Tag Archives: consumer behavior

Tesla Shifts Retail Strategy, Then Shifts Again

Tesla, Tesla, Tesla… It’s so much fun to track this company. Not only are the products innovative and exciting to follow, it is also a marketing case study in nearly constant motion.

Case in point: At the end of February the company announced it would be closing its retail stores in order to cut costs and lower the pricing of the Model 3 to make it more affordable (at a starting price of $35,000). Tesla believes that car buyers will increasingly rely on on-line ordering instead of physical stores. Tesla stated that in North America, a customer can buy a Tesla on their phone in approximately a minute. Which begs the question, just because customers can do this, will they do it?

However, two weeks later, Tesla reversed its strategy and stated it would instead keep most of its 378 retail stores and would instead raise prices of cars by 3%, excluding the Model 3 cars. Tesla hoped to cut costs by closing stores, but landlords, customers, car dealers, and lawmakers protested the closings. The stores will still function as a showroom and location for test-drives, but sales will still be done online.

Where do you want to stop for your next car?

Group Activities and Discussion Questions:

  1. Discuss the distribution model used by Tesla and compare it to the distribution model used by other automotive manufacturers.
  2. Here is an interesting video on why Tesla cars cost so much: https://www.wsj.com/video/the-secret-to-why-a-tesla-costs-so-much-hint-batteries/65F3A21D-0837-4DA6-B739-612124815603.html (Hint – it’s the batteries.)
  3. Poll students: How many would buy a car online instead of at a dealer/store?
  4. What are advantages and disadvantages of buying cars online only?
  5. Why has Tesla disrupted the traditional automotive sales model?
  6. Will other automotive companies follow the Tesla model?

Source: Wall Street Journal, New York Times, Assoc. Press, other news sources

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Why are Prices Going Up?

Pricing is a very strategic part of marketing and planning. And, yes, price is also one of the four P’s and is usually referred to as a tactic. However, when an organization is setting strategic objectives, the price level is a critical factor that may be adjusted to help a company meet its objectives. However, raising prices can be difficult as consumers tend to balk at paying more for a product or service that they have had for years. Among companies raising prices are two affecting many college students: Netflix and Whole Foods.

In January, Netflix raised prices for its subscription plans by 18% to $13/month. The increase is intended to help Netflix cover increasing costs for original content and streaming services. Some of its highly-rated content includes “Bird Box,” “Stranger Things,” and “The Crown.” According to Netflix, it has 10% of all U.S. TV screen time, or a billion hours each day.

In February, Whole Foods raised prices on hundreds of its products in order to cover increasing costs of inflation, including transportation, ingredients, and more. The price increases range from a few cents to several dollars, depending on the product and manufacturer.

Is it worth the price?

Group Activities and Discussion Questions:

  1. Question students: Why are Netflix and Whole Foods raising prices? How does the price increase fit into the company’s strategy? What environmental factors should be considered?
  2. Show a video about Netflix price increase: https://mashable.com/video/netflix-raises-prices/?jwsource=cl#tzDtP.YOImq1
  3. 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. 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.).

Source: Ad Week, Wall Street Journal, other news sources

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The Year in Google Search – 2018

It’s important for marketers to keep current on topics of interests and trends around the world. This research gives us a good idea of what people are thinking, and what they like and need. Often, past trends can also be predictors of the future.

What did the world search for in 2018? Well, besides our usual searches for love, the meaning of life, and how to vote, the citizens of the world used Google’s search engine to keep current on topics including sports, celebrities, world events, food, entertainment, and more.

The lists are not only tracked globally, they are also tracked on an individual country basis. Globally, some of the most searched for topics included the World Cup, Meghan Markle, Sylvester Stallone, Tristan Thompson, Avicii, Black Panther, Demi Lovato, Royal Wedding, election results, and Hurricane Florence.

Top searches in the U.S. also included the keto diet and unicorn cake (yes, it’s on the list). Australia was interested in bitcoin, and Canadians queried about how many ends there are in curling (ten).

Google processes two-out-of-three Internet queries each day. These queries give marketers a good snapshot of trends around the world.

Take a look – which of these topics did you search for in 2018?

Group Activities and Discussion Questions:

  1. Before showing the Google results, poll students as to what they think the top searches were in 2018. Why those topics?
  2. Next, show the Google site: https://trends.google.com/trends/yis/2018/GLOBAL/
  3. Discuss the importance of market research. What are sources that can be used? Why is tracking trends important?
  4. Divide students into teams and have each team examine a different Top 10 List topic. What are the trends from that topic?
  5. How can these trends be used to develop new products?
  6. Debrief the exercise by listing the ideas from each team.

Source:  Google Trends. Year in search 2018.

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