Coincidence of Cycles in Credit and Property Markets

Coincidence of Cycles in Credit and Property Markets Abstract What caused the financial crisis that is sweeping across the world? What is the role of debt and leverage in causing asset market bubbles to form and collapse? What keeps asset prices and lending depressed? What can be done to remedy matters? This paper will present a qualitative review of the role of debt and leverage in causing asset market bubbles to form and collapse in the real estate market under the context of the global financial crisis. Long-run causality appears to go from property prices to bank lending. Literature Review The direction of causality between bank lending and property prices The causality between bank lending and property prices goes in both directions. Property prices may affect bank lending via various wealth effects (Hofmann, 2003). First, due to financial market imperfections, households and firms may be borrowing constrained. As a result, households and firms can only borrow when they offer collateral, so that their borrowing capacity is a function of their collateralisable net worth. Since property is commonly used as collateral, property prices are therefore an important determinant of the private sectors borrowing capacity. Second, a change in property prices may have a significant effect on consumers perceived lifetime wealth, inducing them to change their spending and borrowing plans and thus their credit demand in order to smooth consumption over the life cycle. Finally, property prices affect the value of bank capital, both directly to the extent that banks own assets, and indirectly by affecting the value of loans secured by property. Proper ty prices therefore influence the risk-taking capacity of banks and thus their willingness to extend loans. The literature in the last few decades referred to risk-taking behavior of financial market participants in times of abundant liquidity, banks leverage targeting behavior and a portfolio real balance effect of other financial intermediaries. Financial intermediaries, which must maintain an adequate ratio of capital to assets, can be deterred from lending, or induced to shift the composition of loans away from bank-dependent sectors such as small businesses, by declines in the values of the assets they hold (Bernanke Gertler, 2000). Bank lending, on the other hand, may affect property prices through various liquidity effects. The price of property can be seen as an asset price, which is determined by the discounted future stream of property returns. An increase in the availability of credit may lower interest rates and stimulate current and future expected economic activity. As a result, property prices may rise because of higher expected returns on property and a lower discount factor. Property can also be seen as a durable good in temporarily fixed supply. An increase in the availability of credit may increase the demand for housing if households are borrowing constrained. With supply temporarily fixed because of the time it takes to construct new housing units, this increase in demand will be reflected in higher property prices. This potential two-way causality between bank lending and property prices may give rise to mutually reinforcing cycles in credit and property markets. A rise in property prices, caused by more optimistic expectations about future economic prospects, raises the borrowing capacity of firms and households by increasing the value of collateral. Part of the additional available credit may also be used to purchase property, pushing up property prices even further, so that a self-reinforcing process may evolve. Potential simultaneity problems are controlled for the direction of causality between bank lending and property prices, as studied by Gerlach and Peng (2002). Bank lending, which was transformed into real terms by deflation with the CPI (consumer price index), is defined as total credit to the private non-bank sector. Cross-country comparisons of the development of bank lending are flawed by differences in the definition of total credit across countries. These differences in definition will be reflected in the results of the empirical analysis. Differences exist, for example, with respect to the treatment of non-performing loans (NPLs) in national credit aggregates. A drop in property prices will on the one hand have a negative effect on the extension of new loans. On the other hand, it will give rise to an increase in NPLs. The estimated effect of property prices on bank lending will therefore depend on whether banks are forced to write off NPLs quickly or not. For instance, Japan and the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) experienced severe banking crises in the late 1980s or early 1990s, which were preceded by a collapse in property prices. While NPLs were quite quickly cleansed from banks balance sheets in the Nordic countries, this was not the case in Japan. To a broader view, bank lending has contributed significantly to the real estate bubble in Asia prior to the 1997 East Asian crisis. Quarterly residential property price indices were available for all countries except for Japan, Italy and Germany. For Japan and Italy, semi-annual indices were transformed to quarterly frequency by linear interpolation. For Germany, a quarterly series was generated by linear interpolation based on annual observations from the first quarter of each year. In order to obtain a measure of real property prices, nominal property prices were deflated with the CPI. Residential property prices may not fully capture the property price developments, which are relevant for aggregate bank lending. Credit aggregates comprise bank lending to households and enterprises. The appropriate measure of property prices for the empirical analysis would therefore be aggregate property price index, comprising both residential and commercial property prices. For most countries, the available commercial property price data are available only in annual frequency and represent only price developments in the largest urban area of the country. The use of these data in empirical analysis is therefore quite problematic. In the few countries where high quality commercial property price data are available, such as Japan, Hong Kong and Singapore, residential and commercial property prices are closely correlated, suggesting that residential property prices may act as a proxy for omitted commercial property prices in the empirical analysis. The short-term real interest rate is measured as the three months interbank money market rate less four quarter CPI inflation. The short-term real money