iPhone X – Premium Pricing

Apple introduced not just one, but two new models of the iPhone this fall: iPhone 8 and iPhone X (ten). Sure, companies often introduce multiple new products at the same time, but rarely do they introduce products that are so similar in scope and use. Why did Apple introduce two models at the same time? Easy – two different models are for two different market segments.

At a price of $999 (64 GB) and $1,149 (256 GB), the iPhone X is Apple’s first premium level iPhone model. And, since it has leading-edge features unavailable on any other smartphone, it seems to be targeting the early adopters and tech enthusiasts who are not price sensitive.

What does the iPhone X have?

  • 8 inch screen takes up the entire face of the device
  • OLED display for thinner, brighter, viewing
  • Face ID infrared facial scanning

The strategy seems to be working. After only a few days of pre-ordering iPhone X online, delivery times are easily two months away.

Are you planning on buying one?

Group Activities and Discussion Questions:

  1. Pricing is usually a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  2. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  3. Show iPhone X: https://www.apple.com/iphone-x/
  4. Show CBS Video: https://youtu.be/haj5nV6Muhw
  5. For iPhone X product, divide students into groups and have each group work on any/all of the six steps.
  6. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  7. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source:  New York Times, CBS, other news sources

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Home Delivery – Inside of the Doorway

Consumers are used to ordering goods online and then having packages waiting on the doorstep when they get home. It’s convenient, but sometimes it’s messy when packages are exposed to rain or snow, or when the neighbor dog plays hide-and-seek with the package, or if someone targets the house for a convenient theft while we’re at work. Sure, we can ask the neighbor to keep an eye out, but what if the neighbor isn’t home, or misses the action? While the costs of package theft has not been measured, one can assume the expense of stolen packages adds up for the shippers – and for the buyers.

Ecommerce companies have been working on solutions. Jet.com (owned by Walmart) is using a smart lock made by Latch to provide one-time home entry by using a code. And now Amazon has gotten into the game with Amazon Key – a $250 service that includes a smart camera made by Amazon coupled with a smart door lock made by Yale or Kwikset.

When the delivery arrives, the lock verifies that the driver is at the correct address and at the correct time. Amazon Key then starts recording video, unlocks the door, and records the entire delivery. It can even grant access to the home to other services such as Merry Maids (housecleaning) and Rover.com (dog walking).

Amazon key is currently available in 37 cities and is open to Prime members (who already pay $99/year for fast shipping and other services).

What will you have delivered?

Group Activities and Discussion Questions:

  1. Discuss some of the problems that consumers have with delivery of packages.
  2. Show links and videos of Amazon Key:

Link: https://www.amazon.com/b?&node=17285120011&ref_=pe_3455630_258731250_em_ecg_bor_bs_ann_func

Kit: https://www.amazon.com/Amazon-Key-Home-Kit-compatible/dp/B00KCYQGXE

  1. Also show Latch’s solution:

https://www.latch.com/

  1. How does this service benefit consumers?
  2. Poll students: Would they use this service for deliveries? Why or why not?
  3. How should these services be marketed? Who is the ideal customer?

 

Source: New York Times, Wall Street Journal, other news sources

 

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Porsche Passport Subscription Services

Subscription services are everywhere. Today, consumers can receive monthly supplies of items including shaving gear, food, cooking supplies, diapers, clothing, pet food, and Porsche automobiles. Wait… Porsche has a subscription service for its cars? What’s going on?

Yes, Porsche has entered the sharing economy with its subscription service, called “Porsche Passport,” that allows members to drive up to 22 different models of cars, sedans, and SUVs each month. After all, why have the hassle of ownership if a car can be delivered when you need it via a mobile app?

The service isn’t cheap though. For $2,000/month, the service will allow customers access to eight different models, including the Cayman S and 718 Boxster. Add on another $1,000/month and customers have on-demand access to more models including the 911 Carrera S and the Macan GTS. The plan has a one-time activation fee of $500 and includes vehicle tax, registration, insurance, maintenance, and detailing (members buy their own gas). Members can switch cars as often as they want, enjoy unlimited mileage, delivery, and service. (The program is currently only available in the metro Atlanta area.)

What do you feel like driving today?

Group Activities and Discussion Questions:

  1. Discuss the importance of clearly defining a target market.
  2. Show Porsche Passport Web site: http://www.porschepassport.com/
  3. Show video: https://youtu.be/5pyPAYmpK0U
  4. Who is the target market for Porsche Passport?
  5. Divide students into teams and have each team develop a profile of a target market. Include demographics, psychographics, behaviors, values, attitudes, etc.
  6. Based on the target market profile, what makes this product unique for these customers?
  7. Debrief the exercise.

Source:  Brandchannel.com, Automotive News, other sources

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