The World’s Most Expensive Pigeon!

Determining the right price for a product or service is not always easy. Organizations need to determine the strategy that is best for meeting its objectives. Does the organization want to establish a beach-head and gain market share, or reach the elite purchasers? Pricing strategies include demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches. Within these various approaches are price models that include skimming, penetration, luxury, bundling, price-lining, return-on-investment, and more. And finally, do not discount the strong appeal used with psychological pricing.

All these strategies are interesting, but how does one apply them to a unique product such as a rare Stradivari viola made in the 1700s? Or a prized Belgian racing pigeon? In the case of the Stradivari, the auction price starts at $45 million. For the pigeon (named Armando) the auction price rose to $1.4 million in approximately and hour as two Chinese buyers kept increasing their competing bids trying to obtain the world’s fastest pigeon! Armando is believed to be the most expensive bird ever to be sold at auction. The attraction to the Chinese buyer was likely due to the sport of pigeon racing becoming more popular among the countries elite.

So, next time you see a pigeon sitting on a statue on the park, consider how valuable the little guy might be.

Group Activities and Discussion Questions:

  1. As class begins, poll students about pets and pricing. Ask who has a pet and how much they paid. Ask other students if they were going to buy an animal, how much would they consider spending?
  2. Show a video about the Belgian pigeon: https://www.youtube.com/watch?v=Z2SwXWV5Rec
  3. The auction site (with additional video) can be found at: https://www.pipa.be/en/newsandarticles/reports/armando-joel-verschoots-record-breaking-pigeon-video
  4. Discuss pricing strategies (e.g., demand-oriented, cost-oriented, profit-oriented, competition-oriented, etc.).
  5. Divide students into teams. Have each team select a different price approach and determine a SMART objective for the approach.
  6. Next, have students use their selected price model to determine prices for the ordinary products (e.g., milk, gas, eggs, etc.), shopping products (e.g., shoes, jackets, etc.), and luxury items (e.g., Tiffany, Louis Vitton), and rare (e.g., Tibetan Mastiff, Stradivari viola).

Source:  Belinger, J. (19 March, 2019). Chinese buyer bids record $1.4 million for racing pigeon. CNN

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Experiential Marketing Keeps Evolving

In today’s fast-paced Instagram world, experiencing a product and brand is more important than ever to consumers. While experiential marketing is not a new tactic for marketers, it has certainly increased in the past few years due to social media usage, and the rise of selfie photos showing consumers interacting with brands and products.

In the past year there were thousands of pop-up experiences and stores around the country. Some of the more well-known ones are the Museum of Ice Cream, 29Rooms, and products such as Peleton bikes. Other pop-up experiences have come from retailers such as Birch Box, Tiffany, Adidas, Samsung, Amazon, Dior, Payless Shoes, and even HBO show ‘Game of Thrones’. In the past, we might have called these ‘kiosks’ but that doesn’t do justice to the full experience offered by the new world of pop-ups. In their new iteration, the pop-ups may offer a brick-and-mortar experience (such as Museum of Ice Cream) or include another form that offers a fully immersive experience.

For today’s Millennial shoppers, content is key. These shoppers not only check their phones continually, they also generate their own content at a high rate!

What experiences do you want?

Group Activities and Discussion Questions:

  1. Discuss the different forms that experiential marketing can take.
  2. Show several examples: 29 Rooms: http://www.29rooms.com/
  3. Museum of ice cream: https://www.museumoficecream.com/
  4. Rose’ Mansion: https://www.rosewinemansion.com/
  5. Poll students: What has been their experience with pop-ups and immersive experiences?
  6. Divide students into teams. Assign each team a product, or let the teams select their own products.
  7. Have each team develop an experience for that product.

Source: Ramirez, D. (12 March 2019). Creating experiential that stands out in a crowded industry. Ad Week.

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Tesla Shifts Retail Strategy, Then Shifts Again

Tesla, Tesla, Tesla… It’s so much fun to track this company. Not only are the products innovative and exciting to follow, it is also a marketing case study in nearly constant motion.

Case in point: At the end of February the company announced it would be closing its retail stores in order to cut costs and lower the pricing of the Model 3 to make it more affordable (at a starting price of $35,000). Tesla believes that car buyers will increasingly rely on on-line ordering instead of physical stores. Tesla stated that in North America, a customer can buy a Tesla on their phone in approximately a minute. Which begs the question, just because customers can do this, will they do it?

However, two weeks later, Tesla reversed its strategy and stated it would instead keep most of its 378 retail stores and would instead raise prices of cars by 3%, excluding the Model 3 cars. Tesla hoped to cut costs by closing stores, but landlords, customers, car dealers, and lawmakers protested the closings. The stores will still function as a showroom and location for test-drives, but sales will still be done online.

Where do you want to stop for your next car?

Group Activities and Discussion Questions:

  1. Discuss the distribution model used by Tesla and compare it to the distribution model used by other automotive manufacturers.
  2. Here is an interesting video on why Tesla cars cost so much: https://www.wsj.com/video/the-secret-to-why-a-tesla-costs-so-much-hint-batteries/65F3A21D-0837-4DA6-B739-612124815603.html (Hint – it’s the batteries.)
  3. Poll students: How many would buy a car online instead of at a dealer/store?
  4. What are advantages and disadvantages of buying cars online only?
  5. Why has Tesla disrupted the traditional automotive sales model?
  6. Will other automotive companies follow the Tesla model?

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

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