard understood the business pretty well. Adrian Chiles points out that Howard was not so risk-averse as all that, volunteering to be team leader in the first task.
10:05 Highly unlikely that anyone reading this cares about the football result and hasn't seen it yet. But I'll just say that people in either Spain or England will be happy tonight, and other people in either England or Spain will be depressed. Hope that clears things up.
10:00 And now a quick switch to You're Fired. I might have a little look at the football on the way over...
9:59 A nice preview of next week's interview episode. I do like that one. Fortunately Alan is pointing in several different directions and so I don't get too many clues about who will be sacked.
9:58 Howard thinks maybe he needs to be "a bit more maverick" in future. I suspect he just needed to be a bit more colourful on TV.
9:57 And Howard's fired! For being too ordinary. I think we all wish the other team had lost. But we will get better TV out of James, Debra and Lorraine.
9:56 Alan seems to be at pains in the last few episodes to emphasise what a difficult decision he's making every time he fires someone. I wonder if he is planning his own exit strategy.
9:55 Is Lorraine on her way out? She's getting the longest chat from Alan.
9:54 Howard explains rationally what a strong candidate he is. Lorraine mainly talks about her motivation and desire to get back into the workplace. Kate cleverly reminds Alan of her actual performance in this series. A good tactic I suspect, because resurfacing recent memories is a good way to strengthen someone's impression of you.
9:53 Nick is really putting the knife into Howard. Quite a sinister little comment there! I wonder whether Nick and Margaret have their own careers to take care of...
9:52 Final chance for someone to burn their public image in an attempt to save themselves. But it's probably worth taking the risk - any insults today will be quickly forgotten. Which makes it interesting that Alan also describes Howard as risk-averse.
9:49 A very low-vitriol boardroom. These are quite mature candidates, I think, and have an eye on their reputation after the show. Interesting and subtle comments from Alan, Nick and Margaret on the three of them.
9:47 Kate only sold £277, compared to Debra's over £900. Quite a gap there. But despite Howard and Lorraine's selling over £1000, apparently it's only 5% of the expected revenue for the time slot.
9:45 Howard thinks Lorraine didn't push the dinosaur product hard enough to persuade the rest of the team to take it up, and Alan agrees. Instead of Howard letting her take the heat, he steps in and puts himself back in the spotlight.
9:44 Kate's animal craft kit sold only one. I think Kate has to take responsibility for that. But Howard did pick it.
9:43 Lorraine sets up a nice boardroom moment by claiming that she will only talk about her own performance and "if I bow out today, it will be with a bit of integrity and grace". Clearly that's not going to happen.
9:42 Then again (don't worry, nothing's happening on TV except the winning team is going flying) Kate did choose the top products.
9:41 Alan thinks the high-end products were right but it was sold badly. I guess the problem was: enough rapport and charm (except from Kate!) and not enough focus on proven calls to action: phone number, website and price.
9:40 Shows what I know. Howard loses, because Debra sold as many ponchos as a professional presenter would have done. Well done folks.
9:39 And from Ignite: £1376.73
9:38 Total sales from Empire (Yasmina's team): £1541.88
9:37 A bit like last week's lesson - limited sales resource implies that more expensive items are worthwhile.
9:36 Yasmina is criticised for that risk aversion which Lorraine thought was a problem for Howard.
9:35 Great loyalty from Howard's team - it's such a disciplined and functional team that they almost have to win. But...
9:34 Into the boardroom, and I am very curious to get some insight into this. They have avoided giving us many sales clues, which normally is a sign that the results are completely one-sided. I still think Howard's team has done much better - because of the more diverse price range - but I have been wrong often enough to not put money on this.
9:33 However - possibly good product choices, because the craft product and air guitar are sufficiently specialist products to sell on their own without much help from Kate. And they aren't getting any.
9:32 Kate unfortunately wasn't the right choice to put on screen on her own - but I think the other two will have sold enough to compensate for her.