market rate serves as a proxy for real aggregate financing costs. A more accurate measure would be an aggregate lending rate. Representative lending rates are, however, not available for most countries. Empirical evidence suggests that lending rates are tied to money market rates, implying that money market rates are a valid approximation of financing costs. The global financial crisis and debt explosions A chain of events, beginning with unexpected losses in the U.S. subprime mortgage market, was destined to bring the global financial system close to collapse and to drag the world economy into recession. In the aftermath of the Global Financial Crisis between 2007 and 2009, economists have paid more attention to the role of debt and leverage in causing asset market bubbles to form and collapse. For instance, the asset price inflation and rising leverage for the United States exemplified nearly all the signs of a country on the verge of a financial crisis-indeed, a severe one. Then, we find that asset market collapses are deep and prolonged. Obviously, the transparent global banking system shows that the main cause of debt explosions is not the broadly critically valued costs of bailing out and recapitalizing. In essence, the crucial drivers of debt increases are the inevitable collapse in tax revenues that governments suffer in the wake of deep and prolonged output contractions, as well as often-ambitious countercyclical fiscal policies aimed at mitigating the downturn. Firms private investment and asset market valuation are negatively associated with their top lenders real estate exposure. Global firms have a flexible average and they can get the leverage market, so there is an opportunistic approach about it. The characteristic huge buildups in government debt are driven mainly by sharp falloffs in tax revenue and, in many scenarios, big surges in government spending to fight the recession, declared by Reinhard and Rogoff (2008). The rise in real government debt in the three years follows a banking crisis, tending to explode with a rise at an average of 86% in the major post-World II episodes (Reinhard and Rogoff, 2008). Using the money amount of borrowing from the banks is the amount of credit available to the firm. Lang, Ofek, and Stulz (1996) find that future growth and investment are negatively related to leverage, especially for real estate firms with high debt ratios. In the current economic background, the effects of firms collateral losses may also depend on firm leverage, with highly leveraged firms investing less owning to more binding borrowing constraints. Hofmann (2003) suggests that property price cycles, reflecting changing beliefs about future economic prospects, drive credit cycles, rather than excessive bank lending being the cause of property price bubbles. Most asset classes have derivative markets. Professional investors assume that property derivatives market worked property, and the deleveraged REIT returns are closely linked to underlying market. Real estate invest in real estate debt (in effect deleveraging), use derivative trades for liquidity or use long-short trading to take positions on market views, and need to buy real estate at all. Purchaser gets low cost, diversified returns without alpha. Seller hedges underlying assets or reinvests cashflow. If there are some products that allow them to invest to increase the house price, then the investors can hedge against the increase of the house price and build up my investment. The investors could track the increase of the house prices and reduce the exposure of the house. They can diversify in the portfolio. A derivative market will give you pricing information for the pricing symmetry. The U.S. real estate is strongly distorted by derivatives and arbitrage argued by Schiller. The global financial crisis and leverage: worsening the impact of collateral losses and borrowing The factors that determine the leverage level are: financial covenants, property market/cycle, income to repayment ratio, sum of deals, maintain credit rating, dividend policy, competitor debt levels, tax benefits, and other factors. They are weighted from the largest proportion to the smallest proportion respectively. Leverage does hurt growth in the sense that it worsens the impact of collateral losses. Figure 1 explores the impact of a lower steady-state leverage ratio, 25% instead of 50% as in the baseline scenario. The figure shows that a reduction in leverage significantly moderates the cycle. Figure 1. The effects of leverage on responses to an asset-price boom and bust Notes: Comparison of high steady-state leverage (ratio of net worth to capital of 0.5, as in baseline simulations) and low steady-state leverage (net worth-capital ratio of 0.75). Monetary policy is assumed to target expected inflation aggressively. For example, firms or households may use assets they hold as collateral when borrowing, in order to ameliorate information and incentive problems that would otherwise interfere with credit extension. Under such circumstances, a decline in asset values (for example, a fall in home equity values) reduced available collateral, leads to an unplanned increase in leverage on the part of borrowers, and impedes potential borrowers access to credit. Supportive of the bubble-size hypothesis shows that the greater the gain prior to the shock between 1986 and 1989, the greater the fall in the post-shock period. Leverage is significantly positive, probably suggesting that firms that can secure borrowing are better firms and those with better relationships (Gan, 2007). Lamont and Stein (1999) show that house prices into metro areas with high levels of leverage are more sensitive to income shocks than house prices in metro areas with less leverage. At an individual level, Genesove and Mayer (2001) show that leverage has a large impact on seller reservation prices in a downturn, affecting both the probability of sale and the subsequent sales prices. Others have shown that liquidity affects refinancing behavior and mobility. While Case and Shiller (1988) use surveys to show that market conditions affect the reported expectations of recent home buyers, few papers have explored the role of information and psychology on expectations formations and transactions prices. Leverage drives up volatility of returns and bad timing issues, and LTV based lending is highly risky with the characteristics of being both pro-cyclical and vulnerable to downturns. Income/earning based constraints are more robust, and NB debt maturity, downside risk and refinancing risk are both crucially important for the leverage performance. Non-contractibility imposes