McDonald’s Offers Adult Happy Meals – Complete with Toy

We’ve discussed the impact of nostalgia on marketing. (Nostalgia is when someone longs for a different time period when they were happy.) We usually think of nostalgia as being an older person longing for an earlier time period or event. Perhaps it is caused by seeing or wishing for something that happened when a consumer was younger.

Marketers know how to use those desires. For example, Mattel recently brought back several older toy lines to gain more adult buyers. And now McDonald’s appears to be following suit by launching a limited edition of “adult Happy Meals” that include not only food, but older versions of collectible toys.

Why the adult meals? Well, that’s easy. McDonald’s hopes to lure back older consumers to the fold by reminding them of the pleasures of toys and burgers (or chicken nuggets). For a limited time, when ordering the adult Happy Meal, one gets slightly warped figures of Grimace, the Hamburglar, and Cactus Buddy (new figure).

The collaboration with Cactus Plant Flea Market for the toys is a little unusual for McDonald’s as CPFM represents younger designs and apparel for a streetwear market.

The meals have different packaging and higher prices. Adult Happy Meals range from $14.09 to $17.99. Demand has been high with most franchises sold out of the meals. And buyers are already flipping their toys on resale sites such as eBay with reports of sellers pricing the toys for thousands of dollars (although a recent search show much lower prices).

Don’t you feel like a kid again?

Group Activities and Discussion Questions:

  1. Have students define the target market for McDonald’s. Then have them define the adult Happy Meal target market (demographics, psychographics, etc.).
  2. View ad: https://youtu.be/sYdNnkz1bik
  3. View brief video story: https://youtu.be/p5ZfSlwMz8g
  4. Have students do a search on social media for the toys. What had the response been on social media?
  5. Also have students search resale sites for the toys.
  6. Divide students into teams. Have each team identify a product that could be revamped for a different market segment.

Sources:  Gallagher, J. (13 October 2022). With adult Happy Meals, McDonald’s sparks a collecting frenzy. Wall Street Journal.  

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The Bullwhip Effect Impact on Inventory

The bullwhip effect is in fine form these days. What is the bullwhip effect? In short, the bullwhip effect is when small changes in demand at the retail level can cause large changes in demand at the wholesale, distributor, and manufacturer levels. Think of how a bullwhip whistles through the air… The small motion of the whip base causes a big crack at the end of the whip, putting everything in disarray.

The result can either too much inventory (excess product) or too little inventory (unfulfilled need). Ideally, retailers want to have enough inventory to fill demand, but not too much waste storing extra inventory. It’s a fine balance. And of course, the balance was upset by the COVID pandemic when the supply chain was significantly disrupted globally. (Remember all those empty shelves for toilet paper?)

Retail spending for some categories trended upwards during the pandemic when (1) customers demanded more inventory, so (2) retailers ordered more product, followed by (3) wholesalers ordering more from (4) manufacturers, who in turn ordered more from (5) suppliers to meet demand. The cycle was exacerbated into a larger swing in orders. Excess inventory tends to be discounted so that the shelves clear. And then the cycle start again….

Bullwhips are tough to manage. It takes coordination throughout the supply chain to maintain balance. Technology can help, but it takes a continual evaluation of on-hand inventory, order timing, and pricing.

Go ahead, crack the whip and see what happens.

Group Activities and Discussion Questions:

  1. Poll students: What categories of items have been in short supply? What categories have more inventory than needed?
  2. Show video from WSJ: https://www.wsj.com/video/series/wsj-explains/why-everything-is-on-sale-the-bullwhip-effect/86086359-41FE-440C-9E66-A106E6D045A6
  3. How can the bullwhip effect be minimized?
  4. What should be done at each step of the supply chain?
  5. Is there a long-term effect?

Sources:  Wall Street Journal (5 October 2022). Why everything is on sale: The bullwhip effect. Video.

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Netflix Now Offers Ad-supported Subscriptions

It’s long been rumored that Netflix was considering adding advertising to its streaming service. That time is finally here.

Beginning in November in 12 countries (including the U.S., U.K., Australia, Brazil, Britain, Canada, Germany, and South Korea), Netflix will offer a $6.99 per month subscription option (Basic With Ads) that will show four to five minutes of advertising for each hour of content watched. The 15 to 30-second ads will show before and during TV shows and older movies; for new movies ads will only be shown before the movie begins.

Netflix’s subscriber base dropped significantly this year for the first time in a decade. Netflix is showing signs of maturing compared to other streaming services that are earlier in the cycle and must remain competitive. In 2021 ,it release 500 original programs (roughly $20 billion/year) but only a small percentage became hits.

Why the new pricing package? It’s one of Netflix’s key strategies to increase its subscriber base and improve average revenue per user. The company hopes that the new service option will encourage viewers who currently share passwords to get their own subscription, thereby increasing the customer and revenue base. (Netflix estimates that it has 100 million users who share passwords, making it a significant loss of potential revenue.)

For advertisers wanting to promote their brands, the new service is an opportunity to extend their reach to specific segments based on country and genres such as action, comedy, romance, and more.

Netflix isn’t alone in offering new subscription tiers. Disney+ will soon offer an advertising-based subscription in December at $7.99 per month. Hulu has long offered ad-supported subscriptions which accounts for more than half of its customers; HBO Max also offers ad-supported subscriptions.

Will you switch to the advertising version?

Group Activities and Discussion Questions:

  1. Poll students: What streaming services do they use? How much do they spend each  month? Is it worth it? Do they share passwords?
  2. Discuss the product life cycle. Where is Netflix in the PLC? What is the biggest challenge in that part of the PLC?
  3. Show a WSJ video that outlines Netflix’s strategy: https://www.wsj.com/video/series/news-explainers/netflix-hit-a-subscriber-peak-heres-how-it-plans-to-keep-growing/62158AB3-FBBB-4C38-8F72-30F8E27C9CD7
  4. Divide students into teams. Have each team build a price chart that includes the options from streaming services such as Disney, Prime, Paramount, Showtime, Hulu, etc.
  5. Discuss various pricing models. Which model is Netflix using?
  6. Have students develop pricing objectives for Netflix.

Sources:  Krouse, S. (13 October 2022). Netflix’s ad-supported plan will launch in November at $6.99 a month. Wall Street Journal; Sperling, N. (13 October 2022). Netflix to offer cheaper ad option beginning Nov. 3. New York Times; other news sources

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