Tag Archives: ecommerce

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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Designer Toothpaste Anyone?

Some products have become so ubiquitous in our lives that we seldom consider how they might be updated to reflect current trends. Consider products such as hand soap, detergent, and toothpaste. After all, when was the last time you truly examined your toothpaste and thought about design and innovation? And what exactly are the ingredients in toothpaste? Go ahead, read the ingredient list and you are likely to uncover it contains components such as triclosan and saccharin. (The FDA has banned triclosan for hand soap, but it is ok to put those ingredients in our mouths? Huh?)

Given how nearly every product seems to be undergoing a make-over, it just seems logical for toothpaste to get an update for today’s consumers. Packaging and ingredients can both be updated, as well as how and where consumers buy it. Today’s newer toothpastes take lessons from the beauty product world, where design and price points vary and make the products more appealing as well.

Of course, revisions may not come cheaply. French company Buly 1803 sells $29 toothpaste in artfully designed packaging and in flavors including orange-clove-cinnamon. Sephora carries a coconut oil dental floss ($8) and a Lush sells a charcoal, kaolin clay, and gunpowder tea tablet that is chewed before brushing. Twice, a brand from musician/artist Lenny Kravitz, has a two-pack of toothpaste (one for morning, another for evening) that sells at $17 for the pair with proceeds going to help Bahama communities.

Go ahead. Read the labels and make your choice.

Group Activities and Discussion Questions:

  1. Review key aspects of developing a product positioning map, including determining the axis labels for positioning.
  2. Show examples of new toothpaste:

 

Hello: https://www.hello-products.com/

Revolve: https://www.revolve.com/marvis/br/2677a2/?srcType=dp_des2

Sephora: https://www.sephora.com/product/cocofloss-P421244

Lush: https://www.lushusa.com/face/teeth/boom%21/04342.html?gclid=EAIaIQobChMI1-6V-LP33wIVA4vICh1cJAaeEAQYBSABEgIiFvD_BwE

Twice: https://www.smiletwice.com/

APA Beauty: https://apabeauty.com/apa-white-toothpaste.html

 

  1. Review toothpaste products. What other products are competitors?
  2. Divide students into teams and have each team develop a positioning map for one of the new companies.
  3. Have each team draw their map on the board.
  4. Debrief exercise.

 

 

Source: Shapiro, B. (4 April 2019). Is that chic toothpaste worth the price? New York Times.

 

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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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