Podcast Summary

The hosts of "Opinionated Marketers," Charles Nixon and Kiran Kapur, discussed two main topics. First, they addressed the growing speculation about an AI stock market bubble, comparing it to historical events like the .com bubble. They noted signs of a potential downturn, such as Peter Thiel selling his Nvidia stock, but concluded that while a "reality check" was likely, the technology itself was here to stay. Second, they examined the issue of online pricing, referencing investigations by the UK's Competition and Markets Authority into unfair practices like hidden fees and misleading sales. They strongly advocated for ethical marketing, emphasising that transparency and honesty in pricing were crucial for maintaining long-term brand reputation, especially in a slow economy.

 

Key Points

  • The current surge in AI-related stock prices was characteristic of a speculative bubble, similar to historical examples, and a market correction or "reality check" was expected.
  • Despite a potential bubble burst, AI technology was considered a permanent and significant development, with the main challenge being how to utilise it effectively.
  • It was crucial not to rely entirely on AI for information, a point reinforced by a recent statement from Alphabet's CEO, and to instead consult a wide variety of sources.
  • UK regulators were actively investigating unfair online pricing practices, such as hidden fees, misleading time-limited offers, and mandatory extra charges.
  • Marketers faced an ethical choice between exploiting market inefficiencies for short-term gain and maintaining a transparent, honest pricing strategy to build long-term brand reputation.
  • In a slow economy and during competitive periods like Black Friday, it was especially important for marketers to be ethical and transparent in their pricing and discount strategies.

 

Podcast Transcript

Transcripts are auto-generated.

 

Kiran Kapur (00:04):
Hello and welcome to Opinionated Marketers with Charles Nixon and me, Kiran Kapur. There seems to be lots of rumours about AI and bubbles bursting at the moment, but there's also quite an interesting discussion going on about online pricing.

Charles Nixon (00:18):
Yes, the AI bubble is an interesting one because everybody has been somewhat foxed by the onward growth of share prices because of this new technology. The doomsayers basically saying, well, it can't go on forever, which is absolutely true. The usual time to have got out is probably before now, but there'll be people who will be continuing to see the rise until it goes down. It's typical of any new technology or new fad in one respect, everything from the tulip and South Sea bubbles of the 17th century, right the way through to the stock market of the mid 20th century and earlier, a.com bubble. The biggest problem, of course, is the degree to which the technology is actually going to prove fruitful. All the specification and speculation rather, has been that AI will take over the world. AI will remove the large numbers of employment. These things may well be true, but they may not happen for quite a while.

(01:19):
We've talked about the hype cycle for quite a while, about the fact that we're now at the height of expectations, and people will start to realise it can't do everything or it can't do everything well. So there will be a reality check at some point. We're not financial forecasters, but the biggest concern is whether or not this has a knock-on effect in the general levels of economic activity in the US or around the world, and that is more concerning, the ripple effect. I think there was a discussion about whether or not some of these companies are now too big to fail and whether or not they'd be bailed out. The UK is probably a little bit immune to that on the basis we don't have any large AI companies in the stock market, but it's undoubtedly this technology is here to stay. We just have to work out how to use it. So I think the answer is yes, we will end up with a bit of a bubble burst. The extent to which no one really knows.

Kiran Kapur (02:19):
The reason this has been sparked is one that Peter Thiel, I think that's how you pronounce his surname, who was the founder originally behind PayPal last night, sold off his entire stock in Nvidia, which is the company that's been pushing the highest valuations. That has generated quite a lot of discussion about is he getting out at the top of the market? Is the market going to come down? And the other thing I noticed was that the CEO of Alphabet, that's the company that owns Google Sundar Pichai, is that how you pronounce his name, has been speaking exclusively to the BBC News. So do have a look at the BBC website if you want to catch up what he said. I'm absolutely delighted that one of the things he said was that people shouldn't rely a hundred percent on AI, which is what I've been saying for weeks. And that you should have a wide hinterland of sources to get your information from, which is what you and I Charles said last week. So good to know that the head of Google's been listening to us. Absolutely, but a very sensible point that you can't just rely on AI, which is what he says. But he does also say that no company's going to be Moon if the AI bubble bursts.

Charles Nixon (03:20):
Yes, I think the point is a very sound one on the basis that we are talking about a technology, it is not godlike, it isn't infallible. And indeed there are many cases of the humour that comes about by accepting it as being so, so basically take a normal humanistic approach to these things. Use it for where it helps, but don't rely on it for lifesaving advice. So I think the point we made earlier is still valid and we still just need to sort of watch this space.

Kiran Kapur (03:54):
The other topic we were going to mention was online pricing. And this follows an investigation.

Charles Nixon (04:02):
There are several investigations ongoing, I think by the Competition and Markets Authority on looking at whether or not fair practises being applied in ticket sales, in the pricing of things such as furniture or indeed in terms of driving tests and whether or not one believes in the government getting involved in the marketplace From this perspective, the thing to bear in mind from a marketing perspective is that people will pay for what they value most and the result of which is that if they value a particular ticket, they will pay for it. If they value a particular piece of convenience as in finding a website which gets 'em a driving test because the market is not functioning well enough, then they will pay for it. And yes, I know you have this, you are in that situation. Often it's the case that the market is not functioning, and the result of which is people are therefore exploiting a unique position or a limited supply. So the government steps in these circumstances. The moralistic aspect I suppose from a marketer's perspective is do you exploit this opportunity or do you actually still charge a standard and visible and transparent price and maintain your reputation? Because I think one of the biggest problems is should you be investigated on this, your reputation gets significantly reduced.

Kiran Kapur (05:26):
Yeah, I mean my argument would always be that one should be transparent on pricing. You never try, because actually we've all been in that situation where you've got halfway through a signup process to something, and then you get hit by something that you weren't expecting an additional cost or whatever. And it is annoying, and you do feel bad about the company, and I certainly would always walk away. So I mean, one of its things, some of the practises are things like whether time-limited sales are actually ending when they say they were going to. Some of the practises are whether fees are suddenly introduced partway through the signup process, and yes, other ones, whether there are mandatory additional charges being applied when again that people are not aware. So a lot of this is a transparency issue rather than whether the price is are fair. It's just are you being clear about that, what you're paying?

Charles Nixon (06:16):
I mean, the aspect about whether or not things have been on offer for the period of time that they're meant to have been offered before they then seemed to be reduced has been going on since sales were first thought of in the offline marketplace for years. And as a consumer, you have to be wary of these things. I mean, yesterday I picked up some jars of coffee, which were allegedly £8.50, and now were reduced down to a very remarkable half price. I can't ever remember them being at £8.50. And yeah, so one store somewhere offered them at that price. I can still remember some store offering tins of tomatoes at something like £4 each and thinking that's a bit stupid. And of course they disappeared after a week, but they were able therefore to say, well, this is now an offer. So people exploit these sides of things, and again, reputations are tarnished. So honesty in all things and transparency I think is the most important aspect here.

Kiran Kapur (07:20):
And with so many companies, the market is busy with Black Friday deals, and Black Friday is no longer a day or a week. It seems to be an entire month or six-week period. If you are doing that, make absolutely certain that you are meeting all the pricing requirements and the discount rules and everything else that you are required to do.

Charles Nixon (07:37):
Yes, I think the element here is that there's slow in the economy. Companies are constantly forging the need for growth or increased sales, and therefore the tactics get a bit murky. I think this is the time where marketers need to be ethical and stand up for the fact that we should be open, honest, and transparent on this subject. That's it for this week. We look forward to the budget, and we will have comments about that and the implications afterwards. So thank you very much for listening, and goodbye.