"Marys Bar" A Short Story About Economics

Mary is the proprietor of a bar. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronise her bar

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans) 

Word gets around about Mary's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Mary's bar. Soon she has the largest sales volume for any bar in the area.  By providing her customers' freedom from immediate payment demands, Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Mary's gross sales volume increases massively 

A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases Mary's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral 

At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses 

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary's bar. He so informs Mary

Mary then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.Since, Mary cannot fulfil her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs 

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community

The suppliers of Mary's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds 

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class who have never been in Mary's bar.```

```Now, you know - Economics```

Disclaimer : This is a WhatsApp forward, all credits are due to the original creator.

The original post can be found here
our-drunken-economics-explained

P.S- If it is factually incorrect please comment, will change it

Monday Morning Quarterbacks

I came across this term Monday Morning Quarterback's, in a book  about social media intelligence, here the authors were discussing about how people were willing to share their opinions over social media about any particular event or issue and how most of the opinions shared are by people who don't hesitate to express themselves.

This led to the thought ; wont every company  love to hear from their customers experience with the brand and  their unbiased opinion, do their customers give such opinions? 

 So when do customers reach out to companies, if you see the timeline of many companies, majority of the customers reach out to complain or rant about their unhappy experiences these people are the Monday morning quarterbacks. How does companies use this feedback to improve itself that is the critical question?

"The definition of a Monday morning quarterback is someone who is always criticizing and saying how he/she would have done something better or differently after the event has passed."

I believe that companies should create opportunities for customers to relate and share their experiences with the brand and this will bring in more straightforward opinions.

One good example would be the #AirtelThanks, a simple search and analysis of  the hashtag for two weeks gave me this simple result. As we can see there was about 200 posts by 136 users and 522 engagements.  The total reach was 2518477 . Impressive right, this is what is needed for companies to be relevant and people to talk about all the benefits they got from the company.

If we dive deep into the analysis we can also check how the interactions were, if it was positive or negative and so on. also most analysis will throw insights on who were the most influential users and how they interacted with the hashtag. In this particular example we can see that overall interaction was positive 51% positive and  32% neutral and 18% negative. So we can say the overall mood towards Airtel is good. That is a big percentage when we consider peoples interaction in social media which usually tends to favour sharing negative experience more.

These 136 people who shared their experiences with Airtel over the past 2 weeks are who we can call the opposite of the  Monday Morning Quarterbacks .These people willingly share good things about the brands which is rare for a company in the services sector. Now if the company wants to leverage more from these interactions, they can look into the factors or offers which made them talk and promote more such offers.

When I say that people came out on their own and responded, it doesn't mean they are unbiased, they are customers who have enjoyed the benefits and are sharing their positive experiences. In social media perceptions do matter  and when the timeline of a company's social media page is filled with positive experience it would evoke a strong sense of reliability among prospective customers.

To illustrate let me share another instance of social media interaction which lead me a customer in India to a brand in the United States American Airlines. I came across this from a tweet and followed on to YouTube and got this video. what would be the impression of me a customer who is of no relevance to American Airlines, none right. But what if any of my relatives or friends travel abroad and while the talk about booking tickets come. I would ask them to check for social media reviews before booking flights and they are very likely to come across this video. This will never go away as it has gone viral and people tend to remember bad experiences more.

This was a two year old video but still it came up my feed and when I checked with latest tweets on twitter still I see many such negative reviews from customers. This is the power of social media, even a single instance of negative mention can open the flood gates for the negative reviews and destroy the goodwill earned.

This analysis of 2 weeks old data from twitter shows that the company has huge social media engagement 200 posts from 159 users with reach to 470,102 people. How much was good interactions?

 If we see the recent tweets and the word cloud , we can get a clear understanding even after two years the brand is yet to clean up their bad reputation. #AmericanAirlineSucks finds a mention in the cloud and the second tweet is a negative one.

Ok let us proceed to see another metric of how much the tweets say about the mood of the people towards the brand, we can see that the positive sentiment is equal to negative sentiment at 22% and majority are neutral. Most of the neutral trends must be either in response to a contest or an effort by brand to manage PR.

 If you can see these tweets you can see that most of neutral tweets got tagged because of some other reason or occasion and the negative tweets are directly in response to the service provided by the brand.

That's why brands need to be constantly on the look out for negative mentions and bad experiences and attend to them immediately or these trends have the power to destroy the brands eventually.