Tag Archives: competition

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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UPS Drones Take to the Sky

Are drones finally ready for prime time? Can they deliver the goods? And how does this change delivery services around the globe?

We’re about to find out the answers to some of those questions as UPS recently announced that its drone airline, UPS Flight Forward, has received FAA certification to operate a drone airline. The service will initially support medical packages at hospital campuses around the country. The UPS drone has been in test mode for the past year at the WakeMed campus in Raleigh, N.C., where is has been delivering packages such as tissues and blood samples to different buildings on the campus.

UPS is not the first company to use drones to deliver medical supplies. Other companies outside of the U.S. have been using drones to deliver medical supplies such as vaccines in difficult to reach areas. Healthcare operations (and patients) directly benefit from shorter in-transit times. The FAA certification allows UPS to fly an unlimited number of drones with remote operators in command. The certification also allows for cargo to exceed 55 pounds and fly at night.

Let’s fly!

Group Activities and Discussion Questions:

  1. Review key aspects of developing a product positioning map, including determining the axis labels for positioning.
  2. Review UPS drone service.
  3. Show UPS drone video: https://youtu.be/xx9_6OyjJrQ
  4. The detailed business news announcement is available at: https://pressroom.ups.com/pressroom/ContentDetailsViewer.page?ConceptType=PressReleases&id=1569933965476-404
  5. Who are UPS’s competitors? What are their strengths and weaknesses?
  6. Divide students into teams and have each team develop a positioning map for UPS’s new Flight Forward drone service.
  7. Have each team draw their map on the board.
  8. Debrief exercise.

Sources: Wall Street Journal, New York Times, The Verge, Forbes, other news sources

 

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Rent Furniture instead of Buying

Most college students likely have furniture that includes hand-me-downs from family and friends, or purchases from garage sales and Craig’s List. The sofa in their living room was probably once used by Aunt Helen in Kentucky, transported by Cousin Patrick to New York, sold to his friend Alan who moved to New Jersey, and who knows who else as it made its way around the country! And that is fine for young millennials who are just starting out. But eventually, their longing turns to new furniture that they view regularly on social media platforms such as Instagram and Pinterest.

But it’s hard to swallow that high-priced new furniture. New furniture buyers are likely shocked by the price for that brand-new West Elm sofa. How can they afford that thousand-dollar sofa when they have to pay student loans, car payments, rent, and everything else?

Enter: Services that let you rent furniture through a monthly membership, giving you the option to swap out furniture when tastes and trends change. For example, a popular West Elm sofa may cost $899 in stores, but it can be rented from Feather at $52/month (12-month subscription), and then swapped out, renewed, or returned. Individual pieces as well as full-rooms can be rented in certain cities. It’s a new way to live more upscale without having to pay out the entire fee at once.

Shall we redecorate?

Group Activities and Discussion Questions:

  1. Poll students. Where is their furniture from? Family, friends, neighbors, Craigs List?
  2. What would be their interest level to rent new furniture once they graduate and begin working? How much would they be willing to pay?
  3. Show furniture rental sites:

West Elm: https://www.renttherunway.com/westelm

Casa One: https://www.casaone.com/

Fernish: https://fernish.co/

Feather: https://www.livefeather.com/

  1. Divide students into teams. Have each team examine the information for a different furniture rental company.
  2. Discuss the importance of clearly defining a target market.
  3. Divide students into teams and have each team develop a profile of a target market. Include demographics, psychographics, behaviors, values, attitudes, etc.
  4. Based on the target market profile, what makes this service unique for these customers?
  5. Debrief the exercise.

Source: Carefoot, H. (25 April 2019). Can’t afford that West Elm sofa? Rent it instead. Washington Post.

 

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