9:31 Missing the experienced director - they aren't giving out the phone number and website enough. Boosting perceived utility is great, but you also need to bypass key cognitive barriers for people: make sure they know how to get the product and are prompted to do so.
9:30 Lorraine and Howard have a nice rapport and their bizarre metallic leather jacket is reminiscent of the wolf sweater which was the surprise seller of a previous series. I saw one of those on the tube once. Not sure if anyone is buying them ironically though.
9:29 But something has to go badly wrong with Howard and Lorraine's pitch - otherwise it would just be no fun.
9:28 Alan Sugar doesn't like their pricing strategy either. All the products are low priced. I anticipate a shortage of revenue.
9:27 Now Debra tries to sell a head scarf/neck warmer. Unfortunately she is utterly devoid of the charisma you need to be a solo salesperson.
9:26 Sold £400 in the first session - someone thinks that needs to be "fixed".
9:25 Yasmina and James are messing up their pricing. Telling everyone the hair clips cost £9.99 and then correcting their mistake - the correct price is £17.99 - is about the worst anchoring mistake you can make.
9:23 Again we have a bit of subjectivity to mix with the sales figures: Sralan is watching too.
9:22 What's more, I like everyone on Howard's team and only one on Yasmina's. So of course I'll be supporting Howard's lot.
9:20 My first impression is that Yasmina's team has picked cheap products that are fairly suitable for the market (that's my prejudice showing) but Howard's team has a better range of prices, which is a very powerful match with a diversity of consumer utility functions. That looks like a potential win for Howard.
9:19 A bit of Prisoner's Dilemma here. Each subteam has to sell products picked by the other. So do you pick the best product possible? Or one that you think will screw over your teammates?
9:18 Lorraine believes Howard is risk-averse. Interesting theory - risk-aversion might be the right economic approach in this scenario but possibly not as an Apprentice candidate. We're getting more focus on this team which implies they might be planning to lose.
9:17 A toy baby dinosaur whose personality evolves according to how it's treated. Cute but £229?
9:16 £139.99 chip pan - Kate likes. Some dreadful-looking leather jackets for £149.99. Kate doesn't like.
9:15 Product choice. Has anyone thought to ask about the sales figures of the products they're considering? Howard at least figures out that it's something he should be thinking about.
9:14 Kate's presenting on her own - though her practice wasn't much cop - and Howard and Lorraine will be together. Possibly better than trying to put Kate and Lorraine together, because they are about to kill each other even with Howard in the room.
9:13 Of course the target market is also key - Howard might go down better if the audience is bored housewives. Lorraine thinks he's good but Kate doesn't want to hear it.
9:12 Hope we can get some idea of the rules - because whether you put Kate or Lorraine on TV is a very different decision if you have any choice in the matter.
9:10 Subjectivity rules - all the candidates are busy figuring out which products they like instead of which ones have good historic sales figures. Direct marketing is one of the most data-intensive sales channels there is, and you need to privilege every piece of hard information you can get above your own instincts.
9:08 A nice little insight into how the shopping is directed. Clearly a lot of domain knowledge about what people respond to - close eye on the clock, reminders of the item number and which products to push. Do you think the teams will ask for a professional director to hep them?
9:05 OK, no surprises - it's TV shopping. "One of my favourite tasks" says AS.
9:04 A little bit of philosophy from Howard "this could be my last day...but I don't think of it like that" and James "I have to start winning some tasks. Maybe I'm a jinx, maybe I'm bad luck". Or maybe you're just rubbish, James.
9:03 At the start of this series I thought the candidates were all so indistinguishable I'd never remember any of their names. Funny how they're unmistakable now. Though Yasmina and Debra look a bit more alike then they should.
9:00 And we're off! While the BBC repeats the same two-minute intro from every previous episode and shows last week's episode over again, you may as well watch the Cassetteboy video again.
The last of the regular tasks tonight as Yasmina, Debra, Howard, Kate, James and Lorraine get on TV and try to sell stuff.
This should give us some good insights into economics: demand curves, specialisation, market knowledge and search theory may all make an appearance. See you at 9 for a live blog on an increasingly tense series.