Segway: Innovation and Re-Innovation

Perhaps you have ridden a Segway at some point in time, but it is much more likely you have not. First introduced in 2001, Segway was promoted as the world’s first self-balancing human transport vehicle. The product hype was enormous. People around the world clamored for the product that was supposed to revolutionize transportation, particularly in the last mile. But the hype never came to fruition. What happened?

Industry analysts had originally predicted that the innovative Segway would quickly reach $1 billion in sales. However, by 2007, it had reached only a fraction of that amount and growth appeared to stall out. Why? One key reason was the hefty price tag of $4,950, placing it outside the reach of most consumers. Another reason was that, well, people looked like geeks when riding it. It wasn’t cool, nor was it especially safe. Even then-President Bush was filmed on it while falling. And later, the company owner died while operating a Segway near his home.

This pushed the vehicle into the area of mall cops and tourists. However, in 2015, Chinese company Ninebot bought the company to use in developing other markets and products. Ninebot is a leading manufacturer of today’s electric scooters which are seeing strong acceptance in the marketplace, even as they too face safety issues.

But still, there are problems in the last mile. How do you navigate?

Group Activities and Discussion Questions:

  1. Discuss the stages in the product life cycle.
  2. What are the marketing objectives in each stage?
  3. Poll students: Who knows anything about Segway?
  4. Where is Segway on the PLC? Where are electric scooters?
  5. Show Segway’s Web site: http://www.segway.com/
  6. Show Ninebot’s Segway site: http://uk-en.segway.com/
  7. Ask students what happened to Segway? Why wasn’t the product a hit?
  8. Show video story of Segway: https://youtu.be/U-l4Kf9NUJo
  9. What is the company doing now to re-invent itself? Can it succeed

Source: CNN Business

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New Shopping Records: Black Friday and Cyber Monday

If you are reading this, congratulations. It means you survived the busiest shopping days of the season: Black Friday and Cyber Monday. And, busy is an understatement. Shoppers took to the stores and online in masses, scoping up deals and getting started on holiday shopping for loved ones (and their selves).

The numbers are nearly as staggering. According to Adobe Analytics:

  • Shopping dollars from Nov. 1 – 26 totaled $58.52 billion
  • Black Friday accounted for a record-making $7.9 billion, including $6.22 billion spent online
  • Top products included Fingerlings, L.O.L. Surprise, Nintendo Switch, Laptops from Dell & Apple, LG TVs, drones, and Amazon Echo
  • Sales traffic vs. revenue by device type:
    • Desktop: 42% traffic for 61% of purchases
    • Smartphones: 49% of traffic for 30% of purchases
    • Tablets: 8% of traffic for 9% of purchases
  • Buy Online, Pickup In-Store (BOPIS) increased 50% from last year
  • Cyber Monday sales reached $7.9 billion, the largest single shopping day in the U.S.
  • Sales from smartphones also hit an all-time high of $2 billion

What did you buy?

Group Activities and Discussion Questions:

  1. Poll students about shopping over the Thanksgiving weekend.
  2. What did they buy? How much did they spend? Gifts or personal purchases?
  3. Did students shop in stores, online, or both?
  4. Purchase volumes by type?
  5. Review the data and charts from Adobe site: http://exploreadobe.com/retail-shopping-insights/
  6. Additional information CNBC Article and video: https://www.cnbc.com/2018/11/24/black-friday-pulled-in-a-record-6point22-billion-in-online-sales-adobe.html
  7. Other video: https://youtu.be/DDhk6O5TSN0
  8. Given the results from holiday shopping, what are three things that retailers must do to continue to meet customer needs?

Source: Adobe Analytics, CNBC, New York Times, Wall Street Journal, other news sources

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Psychological Pricing – Payless Becomes “Palessi”

Pricing is a complex topic – it is both strategic and tactical and is influenced by a variety of factors such as demand, costs, profits, and competition. But probably the most important part of pricing for marketers is its psychological impact. After all, there is a common phrase that “you get what you pay for.” But, is that always true?

Consider a recent experiment by Payless Shoes conducted in Santa Monica. Payless opened a shoe store named “Palessi” in a former Armani store and stocked the store with Payless’ low priced shoes and boots. The shoes, usually priced at $19.99 to $39.99 were examined by a group of influencers who were invited to a grand opening party and asked their opinion of the “designer” products.

The guests, who had no idea they were looking at low-cost Payless shoes, all praised the look, materials, and style of the shoes. That might not be so surprising, but what was astonishing was the amount that the guests were willing to pay for the shoes and boots. The top offer for shoes was $640 – a 1,800% markup!

What are you willing to pay?

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 importance of psychology in pricing.
  3. Show the Palessi videos: https://youtu.be/xpqqKRlqZfU and https://youtu.be/7YR2bovjfMU
  4. Payless Web site: https://www.payless.com/
  5. For Payless Shoes, 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.).
  7. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source: Stanley, T. L. (28 November 2018). Payless opened a fake luxury store, ‘Palessi,’ to see how much people would pay for $20 shoes. Ad Week.

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