limits on borrowing: and debt contracts secured on land are the only financial instruments that creditors can rely on (Miller and Stiglitz, 2010). This puts a strict upper limit on the amount of external finance that can be raised: so the rate of expansion of the small businesses is determined not by their inherent earning power but by their ability to acquire collateral. Even without intermediaries, a credit-constrained market economy-where collateral is used to handle repudiation risk-can exhibit liquidity crises and asset price crashes (Geanakoplos, 2003). Highly leveraged borrowers can very easily become insolvent. Giacomini et al. (2015) show highly leveraged REITs produce lower average returns and lower Sharpe ratios over cycle and much greater falls in bear markets. Leverage is producing the worst risk adjusted return. If their net worth were only 5% of assets held as collateral for loans, a correction of asset prices in excess of this would be enough to wipe out their net worth-even before fire-sales begin. As Koo (2011) describes it, the collapse of an economy-wide asset bubble could be the economic equivalent of the collapse of a supernova-with the black hole of insolvency threatening to swallow whole sectors of an over-leveraged economy. The consequences of technical insolvency were seen as so severe, indeed, that a preemptive strategy of concealing the true balance sheet position was apparently in Japan (Koo, 2011). As lending is liberalized and leveraged increased at the same time that prices are inflated (as the result, in p art, of banks capital reserves growth), moral hazard further undermines lenders incentives to price loans efficiently and exacerbate these underlying forces for the provision of excessive credit (Herring and Wachter 1999). The impact of leverage (recall irrelevance proposition-but also costs of financial distress and no tax shield for REITs) is dependent upon market perception of management ability, and CAPM (or factor models) can be used to assess the risk premium. The study covers the short-term and long-term dynamics of the assets, correcting for leverage in the direct real estate indices. Results suggest that long-run REIT market performance is more closely related to the direct real estate market than to general stocks, similar response to shocks in fundamentals. Asset market features that hamper arbitrage processes The inefficiencies in underlying asset market include high round trip transaction costs, illiquidity and time to trade, real management costs, and heterogeneity and alpha (the retail portfolio preference). An obvious reaction to market inefficiency is arbitrage. Arbitrage signifies taking advantage of pricing inefficiencies without any exposure to risk, and creates abnormal profits (no free lunch). When arbitrage speculators enter the market, adding liquidity, it is reasonably assumed that these are mostly short-term investors, as arbitrage investors by their nature tend to buy and sell more rapidly than most other investors. Theoretical analyses suggest expected margin should be zero or close to zero for the underlying asset markets and rational margins (arbitrage portfolio). However, in practice consumers and FI do not arbitrage in the housing market (Farlow, 2004). Arbitrage in the real estate market is risky for several reasons. First, a player has to be sure that there are enough players in the market that are also arbitraging: an insufficient proportion of arbitrageurs might cause the inefficiency to persist. The execution time is more painful for the buyers than the sellers. In any one market, there are more buyers than sellers. Second, another risk is the impossibility to obtain general agreement on the deviation from a certain fundamental value. Third, houses are heterogeneous assets that rarely have close substitutes and hence are traded in segmented markets. In addition, no central exchange exists so information is far from perfect. Furthermore, the relatively high transaction costs and the absence of short-selling opportunities in housing markets make arbitrage even riskier (Hong and Stein, 2003; Farlow, 2004). Money illusion in real estate implies the failure of consumers to evaluate alternatives during a period of inflation due to a difference between nominal and real values. It plays an important role in real estate because it generally deals with long-term projects and frictions, like short-sale constraints, which makes it difficult to arbitrage mispricing away. There are several ways of the improvement of the market: the lack of liquidity, the pricing issue, the inability to arbitrage, the trench to pension funds and so on. Hence, it is better to exploit momentum in this risky market than to try to fight against it in time of excess. When the real estate portfolios lack momentum effects, they would rather have big margins. Professional investors should get rid of their retail portfolios while they are actually selling and trading. Research Methodology An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to overshoot equilibrium when asset bubble bursts-threatening widespread insolvency and what Richard Koo calls a balance sheet recession (Miller Stiglitz, 2010). For the purpose at hand-to study the dangers posed by excessive leverage and how capital restructuring may be needed to avert economic collapse when an asset bubble bursts-we make use of a stripped-down framework of heterogeneous agents with explicit credit constraints but no intermediaries (Miller Stiglitz, 2010). Before considering what happens when an asset bubble collapses globally, consider how things evolve with perfect foresight, starting with small businesses that borrow up to the hilt and happily postpone consumption of traded goods to some later date. Their flow of funds accounts show land holdings, denoted evolving as: or, in symbols,  where is the amount of one-period borrowing to be repaid as (R is one plus the one-period interest rate), is price of land, and measures the productivity of land in this sector. The credit constraint, assumed to bind at all times, is that borrowing gross of interest matches the expected value of land, i.e. As the degree of leverage is keyed to expectations of future prices, there will be more lending when capital gains are in prospect-as was true for sub-prime lending according to Gorton (2008). This will be crucial when an asset bubble is considered. But with perfect foresight of future land values, substitution into (1) yields an accumulation equation for small businesses who use all their net worth to make down payments on land, namely: where the expression in parentheses on the left is the down-payment required