Tag Archives: sports

Subscription model for Nike kids’ shoes

Subscription services can be a great business model. It gives businesses a monthly recurring revenue stream that is steady and predictable – at least until the consumer ends it. Many subscription services have had initial success, only to lose subscribers as time goes on and subscribers no longer see the value of the service.

The meal subscriptions have been particularly hard hit as customers try various plans, only to eventually stop. There are also a great number of clothing subscription services, including subscriptions for fashion clothing, business apparel, and athletic wear. Now, Nike is launching a new subscription service aimed directly at the kids’ shoes market. It’s an important market space and is valued at roughly $10 billion annually.

Nike will offer three levels of subscriptions: $20, $30, or $50. At $20/month, customers get four new pairs of shoes and play activities; $30/month gets 6 pairs; $50/month gets 12 pairs. Named ‘Nike Adventure Club’, the service is aimed at 2-10 year olds and supplies Nike and Converse shoes. Is it money saving for consumers? Perhaps. It depends on the level of shoe selected. The main goal of the service is to build relationships and maintain brand loyalty for Nike and Converse.

As for correct shoe sizing, Nike includes a sizing chart to help parents measure their child’s feet. In a pilot program run with 10,000 members, only a small percentage of parents had the wrong size. The service includes free shipping and returns along with free size and style exchanges.

Ready to play?

Group Activities and Discussion Questions:

  1. Discuss the advantages and disadvantages of subscription-based services.
  2. 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).
  3. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  4. For Nike Adventure Club, divide students into groups and have each group work on any/all of the six steps.
  5. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  6. Is the Nike program correctly priced for the target market?

Source: TechCrunch, CNN, USA Today, Reuters, other news sources

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The World’s Most Expensive Pigeon!

Determining the right price for a product or service is not always easy. Organizations need to determine the strategy that is best for meeting its objectives. Does the organization want to establish a beach-head and gain market share, or reach the elite purchasers? Pricing strategies include demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches. Within these various approaches are price models that include skimming, penetration, luxury, bundling, price-lining, return-on-investment, and more. And finally, do not discount the strong appeal used with psychological pricing.

All these strategies are interesting, but how does one apply them to a unique product such as a rare Stradivari viola made in the 1700s? Or a prized Belgian racing pigeon? In the case of the Stradivari, the auction price starts at $45 million. For the pigeon (named Armando) the auction price rose to $1.4 million in approximately and hour as two Chinese buyers kept increasing their competing bids trying to obtain the world’s fastest pigeon! Armando is believed to be the most expensive bird ever to be sold at auction. The attraction to the Chinese buyer was likely due to the sport of pigeon racing becoming more popular among the countries elite.

So, next time you see a pigeon sitting on a statue on the park, consider how valuable the little guy might be.

Group Activities and Discussion Questions:

  1. As class begins, poll students about pets and pricing. Ask who has a pet and how much they paid. Ask other students if they were going to buy an animal, how much would they consider spending?
  2. Show a video about the Belgian pigeon: https://www.youtube.com/watch?v=Z2SwXWV5Rec
  3. The auction site (with additional video) can be found at: https://www.pipa.be/en/newsandarticles/reports/armando-joel-verschoots-record-breaking-pigeon-video
  4. Discuss pricing strategies (e.g., demand-oriented, cost-oriented, profit-oriented, competition-oriented, etc.).
  5. Divide students into teams. Have each team select a different price approach and determine a SMART objective for the approach.
  6. Next, have students use their selected price model to determine prices for the ordinary products (e.g., milk, gas, eggs, etc.), shopping products (e.g., shoes, jackets, etc.), and luxury items (e.g., Tiffany, Louis Vitton), and rare (e.g., Tibetan Mastiff, Stradivari viola).

Source:  Belinger, J. (19 March, 2019). Chinese buyer bids record $1.4 million for racing pigeon. CNN

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53rd Super Bowl (2019)

The Super Bowl has become one of the premier venues for marketers. The thrills, the chills, the excitement and surprises – and that’s just the advertisements! At a cost of $5 million for 30 seconds of air time, the Super Bowl is also the most expensive advertising placement of any event or show. Add the costs of designing and producing ads, plus the integration into other marketing tactics, and a company can easily spend upwards of $6 million at a single event.

Love them or hate them, Super Bowl advertisements have become a talking point during and after the game. It’s a big stage, and can also be a big risk. This year it had an audience of 98.2 million viewers and a 41.1 U.S. household rating in 49.3 million homes. While still large, this was the lowest viewing in 10 years. However, days later we are still watching ads, arguing about them, and measuring results.

Watch the ads – which ad is your favorite?

Group Activities and Discussion Questions:

  1. Bring up one of the Web sites that have all the Super Bowl ads: https://www.ispot.tv/events/2019-super-bowl-commercials
  2. Divide students into teams. Have each team select a Super Bowl ad to analyze and present in class.
  3. What is the target market, key message, and offer from the ad?
  4. How does the ad integrate with a company’s other advertisements?
  5. Are the messages integrated with a company’s Web site and social media?
  6. As a class, after each commercial have students assign one to five stars for the advertisements. Which advertisement won the class vote?

Source:  Ad Week, CBS, iSpot.tv, Nielsen, other news sources

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