Tag Archives: competition

Streamflation – Paying More for Streaming?

Have you heard the term “streamflation”? It’s a phrase being used to explain the increasing prices for entertainment streaming services.

On average, the cost of a major ad-free streaming service has increased by roughly 25% in the past year, with more increases to come. These increases account for the roughly $219 per month that consumers pay for subscriptions. That’s $2,628 per year!

Let’s take a quick look:

  • YouTube TV – in 2018 it cost $40; compared to 2023 at $73.
  • Netflix – in 2018 it cost $11; compared to 2023 at $15.49.
  • Disney+ – in 2019 it cost $7; compared to 2023 at $14.
  • ESPN+ – in 2018 it cost $5; compared to 2023 at $10.
  • Peacock – in 2018 it cost $5; compared to 2023 at $6.
  • Apple TV – in 2019 it cost $5; compared to 2023 at $7.

And don’t forget about music streaming such as Spotify, Tidal, and Apple Music – all of which carry a monthly fee.

Some fees can be reduced if viewers are willing to accept advertising as part of the service. For example, Netflix has prices of $6.99 per month for ad-supported viewing, compared to $15.49 per month for ad-free viewing.

Why the steep increases? Because most streaming services have been losing money to the tune of millions, if not billions, of dollars. But can companies raise prices and expect customers to stay loyal?

What will you pay?

 Group Activities and Discussion Questions:

  1. Pricing is 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.
  3. Poll students: What do they pay each month for streaming?
  4. Show video about streaming inflation: https://youtu.be/WNhkP9Q2gNs?si=18CUvNE8Oms-K46f
  5. Which pricing strategy is being used by streaming companies?
  6. Divide students into teams. Have each team research the prices being used by the various streaming companies (Disney+, Netflix, Apple, Hulu, etc.). Include both ad-free and ad-supported prices.
  7. Draw a table on the white board that lists the companies and their prices.

Source: Whelan, R., Flint, J., Rattner, N. (15 August 2023). Streamflation is here and media companies are betting you’ll pay up. Wall Street Journal.

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Hoka – The Ugly Shoe Everyone is Buying

Consumers love something different, at least some of the time. But then other times, it is difficult to get them to switch their buying habits. On average, consumers buy the same 150 items fairly consistently. That means it is difficult for new products to get buyers to shift their buying to another product.

Think about it. What are the brands you buy regularly? Now, what might it take to get you to buy an entirely new brand and substitute it for one of your beloved products? It can be tough going to gain acceptance for new products, particularly products that look as different as Hoka shoes.

In 2012, sales of Hoka shoes were approximately $3 million. A little over a decade later, Hoka shoes sales in the past fiscal year were $1.4 billion. That’s a huge jump in sales and loyalty for a very peculiar looking athletic shoe.

Everyone who buys Hoka shoes seem to like them – runners, waiters, workers, teens, even grandparents. Why? Well, the first thing is that the shoe has to be comfortable and perform as required. Hoka shoes also come in vibrant colors and have a hefty foam sole. But still, it’s a big departure from the sleek-looking Nike shoes that dominate the market.

One of Hoka’s main strategies was to grow slowly. Yes, you read that right. Slowly. The company deliberately grew slowly by keeping supply below demand and maintaining selective distribution.

The company founders also deliberately made the shoes bigger than most athletic shoes. The shoes have been described as clown-like, bloated, bulbous, wacky, and just plain ugly. But, the shoes performed. Running stores couldn’t keep them in stock. And the company maximized on direct-to-consumer, skipping the big-box stores. When the company did move to stores such as Foot Locker and Dick’s Sporting Goods, it waited until consumers already knew about Hokas.

They may look clownish, but are you ready to run in them?

 Group Activities and Discussion Questions:

  1. Poll students: What athletic shoes do they have? What do they like? Dislike?
  2. Does anyone have Hoka shoes? Why or why not?
  3. Show Hoka Shoes website: https://www.hoka.com/en/us/
  4. Why did a slow growing strategy and limited distribution work for Hoka?
  5. Discuss competition for Hoka.
  6. What are the direct competitors? Indirect competitors?
  7. Divide students into teams. Have each team compare Hoka shoes with a competitive product.
  8. Students should also develop a positioning map for athletic shoes. Where in the map would Hoka shine versus competitors?
  9. What are the key points of difference?
  10. How should Hoka be marketing its shoes?

Source: Cohen, B. (22 June 2023). The ugly shoes now worth billions of dollars. Wall Street Journal.

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We are finally getting flying cars!

The future has finally arrived and science fiction has come true. After years and decades, we’ve been teased about the possibility of flying cars. Is it finally time? Has the car in “Back to the Future” finally been built?  

Kinda. Under experimental status, Alef Aeronautics’ flying car (Model A) now has permission from the Federal Aviation Administration to test its car/plane in the sky/on the road. But, the vehicle also needs to meet National Highway and Traffic Safety Administration standards.  

Model A has been designed to drive on streets and take off vertically to fly above traffic. While not yet available, Interested customers can pre-order their flying cars and be placed in a priority queue for the low fee of $1,500 (the final estimated price is $300,000).  

Model A can be driven on regular roads; it fits into normal driving lanes and even fits into a regular parking space or garage. On the ground, the car has a 200-mile range. When ready to fly, the car takes off vertically, allowing drivers to fly above obstacles yet still remain stable due to a unique gimbaled design. It has no exposed propellers, 110-mile range in the sky, and works similar to a drone (no wings!).  

Alef is not the only company exploring flying cars. Another company, ASKA, also has been cleared by the FAA and has started flight testing. ASKA’s A5 is hybrid with batteries and can use premium gasoline. This vehicle does have wings, six independent rotors, and a parachute. It also have vertical takeoff and landing, and can enter an airfield by driving through the gate. It already has reached $50 million in pre-orders.   Let’s fly away…      

Group Activities and Discussion Questions:

  1. Poll students: What are their thoughts about flying cars? Any interest in owning one?
  2. View Alef Aeronautics site: https://alef.aero/
  3. Play Model A video: https://youtu.be/E5YRh8vLjLU
  4. View ASKA’s site: https://www.askafly.com/
  5. Play ASKA A5 video: https://youtu.be/d7lA3Ibv1MA 
  6. Discuss the components of a situation analysis: company, general industry, trends, key competitors, technology, legal, etc.
  7. Ask students what data they would want in order to make marketing decisions for Model A and ASKA A5.
  8. Divide students into teams. Have each team use laptops to do general research to answer the questions above. (ex: overview of industry, size, growth, new technologies, environmental impact, etc.)
  9. Debrief the exercise by compiling information on the white board. Does this give a good picture of the situation?

Source: The first flying car, ‘Model A,’ approved by the FAA and it’s 100% electric. (3 July 2023) CNN; FAA clears ASKA’s flying car. IEN Staff (June 30,2023).  

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