to purchase a unit of land and the term on the right measures both the productivity of those resources in this sector and SB net worth. By adding an asset bubble to a canonical model of highly leveraged businesses, Miller and Stigliz (2010) have highlighted the vicious downward spiral that may develop when asset prices begin to fall and have outlined a variety of measures that may be used to check this-with the government stepping in because of the externalities and moral hazard involved. The authorities in both the US and UK have of course undertaken extraordinary financial interventions, amounting in total to around three quarters of GDP (Miller and Stigliz, 2010). The arbitrage scenario of the asset market bubbles Suppose in addition to the fundamentals (net rents), we define a periodic bubble component b; then any of the following form will also satisfy arbitrage conditions and be rational: , with . Thus, if at time t an asset is overvalued by an amount , a rational investor will still purchase such an asset, if the degree of overvaluation is expected to grow by a rate equal to or greater than the appropriate discount rate. In turn, this implies that a necessary condition for housing bubbles to form is serial correlation in price changes. However, to anticipate results below, in our model housing bubbles will be self-limiting because new supply is being built. Panel unit roots and co-integration tests As a tentative attempt to partly overcome this problem, I exploit the rather large cross-section dimension of my analysis to perform unit root and co-integration tests. Asa first step I perform standard augmented Dickey-Fuller (ADF) unit root tests (Dickey and Fuller, 1981) to test for the order of integration of the time series under investigation. The ADF test regression is of the form: Allowing for a maximum lag order of four, the lag order was determined by sequential t-tests eliminating all lags up to the first significant at the 5% level. The test regression for the level of each variable contained a constant and a trend; the test regression for the first difference contained only a constant. The ADF test statistic is the t-statistic of . If is significantly smaller than zero, the null hypothesis of a unit root can be rejected. I also report a panel ADF test proposed by lm et al. (2003). They show that the standardized average of the N individual ADF test statistics (6) has a standard normal distribution, where is the average of the individual ADF test statistics and and are respectively the mean and the variance of the distribution of the ADF test statistic. The appropriate mean and variance adjustment values are tabulated in Im et al. (2003). The test is one sided. The 1%, 5%, and 10% critical values are -1.96, -1.64, and -1.28. Large negative values therefore imply a rejection of the null of a unit root. On the whole, the results suggest that the natural logs of real bank lending, real property prices and real GDP are integrated of order one. This conclusion is suggested both by the individual country level tests as well as by the panel tests. The short-term interest rate appears to be a borderline case. The null of non-stationarity is rejected at least at the 10% level in seven countries out of 20 countries. The panel unit root test strongly suggests that the real interest rate is a stationary process. Given the results of the unit root tests we test in the following for the presence of a long-run relationship between real bank lending, leverage and real property prices. The level of the real interest rate is not allowed to enter the long-run relationship. The Johansen approach is based on maximum likelihood estimation of a cointegration VAR model, which can be formulated in vector error correction form: (7) where x is a vector of endogenous variables comprising the log of real bank lending, leverage and real property prices. is a vector of constants and is a vector of white noise error terms. Since I want to allow for deterministic time trends in the levels of data I leave the constant unrestricted. The rank of the matrix indicates the number of long-run relationships between the endogenous variables in the system. The cointegrating rank hypothesis for the Johansen trace test is specified as against the alternative . The lag order of the VECMs was determined based on sequential likelihood-ratio tests, eliminating all lags up to the first lag significant at the 5% level. The 1%, 5% and 10% critical values are respectively 35.65, 29.68, and 26.79 for , 20.04, 15.41, and 13.33 for for and 6.65, 3.76 and 2.69 for I also report the result of a panel cointegration trace test proposed by Larsson et al. (2001). Policy Suggestions Flexible inflation targeting Under the accommodating policy, the bubble stimulates aggregate demand, leading the economy to overheat. In contrast to the accommodative policy, the more aggressive inflation targeting policy greatly moderates the effects of the bubble. As with the case of bubble shocks, the results indicate that the policy that responds aggressively to inflation and does not target stock prices works best. Under inflation targeting monetary policy is committed to achieving a specific level of inflation in the long run, and long-run price stability is designed the overriding or primary long-run goal of policy. Inflation targeting is generally characterized by substantial openness and transparency on the part of monetary policymakers, including for example the issuance of regular reports on the inflation situation and open public discussion of policy options and plans. Regulatory initiatives to control excessive lending in real estate markets Banks have overextended their lending during periods of high asset inflation, exposing themselves to greater portfolio risks during periods of declining asset value. Bank lending to related parties, as bank owners sought to capture the gains from their speculation, has aggravated the adverse impact of speculative lending. In response, regulatory authorities have increasingly restricted lending for real estate and to related parties-as well as lending concentrated on a few borrowers. Restrictions on related lending have been difficult to implement, however, because disclosure rules are generally poor, and in Indonesia, Japan, and Thailand, banks and firms have interlinked ownership, and companies are closely held (Stiglitz and Uy, 1996). Although governments established priorities for lending-and discouraged lending for real estate and consumer goods-they still employed commercial standards. Prudential regulations, particularly capital adequacy requirements and controls on real estate lending, are