Tuesday, February 16, 2016

Product feature, advantage and benefit

In the business world where sales and marketing activities are key function to bring in revenue and profit, there is a saying that if you focus in selling your product feature, the sales process will generally be more difficult than selling your product advantage to the customer; and if you focus in selling your product advantage, again the sales process will generally be more difficult than selling the benefit that your customer can get from your product.

There are 3 motivations for people to buy something:

  • Fear
  • Need
  • Greed
And people see or evaluate the value of a product offered from these 3 points of view:
  • Money
  • Time
  • Risk or Effort
You can sell the benefit to your customer by understanding their major concern.

Normally, if your customer is in need of something you have, you can just sell them your product. So, if need is the major concern, your customer will most probably hunting for it, and what you need to do is to tell them you have exactly what they need.

Are they fear of losing money? Fear of having shortage in time? Fear of being exposed to risk? What can your product help them? Coming from the "fear" perspective, you can sell them the advantage of your product, which will probably reduce or eliminate their fear.

It is said that most business selling is through the greed motivation, which you need to tackle by selling the benefit. Can your product helps to bring in more revenue or reduce more cost? Can your product helps to speed up process? Can your product helps to mitigate the risk? Can your product helps to eliminate some of the effort?

What is the different between advantage and benefit? This can be explained by using some examples:

Example 1:
Product: Light
Feature: LED illumination
Advantage: Use much less electricity, has longer lifespan, less heat generated
Benefit: Save electricity cost, reduce hassle of replacing faulty unit, less risk of catching fire

Example 2:
Product: Printer
Feature: Laser jet
Advantage: Faster printing, handle high volume printing, waterproof printout, quality output
Benefit: Save printing time, presentable printout that you can confidently handover to customer as sales material, no risk of water smearing which is a major problem of inkjet printing

Tuesday, February 2, 2016

Some discussion about the recent slide in oil price and its impact to world economy

The slide in crude oil price from above $100 per barrel in 2014 all the way down to around $30 per barrel today has caused quite a lot of worries and volatilities in the investment market recently.

I found some data on the annual average prices in US$ per barrel of domestic crude oil from InflationData.com and plotted the graph of inflation adjusted oil price from 1946 to 2015 as below:


In fact, there is also a historical inflation adjusted oil price chart in the website of InflationData.com shown like this:


Looking at the historical oil prices since World War II, and adjusting it for inflation in today's currency value, we can see that most of the time, the oil prices were within the range of $20 to $40, which is what it stays at now.

Observing from my graph above (which is a clean version of the original graph from InflationData.com website cluttered with more information), there were 2 bubbles in oil price, one is in the 1970s where oil price crisis occurred due to wars in the Middle East, and another in the 2000s which once affected by the 2008 economic crisis but quickly restored until the recent burst.

The 1st bubble in the 1970s made Soviet Union into a major exporter of oil, and its burst in 1980s eventually caused the dissolution of Soviet Union in 1991.

Now the 2nd bubble in the 2000s which brought oil price to a level of above $100 per barrel was a super windfall to the oil and gas industry and oil exporting countries, to the extend that their fiscal for 2015 and 2016 need the oil price to stay above $100 per barrel to breakeven.

The recent oil bubble burst sending the oil price to its "normal" price range of between $20 and $40 has no doubt caused trouble to the overspending oil exporting countries. It is also a big slap to the oil and gas industry which borrowed huge debt from financial institutions to finance their drilling activities. This include the shale oil companies in the United States which bloomed up during the bubble.

Who will be most affected by this oil price slide?

The website of World's Top Exports has a list of Top 15 crude oil exporting country in 2014 as follow:
  • 1.Saudi Arabia: US$268.2 billion (18.5% of total crude oil exports)
  • 2.Russia: $152.6 billion (10.5%)
  • 3.United Arab Emirates: $98 billion (6.8%)
  • 4.Canada: $88.1 billion (6.1%)
  • 5.Iraq: $84.4 billion (5.8%)
  • 6.Nigeria: $76.2 billion (5.3%)
  • 7.Kuwait: $69.3 billion (4.8%)
  • 8.Angola: $61.2 billion (4.2%)
  • 9.Kazakhstan: $53.6 billion (3.7%)
  • 10.Venezuela: $53.3 billion (3.7%)
  • 11.Norway: $44.2 billion (3%)
  • 12.Iran: $41.3 billion (2.8%)
  • 13.Mexico: $36.2 billion (2.5%)
  • 14.Oman: $34.8 billion (2.4%)
  • 15.United Kingdom: $29 billion (2%)
 
And the website of US Energy Information Administration (EIA) provides a list of Top 10 net oil importers in 2014 as follow:
  • China (6.1 million barrels per day)
  • United States (5.1 mbpd)
  • Japan (4.2 mbpd)
  • India (2.7 mbpd)
  • South Korea (2.3 mbpd)
  • Germany (2.2 mbpd)
  • France (1.6 mbpd)
  • Spain (1.2 mbpd)
  • Italy (1.1 mbpd)
  • Taiwan (1.0 mbpd)

The website of World's Top Exports also provides a list of Top 15 refined oil exporting country in 2014 as follow:
  • 1.Russia: US$114.7 billion (12% of total refined oil exports)
  • 2.United States: $110 billion (11.5%)
  • 3.Singapore: $66.1 billion (6.9%)
  • 4.Netherlands: $64.8 billion (6.8%)
  • 5.India: $60.8 billion (6.3%)
  • 6.South Korea: $49.1 billion (5.1%)
  • 7.Belgium: $40.8 billion (4.3%)
  • 8.China: $25.8 billion (2.7%)
  • 9.United Arab Emirates: $24.7 billion (2.6%)
  • 10.Kuwait: $22.8 billion (2.4%)
  • 11.Saudi Arabia: $22.1 billion (2.3%)
  • 12.United Kingdom: $20.2 billion (2.1%)
  • 13.Taiwan: $19.3 billion (2%)
  • 14.Malaysia: $18.5 billion (1.9%)
  • 15.Germany: $17.9 billion (1.9%)
Generally speaking, high crude oil price will hurt China, United States, Taiwan, Germany, etc. which are top importer of crude oil and also at the same time the top exporter of refined oil. Low crude oil price will hurt Russia and countries in Middle East which are both the top exporter of crude oil and top exporter of refined oil.
 
However, the market is worried that economy slowdown in places like China will cause them to consume less oil domestically and therefore export more refined oil, bringing oversupply situation to the world's oil market, which will then further dampen the oil price.
 
But I think the main worry is with those over-financed oil and gas companies and over-spending oil exporting countries (to erect skyscrapers and luxury places). This is because their repayment default and/or bankruptcy will definitely hurt the finance industry, and a troubled finance industry is really a bad news for the economy.
 
 

Sunday, January 17, 2016

Auspicious dates for housewarming, open house, party, gathering, etc. in 2016

Here is the list of auspicious dates in 2016 for organizing and hosting meet-up with friends and/or relatives (会友), which is produced based on the Chinese almanac Tong Shu.

The dates are applicable for housewarming, open house, home party, gathering, potluck, and any other similar functions to meet up with friends and/or relatives. (Click the image to enlarge)


Bear in mind that although the Tong Shu is a compilation of Chinese astrology and calendaring studies gathering wisdom of thousands of years, we should use it wisely and rationally, but not be too superstitious on it.

Hint: Click on the "Older Posts" link to continue reading, or click here for a listing of all my past 3 months articles.