Monthly Archives: November 2019

Amazon’s Echo Glasses Frames

Does it seem like there are more wearable devices than ever in the marketplace? Well, get used to it. Already there are headphones, ear buds, jackets – there is a lot, and it doesn’t appear to be slowing down any time soon. One of the latest wearable device are the new Echo Frames smart glasses from Amazon, with always-on Alexa voice control.

The glass frames gives the wearer hand-free access to the Alexa services at any time. Alexa – Amazon’s digital assistant – can answer questions, take reminders, and even operate smart home gadgets. The frames let the wearer interact with Alexa, listen to music, podcasts, and more. The frames are controlled by swiping along the earpiece and microphones can be shut off on command. The sound is subtle; only the wearer can hear the Alexa replies.

Priced at $179.99, the frames can be customized with subscription lenses at any optometrist outlet. They currently work only with Android phones; no word on connecting to iPhones at a future time.

If you remember the Google Glass, one of the criticisms was the display with cameras. These Echo frames do not have that capability and there are no cameras.

Now our glasses not only help us see better, they also can cooperate and provide additional functions. How is your vision?

Group Activities and Discussion Questions:

  1. Discuss the impact of wearables, including smart glasses.
  2. Show the Amazon Echo frames: https://www.amazon.com/dp/B01G62GWS4/ref=sxts_snpl_1_0_cb5e5e76-63c9-4995-ba6c-9e5dc465d041?pd_rd_w=96hzn&pf_rd_p=cb5e5e76-63c9-4995-ba6c-9e5dc465d041&pf_rd_r=DVD6DZKRH8TCMHNGS97B&pd_rd_r=2515e17b-55cd-4dd3-8278-8dabcc07c7ae&pd_rd_wg=eioFb&qid=1571077129
  3. Show video: https://youtu.be/gmVgPF4ofsE
  4. What are the opinions of the students about this device?
  5. Discuss the importance of clearly defining a target market.
  6. For the Echo frames product, what is the target market?
  7. Divide students into teams and have each team develop a profile of a target market for the product. Include demographics, psychographics, behaviors, values, attitudes, etc.
  8. Based on the target market profile, what makes this product unique for these customers?
  9. How should the product be marketed to this target market segment?

Source: Amazon.com; Smith, D. (8 October 2019). Amazon Echo frames – here’s what you didn’t know about Amazon’s new smart glasses. C/NET.

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Pricing in the Entertainment Streaming Industry

The entertainment streaming industry is on fire right now. Apple, Hulu, Netflix, Disney, HBO, and more brands are ramping up to fight it out for the monthly consumer subscription!

Here is how the current prices compare between services:

Service Monthly cost Shows
Netflix $12.99 Stranger Things
Hulu $11.99 (ad free), or

$5.99 (with ads)

Handmaid’s Tale
Amazon Prime Video $8.99 Marvelous Mrs. Maisel
Apple TV+ $4.99 The Morning Show
Disney+ $6.99 The Simpsons
HBO Max $14.99 Friends

 

Notice anything interesting in the prices? How each price ends? Which vendor is using penetration pricing? Or below-competition pricing? Name a price model and it’s probably on the list above. Blockbusters, as well as all-new created movies and shows are all offered from multiple services and it can be hard to determine which has which. The marketing focus should be on differentiation – the services are starting to sound alike, and be priced alike.

There has been a dramatic shift in recent years about how consumers get their information and entertainment, and how many more consumers use streaming services each year. The average consumer in 2019 has 2.6 stacked services. This is up from 1.6 stacked services in 2016, but far short of the projected 4.9 staked streaming services by 2023.

Think about it… how many services are currently in your household?

Group Activities and Discussion Questions:

  1. Poll students: How many subscription services does each household have today? Add them and average it for the class.
  2. Show a video about the topic: https://www.wsj.com/video/video-streaming-services-battle-for-subscribers/AED37E41-E1EC-447A-A47F-C55D1834B7E0.html
  3. 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).
  4. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  5. For these streaming services, divide students into groups and have each group work on setting the price level.
  6. Assign each team a different model to use (demand-oriented, cost- oriented, profit-oriented, and competitor-oriented) and have the team explain how the model was used when setting their price.
  7. Compare the various pricing models and discuss advantages/disadvantages of each.

Source: FitzGerald, D., & Flint, J. (29 October 2019). AT&T lays out price, show line-up for HBO. Wall Street Journal; other news sources

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Costco and Chicken

Pricing can be a confusing topic – and not just for marketers. Consumers can also be confused, but one thing they always recognize is when they get a good deal on a product. Such is the case for Costco’s $4.99 rotisserie chickens. At that price the product is less than poultry from competing grocers. So, how does Costco make a profit on the chickens? Well, the short answer is that the company does not make a profit on this item – in fact, it loses money every time one is sold.

The Kirkland Signature rotisserie chicken is probably one of the most popular items the company sells; last year Costco sold more than 90 million of the item. And, yes, it lost money on each and every bird. Estimates are that the loss amounts to between $30 million and $40 million each year. This is known in the industry as a “loss leader.” The reason for a loss leader product is to get consumers in the store in order to sell additional products at which the retailer does make a profit. The chickens are at the very back of the warehouses, meaning if consumers want the bird they have to navigate a tempting array of other low-cost foods and products. It’s tough to leave Costco with only a single item!

Costco is trying to get its costs lower by opening a $450 million poultry complex in Nebraska. In this case, the company will control the supply chain, starting from the grain the chickens eat to grow out and slaughter, eventually to the Costco’s kitchen, and finally to consumers’ homes. The new poultry complex will provide Costco with roughly 40% of the chickens it needs and reduce its purchasing costs. It will also provide a more standard-sized chicken of around six pounds to fit on its rotisserie line.

How much will Costco save with the new complex? Estimates are that savings will be around 35 cents per chicken. Not a lot in a single bird, but multiple it by 90 million and the savings will add up.

What’s for dinner?

Group Activities and Discussion Questions:

  1. 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. Discuss when companies should use loss-leader pricing.
  4. Show a video about Costco chicken: https://youtu.be/MSvCK_xH84s
  5. What strategy is Costco using to price its rotisserie chickens?
  6. For Costco chicken, divide students into groups and have each group work on any/all of the six steps.
  7. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  8. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source: Meyersohn, N. (11 October 2019). It’s only $4.99. but Costco’s rotisserie chicken comes at a huge price. CNN Business.

 

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