essential and replicable. The adaptability of government policies-the ability to abandon policies when they fail and to change policies with changing circumstances-is clearly a lesson of general applicability, although it is hard to design institutions that capture that lesson. A monetary policy regime focuses on asset prices rather than on macroeconomic fundamentals may well be actively destabilizing. The problem is that the central bank is targeting the wrong indicator. As an alternative metric for evaluating policy responses to bubbles, Bernanke and Gertler (2000) computed the unconditional variances of output and inflation under the four different policy scenarios (accommodative versus non-accommodative on inflation, responding to stock prices versus not responding). Conclusion Over the last few years, the coincidence of cycles in credit and property markets has been widely documented and discussed in the economic policy oriented literature, In this paper, I analyse the causes of this coincidence. From a theoretical point of view, the relationship between bank lending and property prices is multifaceted. Property prices may affect credit via various wealth effects, while credit may affect property prices via various liquidity effects. Previous empirical studies were not able to disentangle the direction of causality, since the focus was usually on one of these effects bot not on both. Long-run causality appears to go from property prices to bank lending, rather than conversely. This finding suggests that property price cycles, reflecting changing beliefs about future economic prospects, drive credit cycles, rather than excessive bank lending, in the wake of financial liberalization or overly loose monetary policy, being the cause of property price bubbles. However, there is also evidence of short-run causality going in both directions, implying that a mutually reinforcing element in past boom-bust cycles in credit and property markets cannot be ruled out. References Bernanke, B. and Gertler, M., 2000. Monetary policy and asset price volatility (No. w7559). National bureau of economic research. Case, K.E. and Shiller, R.J., 1988. The behavior of home buyers in boom and post-boom markets. Farlow, A., 2004. The UK housing market: bubbles and buyers. Oriel College. Gan, J., 2007. The real effects of asset market bubbles: Loan-and firm-level evidence of a lending channel. Review of Financial Studies, 20(6), pp.1941-1973. Geanakoplos, J., 2001. Liquidity, default and crashes: Endogenous contracts in general equilibrium. Genesove, D. and Mayer, C., 2001. Loss aversion and seller behavior: Evidence from the housing market. The Quarterly Journal of Economics, 116(4), pp.1233-1260. Gerlach, S. and Peng, W., 2005. Bank lending and property prices in Hong Kong. Journal of Banking Finance, 29(2), pp.461-481. Giacomini, E., Ling, D.C. and Naranjo, A., 2015. Leverage and returns: A cross-country analysis of public real estate markets. The Journal of Real Estate Finance and Economics, 51(2), pp.125-159. Gorton, G.B., 2008. The panic of 2007 (No. w14358). National Bureau of Economic Research. Herring, R.J. and Wachter, S.M., 1999. Real estate booms and banking busts: an international perspective. Hofmann, B., 2003. Bank lending and property prices: Some international evidence. Hong, H. and Stein, J.C., 2003. Differences of opinion, short-sales constraints, and market crashes. Review of financial studies, 16(2), pp.487-525. Koo, R.C., 2011. The Holy Grail of Macroeconomics: Lessons from Japan? Great Recession. John Wiley Sons. Lamont, O. and Stein, J.C., 1997. Leverage and house-price dynamics in US cities (No. w5961). National bureau of economic research. Lang, L., Ofek, E. and Stulz, R., 1996. Leverage, investment, and firm growth. Journal of financial Economics, 40(1), pp.3-29. Larsson, R., Lyhagen, J. and Là ¶thgren, M., 2001. Likelihoodà ¢Ã¢â€š ¬Ã‚ based cointegration tests in heterogeneous panels. The Econometrics Journal, 4(1), pp.109-142. Im, K.S., Pesaran, M.H. and Shin, Y., 2003. Testing for unit roots in heterogeneous panels. Journal of econometrics, 115(1), pp.53-74.<

Touch Screen Alarm Clock Marketing Plan

Touch Screen Alarm Clock Marketing Plan The latest technological gadgets have gained immense popularity in the last few years and the customers are eager to try out new products and services. Considering the increasing demand of touch screen alarm clock as identified by Brandon (2010), our company will be introducing this product in the market and will ensure that it successfully meets the requirements of every customer by charging reasonable price for the product range. Market Research findings Since the business environment is becoming fierce and competitive, it has become vital for the companies to carry out a market research before launching the product in the market (Ranjhita, 2011). With the help of the research, it was found that touch screen alarm clock has huge potential for the new entrants and entry barriers are relatively low (Cako, 2005). In US, every top ranked brand is offering its products but there are some areas where people have limited access to these clocks. The three areas identified by our company are Ohio, Florida and California; the geographic segmentation has been done to get a clear picture of the type of customers that the company will be targeting. From the analysis of the research findings, it is decided that the brand name will be Express Alarm Clock and it will comprise of two models on the basis of features. One model will be simple with less features and other will be with complicated and extremely high technical features. The other aspects of the marketing plan are discussed below in detail. Target Market In order to reach the right market, it is important that the target market is decided beforehand which will ensure that there will be certain number of consumers who would be willing to buy the product (Flink, 2011). The target market of this new touch screen Alarm Clock is as follows: Gender: Male and Female Age: 8 years and above Income: $30,000 and above Lifestyle: Depending on the life cycle stage; young children and adults are fun-loving, adventurous and technologically savvy. Older people i.e. 40 years and above prefer to have simple technical gadgets with easy to understand features. Occupation: Depends on the life cycle stage but would mainly comprise of students, part-time or full-time employed people, professionals and housewives Positioning Statement Since every brand is developed with the aim of creating distinctive image in the market, its positioning needs to be accurately done so that the customers are communicated the message appropriately (Ferrell Heartline, 2008). The positioning statement of Express Alarm Clock is to be the number one touch screen alarm clock with simplistic features, durable quality and advanced functionalities that will allow the users to carry the gadget everywhere easily and with utmost ease. Product offerings Initially, there will be two models launched in the market to meet the demands of the touch screen alarm clock market. Every customer is looking for affordable touch screen alarm clocks, so the company will introduce two models; one will be priced for economical customers and other will be priced for brand conscious and high quality product customers. The two types of product offerings with their descriptions are given below: Simple Express Alarm Clock This product will be used simply for alarm setting purposes. It will be performing only this function and maximum five alarms can be easily set in this clock. The main target for this clock is older people who are looking for touch screen alarm clocks with easy to use features so that they can use the gadget without difficulty. LED Express Alarm Clock This model will have all the features that the customers are looking for in such alarm clocks. The design of the model has been done with perfection so that the customers love its style and design and get attracted to the product at once. The amazing features of the clock are MP3 player, Built-in FM radio and Wi-Fi along with alarm clock setting. Pricing Strategy As there are so many competitors in the touch screen alarm clock industry such as Sony, Apple, Sharp, Timex, Android, Westclox and many more, it is important that the pricing strategy is selected in accordance with the competitors. As the company is new in the market, it should either follow competitive pricing or cost plus pricing (Ernst, Hoyer RÃ ¼bsaamen, 2010). Both of the models will follow competitive pricing so that the customers can easily compare the product features and all other aspects and ensure that they make adequate purchasing decision. The price of Simple Express Alarm Clock will be $10 and LED Express Alarm Clock will be $25. Simple Express Alarm Clock will be available in Black, Blue and Green colors and LED Express Alarm Clock will be available in Blue, Red and Black colors. Distribution Strategy The distribution strategy is one of the key components of the complete marketing plan as the only way to reach the target market is to choose compatible distribution locations (Sikdar VEL, 2010). The products of the company will be available in two places to ensure that every customer has easy access to them. First of all, the products will be available at the consumer shopping centers and retail stores such as Wal-Mart, Target, Costco and many more. The other distribution network that will be used is the companys website. Any customer who is looking for the touch screen alarm clock online will have to just visit our site, review various options available for them and make final decision after carefully evaluating all options offered by the company. However, the distribution will be done only in Ohio, Florida and California. After success of the products, the company might expand into other regions after carefully surveying the markets. Promotion Strategy The promotional strategy will ensure that the desired message is communicated to the target audience with accuracy so that the sales level can be successfully achieved (Flink, 2011). The foremost aim of the promotion strategy is to create awareness about the companys presence in the market and it will make use of complementary mediums so that the customers can develop an association with the brand. Initially, the advertising mediums that will be used are Television Commercials, advertisements in newspapers and billboards along with flyers, posters and advertisements in the leading magazines. Similarly, a trade show will be organized on the commercial street so that it can create awareness about its presence in the market. In order to be present on Internet, the stores website will be developed and all information about the company will be provided on the site. As the latest trend in the market is of social media marketing, our company will develop a webpage on social networking sites such as Facebook, MySpace, LinkedIn and Orkut so that the customers can start talking about the products on our community page. There are various discussion forums as well where people gather and discuss about the products and services of different companies and give their viewpoints about them as well. The social media will be beneficial for our company as it will enhance our online presence and increase the sales amount at an accelerating rate (Weber, 2007). In order to attract our customers, we will offer various attractive packages such as discount packages, gifts for purchasing products of more than $100, arrange contests to distribute various prizes to the customers and give special offers to the loyal customers. We will introduce loyalty cards for our customers who will keep on purchasing new products that are launched by our company on continuous basis. The marketing efforts of the company will be reviewed monthly as the technological advancements take place on an ongoing basis and new products are introduced quickly as well. The initial source of evaluation for the company will be the difference in the estimated and actual sales of the product (Ferrell Heartline, 2008). On the website, the customers will be allowed to give their feedback about the product features and the existing customers will be asked to participate in the survey of the touch screen alarm clocks. Sales and Service Strategy As the touch screen alarm clocks will be developed with latest technology and will have new and unique features, it is vital for our company to have an effective after sales and customer service strategy. With the help of this strategy, we will have a well-trained and competent sales force who will ensure that each customers complaints are properly handled and they are provided instant solutions to their problems. After selling the products to our customers, our sales representatives will call them after one month of purchasing to get their feedback about the products. With the help of this survey, we will be able to monitor the performance of our products and it will ensure that we take appropriate step in case of any problems so that the customers are relieved of their worries. In order to make sure that each of our customers is satisfied with his/her purchasing decision, we will offer one year warranty card and will entertain our customers aptly so that they become our loyal customers.

