Monthly Archives: February 2019

Why are Prices Going Up?

Pricing is a very strategic part of marketing and planning. And, yes, price is also one of the four P’s and is usually referred to as a tactic. However, when an organization is setting strategic objectives, the price level is a critical factor that may be adjusted to help a company meet its objectives. However, raising prices can be difficult as consumers tend to balk at paying more for a product or service that they have had for years. Among companies raising prices are two affecting many college students: Netflix and Whole Foods.

In January, Netflix raised prices for its subscription plans by 18% to $13/month. The increase is intended to help Netflix cover increasing costs for original content and streaming services. Some of its highly-rated content includes “Bird Box,” “Stranger Things,” and “The Crown.” According to Netflix, it has 10% of all U.S. TV screen time, or a billion hours each day.

In February, Whole Foods raised prices on hundreds of its products in order to cover increasing costs of inflation, including transportation, ingredients, and more. The price increases range from a few cents to several dollars, depending on the product and manufacturer.

Is it worth the price?

Group Activities and Discussion Questions:

  1. Question students: Why are Netflix and Whole Foods raising prices? How does the price increase fit into the company’s strategy? What environmental factors should be considered?
  2. Show a video about Netflix price increase: https://mashable.com/video/netflix-raises-prices/?jwsource=cl#tzDtP.YOImq1
  3. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  4. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  5. 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.).

Source: Ad Week, Wall Street Journal, other news sources

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53rd Super Bowl (2019)

The Super Bowl has become one of the premier venues for marketers. The thrills, the chills, the excitement and surprises – and that’s just the advertisements! At a cost of $5 million for 30 seconds of air time, the Super Bowl is also the most expensive advertising placement of any event or show. Add the costs of designing and producing ads, plus the integration into other marketing tactics, and a company can easily spend upwards of $6 million at a single event.

Love them or hate them, Super Bowl advertisements have become a talking point during and after the game. It’s a big stage, and can also be a big risk. This year it had an audience of 98.2 million viewers and a 41.1 U.S. household rating in 49.3 million homes. While still large, this was the lowest viewing in 10 years. However, days later we are still watching ads, arguing about them, and measuring results.

Watch the ads – which ad is your favorite?

Group Activities and Discussion Questions:

  1. Bring up one of the Web sites that have all the Super Bowl ads: https://www.ispot.tv/events/2019-super-bowl-commercials
  2. Divide students into teams. Have each team select a Super Bowl ad to analyze and present in class.
  3. What is the target market, key message, and offer from the ad?
  4. How does the ad integrate with a company’s other advertisements?
  5. Are the messages integrated with a company’s Web site and social media?
  6. As a class, after each commercial have students assign one to five stars for the advertisements. Which advertisement won the class vote?

Source:  Ad Week, CBS, iSpot.tv, Nielsen, other news sources

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A&W Canada: No more plastic straws

Look at the photo above. What do you notice about? Yes, it states that “Change is good.” That’s a good thing of course. But, notice what the entire sculpture is made out of – plastic straws! These are the last of A&W Canada’s stock of plastic straws. The Canadian chain has been moving to paper straws over the last few months, and to celebrate the transition, it used its last 140,000 plastic straws to make the 35-foot sculpture.

Last summer, A&W Food Services of Canada promised to reduce landfill by eliminating the plastic straws. It was the first quick-service restaurant chain in North America to make such a bold promise to improve the environment.  The company estimates that the change will keep 82 million plastic straws from littering the oceans and land.

The ban on the plastic straws is one part of the company’s environmental initiatives which include food sources, packaging, energy, water usage, and waste.

Indeed, change IS good.

Group Activities and Discussion Questions:

  1. Discuss the impact of environmental concerns on companies.
  2. What are companies doing about these concerns?
  3. View A&W Canada’s Web site values section: https://web.aw.ca/en/our-values
  4. What does this move do for the company’s brand?
  5. Divide students into teams. Have each team research the environmental values of a competing fast-food restaurants (e.g., McDonalds’, Wendy’s, etc.)
  6. How does A&W’s commitment impact its positioning in the marketplace?

Source:  Griner, D. (11 January, 2019). A&W Canada used the last of its plastic straws to make a sculpture announcing the change. AdWeek.

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