Author Archives: swhartley

Economics of Airline Class Seating

Plane fares are frustrating. From the time someone searches for a flight in the morning, until they book it later in the week (or day), the price changes. And don’t even get started about how little leg-room and seat space there is in the economy class section! But then again, the economy class is not how airlines make money. How does an airline make money on fares?

First class and premium cabin seats!

Here is an example of a flight’s pricing: British Airways 777, round-trip, non-stop between London and Wash. D.C.

  • 224 seats total
  • 122 economy seats @ $876/seat = $106,872
  • 40 premium economy seats @ $2,633/seat = $105,320
  • 48 business class seats @ $6,723/seat = $322,704
  • 14 first class seats @ $8,715/seat = $122,010

The front sections of the plane account for 45% of the seats, but generate 84% of the revenue! While this model does not always hold true, in general airlines get 66% of revenue from the premium, business, and first-class seats.

In essence, airlines are able to sell the same service (transportation) to different people, at vastly different prices (enhanced amenities and the onboard experience). Airlines realized that passengers could be segmented into two categories: tourists, and business people.

What else will future air travel hold?

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.
  1. Show this video that explains the basic economics of airfare:
  2. https://youtu.be/BzB5xtGGsTc
  3. Draw the price structure on the board.
  4. Divide students into teams. Have each team work on a possible re-design of planes to address more market segments.

Source: Wendover Productions, YouTube

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10 Healthiest Brands in the U.S.

What makes a healthy brand? According to YouGov Brand Index, overall brand health takes into account “consumers’ perceptions of a brand’s quality, value, impression, satisfaction, reputation, and willingness to recommend the brand to others.”

Which brands are ranked the healthiest? There are few surprises in this year’s list. Here are the top brands across all categories:

      1. Band-Aid
      2. Amazon
      3. Google
      4. Craftsman
      5. Dawn
      6. YouTube
      7. Clorox
      8. M&M’s
      9. Lowe’s
      10. Quaker

The index also included ranks for various industries. For example, in airlines, Southwest ranked number one. Toyota topped the car category, and Dove topped the hair and skin care category.

Top brands with the best advertising awareness were also included. Leaders in this year’s list include Geico, McDonald’s, Verizon, AT&T, and Walmart. Brands that made the biggest awareness gains since 2016 include Uber, Blue Apron, Trivago, Dollar Shave Club, Lyft, Hulu, and Nintendo. Consumers value innovation and usefulness when evaluating brands. Each company on the list works hard to be the top in its category.

Which brands do you value and recommend to others?

Group Activities and Discussion Questions:

  1. Class discussion: What makes for a strong brand?
  2. What are favorite brands in the different industries such as automotive, appliances, cars, hotels, food, etc. (see the industry list on YouGov).
  3. Show the YouGov brand index: http://www.brandindex.com/ranking/us/2017-index
  4. Compare the students’ list with the rankings and discuss the findings.
  5. Now have students list brands that are weak or for which they have negative feelings.
  6. What could those brands do to improve their overall rankings?

Source:  YouGov Brand Index, Brandchannel.com

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Google Glass Evolves and Repositions

Remember Google Glass? Google Glass had a short life; it was pulled from the market in 2015 amidst complaints about technology, usefulness, price, and privacy. The original product was focused on consumers as wearable technology. The glasses had a smart heads-up display and camera, allowing users to connect to data and share information and images.

However, Alphabet (Google’s parent company) has now relaunched the product as Glass Enterprise Edition (EE). The new Glass EE is being repositioned into the enterprise/industrial market as wearable tech for workers. Alphabet has been testing Glass EE at locations for companies including Boeing, General Electric, Volkswagen, Samsung, Sutter Health, and DHL.

The Glass EE looks similar to the original, but has a better camera, extended battery life, faster Wi-Fi and processor, and has a new red light that turns on when recording. The electronics are now modular in the shape of a pod which can be detached and reattached to any frame, including safety goggles.

How useful are they? GE reported a 46% decrease in time for certain activities, and 85% of the workers believe the system will help reduce mistakes. Glass EE is sold exclusively through Glass Partners. Prices vary depending on the software customization, customer support, and training.

It’s tough to reposition a failed product, but Glass EE seems ready for an entirely new market.

Group Activities and Discussion Questions:

  1. Review key aspects of developing a product positioning map, including determining the axis labels for positioning.
  2. Review Glass EE product: https://www.x.company/glass/
  3. What products are competitors (direct and indirect)?
  4. Divide students into teams and have each team develop a positioning map for Glass. Start with the original Google Glass, and then reposition for the Glass EE product.
  5. Have each team draw their map on the board.
  6. Debrief exercise.

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

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