Presidential Candidate Profiles :: essays research papers

Candidate Profiles I.  Ã‚  Ã‚  Ã‚  Ã‚  Al Gore   Ã‚  Ã‚  Ã‚  Ã‚  A.  Ã‚  Ã‚  Ã‚  Ã‚  US Vice President and Democratic presidential nominee Al Gore, was born on March 31, 1948 in Washington D.C.. His father Albert Gore Sr., a congressman from Tennessee, served in the House of Representatives and his mother Pauline La Fon was one of the first women to graduate from Vanderbilt Law School. Gore, a Baptist, attended Harvard where he received a degree with high honors in government. Even though he was strongly opposed to the war in 1970 Al joined the army where he served his time in Vietnam as an army reporter. After attending Vanderbilt Law School Gore ran for and won Tennessee’s fourth district congressional seat where he served four terms, after which he ran for and won the Tennessee Senatorial Seat. Gore remained in senate until presidential nominee Bill Clinton Chose him as his running mate in 1992, they were elected into office that year and re-elected in 1996. While in office Gore expressed great concern for the envir onment and in 1992 wrote the book Earth in the Balance: Healing the Global Environment. Gore has been married to Tipper Aitcheson since 1969, together they have four children: Karenna, Kristin, Sarah, and Albert III. Al Gore’s running Mate for the 2000 election is Connecticut state Senator Joe Lieberman. As well as being the first Jewish-American ever in the U.S. Senate, Lieberman was the Connecticut state Attorney General and also practiced law in New Haven. II.  Ã‚  Ã‚  Ã‚  Ã‚  George Bush   Ã‚  Ã‚  Ã‚  Ã‚  A.  Ã‚  Ã‚  Ã‚  Ã‚  Governor of Texas and Republican Presidential Nominee George W. Bush was born July 6, 1946 in New Haven , Connecticut. Bush, often referred to as simply W. is The eldest son of former President George Bush and Barbara Pierce Bush, his siblings include Jeb (Governor of Florida), Neil, Marvin, and Dorothy. Like his father, Bush attended the prestigious Philips Andover Academy in Massachusetts before going to Yale University where he graduated with a bachelors degree. Upon leaving Yale he went to Texas and joined the Air National Guard, Where he learned to fly fighter jets, he eventually became a lieutenant but was never called on to fight in Vietnam. In 1972 Bush entered Harvard Business School, earning his M.B.A. in 1975. In 1977 he married Laura Welch, a former teacher and librarian, and in 1980 she gave birth to their twin daughters, Barbara and Jenna. Shortly after his 40th birthday in July ‘86 Bush reached a turning point in his pers onal and professional life.

Ballad Of Birmingham :: essays research papers

Dudley Randall's Ballad of Birmingham Dudley Randall's Ballad of Birmingham gives a poetic account of the bombing of a Birmingham church in 1963. The poem was written in ballad form to convey the mood of the mother to her daughter. The author also gives a graphic account of what the 1960's were like. Irony played a part also in the ballad showing the church as the warzone and the freedom march as the safer place to be. Writing the poem in ballad form gave a sense of mood to each paragraph. The poem starts out with an eager little girl wanting to march for freedom. The mother explains how treacherous the march could become showing her fear for her daughters life. The mood swings back and forth until finally the mother's fear overcomes the child's desire and the child is sent to church where it will be safe. The tempo seems to pick up in the last couple of paragraphs to emphasize the mothers distraught on hearing the explosion and finding her child's shoe. The poem also focuses on what life was like in the sixties. It tells of black freedom marches in the South how they effected one family. It told of how our peace officers reacted to marches with clubs, hoses, guns, and jail. They were fierce and wild and a black child would be no match for them. The mother refused to let her child march in the wild streets of Birmingham and sent her to the safest place that no harm would become of her daughter. Going to church in the ghetto in Birmingham was probably the safest place a mother could send her child. But this is where the irony takes place. The irony makes the church the warzone and place of destruction while the march was the safest place to be. The child was depicted as combed hair, freshly bathed, with white gloves, and white shoes, which is also ironic. The mother had sent an angel dressed in white to a firestorm from hell called church. The mother was completely sure that her daughter was safe until she

Scuba Diving Essay -- essays research papers

This Essay will illustrate some of the basic aspects of scuba diving. It will show the steps involved in assembling the scuba gear. The price range of scuba gear. The basic principles of diving, and were to go to get certified in scuba diving. It will also reveal some fun things that can be done while diving . The assembly of the scuba gear is very simple. First have your tank filled to the recommended amount of pressure (usually 3000 psi). Take the tank with the valve handle to the right, and set it in front of you. Next take the Buoyancy Compensator (B.C.) and attach it to the tank by putting the straps around the tank and tightening them. After the tank is secure, check to make sure that the O’ring on the valve of the tank is in place and in good condition. loosen the first stage of the regulator and place it over the valve of the tank. Then tighten the first stage securely, but not overly tight. Attach your octopus to the B.C. Then Pick up the pressure gauge and point it away from the body, and others. Turn the handle on the tank, to supply the regulator and gauges with air pressure. The gauges are pointed away from the body to avoid injury if the gauge were to malfunction. Listen for any leaks, and read the gauge and make sure that it is some what close to the pressure that was put in to the tank. Last you need to inflate the B.C.,and purge the regulator to make sure that they work properly. The gear is now ready to be used. Scuba gear is very affordable. Sc...

