Tag Archives: competition

by | Thursday, April 13, 2023 · 7:36 am

The Changing Face of Takeout Restaurants

America’s biggest chain fast-food restaurants are changing how they operate. Responding to the changing consumer behavior during the pandemic, stores are delivering food, but in a new way. Takeout food is now often ordered ahead via online and apps. To respond to the new ordering process, restaurants are eliminating seats and expanding drive-through service.

For example: A new McDonald’s restaurant in Texas has no seats or tables for customers. Instead, a conveyor belt sends food to drivers who have ordered ahead. And it’s not just McDonald’s, Chipotle Mexican Grill and Taco Bell are also considering new formats including a four-lane drive-through.

Why the new strategy? Building operations around large drive-through and digital orders can reduce staff and make the sites more profitable and efficient. America saw takeout foods rise during the pandemic. In 2022, 85% of all food orders as fast-food locales were taken to-go instead of eaten onsite.

Even Starbucks, long known for being a place to meet and linger, plans to add roughly 400 stores that offer delivery and pickup only. Why? Starbucks cafes are often jammed with orders for pick-up, drive-through, delivery, and in-café, leaving customers unsatisfied with the long lines.

What would you like for dinner tonight?

Group Activities and Discussion Questions:

  1. Discuss the changing takeout habits of the students. What do they like? Dislike?
  2. Poll students: Who has switched to mostly takeout? How do they place orders?
  3. Show video of new McDonald’s: https://youtu.be/S-uAsMf1__E
  4. Discuss the importance of environmental scanning: technology trends, social trends, laws and regulations, competitive trends, and economic trends.
  5. What trends are these restaurants responding to?
  6. Have students outline a promotional plan for communicating the value of the new concepts.
  7. Optional: Have students go to a fast-food restaurant (such as McDonald’s) and observe (a) how people order, and (b) how many people eat at the restaurant (versus leaving with the order).

Source:  Haddon H. (28 January 2023). Americans are gobbling up takeout food. Restaurants bet that won’t change. Wall Street Journal.

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by | Thursday, March 23, 2023 · 6:01 am

Membership Programs: Barnes & Noble

Most of us have a number of memberships and subscriptions. We have Amazon Prime, Walmart+, Netflix, Disney+, ESPN+, Apple, Spotify, and more. We might also have subscription food services plans as well. It just seems like every business is working on a subscription or membership, trying to capture that elusive recurring revenue stream – and of course lock us in to its services to the exclusion of other services.

When will it end? Well, it certainly won’t be ending soon. In fact, more and more services, memberships, and subscriptions are offered every day.

Barnes & Noble has entered the fray as it continues to compete with Amazon and its very popular Amazon Prime program. Of course Barnes & Noble’s membership is focused around book sales only (mostly). The company is now offering a $40-per-year membership program that offers customers 10% discounts, free shipping, a yearly tote bag, and size upgrades on drinks.

If the $39.99 program is too pricey, the company has also launched a lower-tier membership program – for free. That program rewards customers with virtual stamps for every $10 spent; 10 stamps equals a $5 credit towards purchase.

The big benefit to Barnes & Noble is to learn more about its customers so that it can provide more products and services to them. If companies learn what we are buying, marketing programs can be tailored to each the consumers more effectively. Barnes & Noble can incent specific purchases using new information gained from the memberships.

What memberships do you have?

Group Activities and Discussion Questions:

  1. Discuss membership programs. Include subscriptions in the discussion.
  2. Poll students – how many memberships or subscriptions do they have? What is the monthly/yearly cost in total?
  3. Show Barnes & Noble website for membership program: https://www.barnesandnoble.com/membership/
  4. Discuss the various promotional tactics that can be used for launching a new service or product.
  5. Have students come up with tactics and list all the tactics on the white board (ex: billboards, print, direct mail, etc.).
  6. Divide students into groups to work on this exercise.
  7. For Barnes & Noble Premium Membership, have each team select three different tactics to use for promotion. For each tactic, explain why it was selected and how it will be used.
  8. Debrief by putting together the entire suggested lists on the white board. As a final step, have the entire class vote on the top three tactics to use.

Source:  Trachtenberg, J. (17 February 2023). Barnes & Noble takes page from Amazon with $40-a-year membership program. New York Times.

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by | Friday, November 18, 2022 · 8:20 am

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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