Tag Archives: target market

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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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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Is Ironing Clothes Obsolete?

When was the last time you used an iron to de-wrinkle clothes? If you are like most consumers, it’s probably been quite a while. While most homes in the U.S. still have an iron, many have not been used for much besides just gathering dust in the laundry room. Why is this?

Well, today’s clothes are more likely to be no-iron clothing than past clothes that required ironing in order to eliminate wrinkles. And today, even when there are wrinkles, Millennials have new solutions – such as popping wrinkled clothes in the dryer for a few minute. Steamers are also popular, as is the dryer setting for removing wrinkles. Other options include dry-cleaning, spraying clothes with wrinkle-release liquids, plus wrinkles can even be considered fashionable for cotton and linen clothing. And finally, ironing is often seen as a ‘chore’ to be avoided at all costs.

All these factors have resulted in sales of irons declining 7% from levels in 2016. In the same time period however, steamer sales have increased 19% as the steamers have gotten smaller and added new functions. Iron makers are moving into manufacturing portable garment steamers, and the spray starch industry is also reinventing its products and marketing.

Are irons a tool of the past?

Group Activities and Discussion Questions:

  1. Poll students: What household products did their grandparents and parents use, but students do not use?
  2. Ask students when they last ironed clothes? When? Why? Other options?
  3. Discuss the different stages in the product life cycle. What are the marketing objectives in each stage? In what stage are clothes irons?
  4. Divide students into teams. Have each team draw a product life cycle and place various household products and services into each stage.
  5. Show Web sites for companies that make irons:

Reliable: https://reliablecorporation.com/

Rowenta: https://www.rowentausa.com/

  1. Divide students into teams: Have teams brainstorm how to reposition or revise irons so that it can be repositioned into an earlier stage of the life cycle.

Source: Konclus, J. (14 May 2019). No, millennials didn’t ‘kill’ ironing. Washington Post.

 

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