Comparison of Ph Between: Coffee, Coffee (Tums) and Coffee (Alka-Seltzer) Essay

Tums and Alka-Seltzer are drugs found in most retail stores, they relieve heartburn, acid ingestion and minor aches/pain (Alka-Seltzer). Coffee is one of the most consumed beverages in the world. It has a stimulating effect due to caffeine and enhances alertness/awareness. Objective/ Hypothesis Coffee is slightly acidic, with distribution of components such as Tums and Alka-Seltzer the various ph levels should be different. So the control treatment (coffee) will have a lower ph then coffee (Tums) and coffee (Alka-Seltzer). Null Hypothesis: Ph levels between Tums and Alka-Seltzer will be slightly different in each treatment. Alternative Hypothesis: Ph levels between Tums and Alka-Seltzer will be similar in each treatment. Methods The treatments were carefully observed. Recording the ph levels were taken with caution to not contaminate the solutions. The three solutions had 50 ml of coffee each, the other two treatments contained a tablet of Tums and one of Alka-Seltzer. Results and Discussion During the experiment each lab tables ran their individual test. The same amount of coffee was used in the solutions for each table, also one tablet of Tums and Alka-Seltzer was used in the solutions. The results on the lab tables were slightly different. PH Table #| Control| Tums| Alka Seltzer| 1| 6.33| 6.68| 6.92| 2| 6.34| 6.80| 6.75| 3| 6.39| 7.34| 6.92| 4| 6.39| 7.11| 6.82| 5| 6.5| 7.05| 6.88| The ph for each treatment are different although the error bars show that ph are not exact. There is uncertainty in the ph for the treatments, the ph can either be higher or lower. Conclusions The treatments showed different ph levels on each lab table even though the same amount of components was distributed. Also the ph level between the alka-seltzer and tums were different. Tums treatment is less acidic then the alka-seltzer treatment, so using tums for treatment of heartburns and acid reflux may be more effective then alka-seltzer. References Alka-Seltzer from http://en.wikipedia.org/wiki/Alka-Seltzer Tums from http://en.wikipedia.org/wiki/Tums

Black Boy By Richard Wright Essay

Harper and Brothers in New York first published Black Boy, an autobiography of Richard Wright, in 1945. The Harper Perennial Edition, published in paper back in 1998 runs to 448 pages. There is more than one theme which runs through this work, of course, but the over-riding, end-all, be-all message which the author hammers home is that harm is done to fellow humans in the name of racial bigotry. Wright’s theme begins with the very title of the book. Black Boy is an epithet used to denigrate blacks as surely as is Nigger, the title chosen by Dick Gregory for his autobiography in the 1960s. Wright’s story takes place in the early 20th century. He sees racism as a child and as an adult. It is a major force in the development of his personality and influences virtually every facet of his life. In Black Boy Richard Wright explores the theme of racism and ultimately suggests that racism is culturally ingrained and it colors not only relations between blacks and whites, but it also affects relationships between blacks. Black people of the era did not want a young black to ‘rise above his station’ in life. Since Wright is reared in abject poverty his peers did not wish to see him try and break his metaphorical chains. His father is mostly absent and he has no strong male influences for the good. He relates how he got over on his father without being punished, â€Å"I had my first triumph over my father (at age 12). I had made him believe that I had taken his words literally (12). He was physically abused. The institutional racism of that day was called Jim Crow and particularly in the deep south of the United States it was a way of life. He grew up misunderstood even by his own people. Blacks of his day were not supposed to get ‘uppity’, meaning they were supposed to act subservient to white people because a black who disrespected a white person would bring down retribution on countless other black people who had done nothing. The blacks that should have had a positive influence on Wright as a child were either blind to his gifts or chose not to see. They not only did nothing to encourage him but also rather did all they could to hold him back. Likely it was so they would not draw attention to themselves or seem ‘uppity’ but the result was a gifted child who lost years of this life that could have been spent in pursuit of the arts. Wright has criticism not only for the white laws, the white establishment and the white race, but also gives a scathing critique of the black community as well. This book is an indictment of the adult black community of his era that refused to take matters into their own hands to educate and guide the children that so desperately needed such guidance. Wright tells his audience that it is not until later in life when he is exposed to literature that he has any idea of what he is missing. He doesn’t know such beauty and such profound thought even exists. Wright’s life is a struggle against the status quo in his native state and in the north where he finds himself as a young adult. White America does not want an intelligent angry young black man voicing his criticisms of the American way of life and blacks do not want him rocking the boat. This is years before Dr. King and even Brown vs. The Board of Education and no one knows what to do with Wright. Mostly they want him to go away. This in itself influences Wright’s attitudes toward his fellow blacks and reinforces the theme of racism being detrimental even to other members of one’s own race. Wright at first sees only two ways to react to his life, feeling caught as he is between the warring races. He can become subservient and bow to the inevitable. He can drink, steal, lie and fight, which he does at first, or he toss away the stereotype of the illiterate lazy black boy and become someone else’s idea of compliant, giving a graduation speech written for him, †You can’t afford to say just anything before those white people that night,† (175) his professor tells him, not allowing him freedom to speak his mind. Wright tosses off the yoke of conformity and does battle with whites and blacks as the need arises. He sees that it is not the white race alone that is holding him back. The metaphor Wright adopts to show his desire for knowledge is hunger. He tells the reader constantly of his incessant childhood hunger, never totally sated, (14) always wanting more than is available and he means for the reader to equate this physical hunger with his hunger for knowledge. He relates how he consumes food and Proust with equal passion. It is implied that it is both whites and blacks who withhold the food, both physically and metaphorically that he so desperately craves to fuel body and soul. Wright tells the reader that it is blacks that are first responsible for trying to quench the fire of his independent spirit but he rises above them and goes his own way, becoming what his heart tells him he must become. He relates how as a child he and the other black children were not given the education they need to rise above that ‘station’ and he blames not the whites but the blacks for the lack of recognition of bright black children who could do so much more with their lives had they but an education. He faults the black teachers and administrators of his school for kowtowing to the whites and keeping black children in ‘their place’. For these reasons Wright ultimately suggests that racism is culturally ingrained and it colors not only relations between blacks and whites, but it also affects relationships between blacks