The rich in America seem to keep getting richer, even as Wall Street drops lower. Why? Because the housing market has been red-hot. That’s not much help to people who don’t own a home. So Washington Mutual, the “Bank of (Middle) America” (page 104), is fighting poverty by financing homes.
Last year, WaMu pledged $375 billion over 10 years for real-estate loans in low- and moderate-income neighborhoods. To help figure out how best to deploy those funds, it turned to Earvin “Magic” Johnson, who has been working on economic revitalization in urban neighborhoods. He has persuaded Starbucks, T.G.I. Friday’s, and Loews Cineplex to locate in urban areas. But supermarkets and banks were missing. WaMu is offering to fill in a component.
“We want to help rebuild communities,” says Craig Davis, the president of Washington Mutual Home Loans. “Magic is good at this. If it’s safe to go to work and walk the streets, if the education is solid, and then you add home ownership, you’ve created an environment where people can live and prosper.” – Linda Tischler
The Price is Always Right
The impulse was irresistible: As I traveled the country reporting on ‘Which Price Is Right?’ (page 92) — an essay on the revolution in how and what companies charge for their products — I had to check in with the creators of TV’s longest-running game show, The Price Is Right.
The show had a seven-year run in the 1950s, and it has been on CBS for 30 years, hosted since 1972 by Bob Barker. In a world where prices and models vary so frequently that comparison shopping can be tough, how does TPIR get its prices? The prizes come with them, says producer Roger Dobkowitz: “The price we go by is the price the manufacturer says. We don’t go into a store with a notebook and say, What’s this dishwasher cost? If a manufacturer can’t, or won’t, tell us a price, we don’t use that product as a prize.”
Dobkowitz says that the staff is meticulous about its records and about getting prices right. “When we have an ounce of gold as a prize,” he says, “we check the price of gold the day of taping.” In rare cases when errors are discovered, TPIR awards the contestant the prize. There is one area of deliberate pricing ignorance. To sustain the suspense, says Dobkowitz, “Bob Barker doesn’t know any of the prices in advance.”
Dobkowitz is the only staffer to have been with TPIR for as long as Barker. Dobkowitz’s longevity gives him an interesting perspective. “The biggest expense in the show is the cars,” he says. “And they’ve gone way up. In 1972, we gave away new cars with prices of $2,000. We once had a Corvette that was $5,000.” For the record, if car prices had risen at the general pace of inflation, then a $2,000 car from 1972 would cost about $8,700 today.
The real price oddity on shows like TPIR is something that viewers don’t see. The “price” of the free prizes is anything but free, and winners routinely turn them down. The federal government taxes the value of any prize as if it were cash income. A “free” $20,000 vacation can easily cost $4,000 in added taxes. At TPIR, if you decline the prize, you go home with only your memories. “You win the prize; you get the prize,” Dobkowitz says. “We don’t give money instead.” – Charles Fishman
How to Make Savings Sell
The virtues of saving money have always been a tough sell. But that’s what ING Direct is selling in a new flight of ads. Can the bank that asks (metaphorically, at least) “Would You Like a Mortgage With Your Mocha?” (page 110) also make it cool to save?
One TV commercial, “Last Straw,” depicts a single guy irritated by an animated gang of derelict dollar bills. The bills are running amok — unspooling toilet paper in the bathroom, diving into a kitchen sink — until the protagonist decides to log on to the ING Direct Web site and put his money to work.
The attention-getting ING Direct Cafés, all on busy thoroughfares, are part of the company’s long-term marketing plan — as is the logo merchandise on its Web site. “It’s something for evangelists,” says CEO Arkadi Kuhlmann. “It’s part of the brand, part of the experience.”
Not every marketing initiative has gone swimmingly though. When ING Direct experimented with staffed kiosks at shopping malls, they didn’t make enough of an impression. “It was too standard,” Kuhlmann says. “It was something you’d expect of a telephone company. It just wasn’t us.” – Scott Kirsner