Tag Archives: transportation

Driverless Cars Deliver Pizza

Are you hungry? Want fast delivery of pizza, but don’t want to talk to anyone? There’s a solution for that.

Domino’s and Ford have formed a partnership to use self-driving Ford Fusions equipped with sensors, electronics and software, to deliver pizza to Domino’s customers in Ann Arbor, Mich. In the next few weeks, the companies will be able to see first-hand how customers respond to the new driverless delivery technology. What happens in the final 50 feet? Do people want to go outside to take delivery? Is it taking delivery simple to understand?

The cars will have safety engineers and researchers inside to monitor activities and customers’ reactions. Customers can track the delivery car through GPS, and when the car arrives, a text message will be sent to customers about how to retrieve their pizza.

Testing automated deliveries to homes and businesses goes far beyond just pizza. Deliveries from online shopping already total in the billions of dollars, and there is even more application in the future. Need roofing materials or building supplies? What about cooked meals, or ingredients for dinner?

One big advantage of the autonomous deliveries – no tipping required!

Group Activities and Discussion Questions:

  1. Poll students: What do they have delivered to their homes now? What would they like to see delivered in the future?
  2. Show video: https://youtu.be/hANXIPxN1ME
  3. Ask for reactions. What would be their behavior for this type of delivery?
  4. What are the advantages, and disadvantages of driverless delivery?
  5. Form students into teams. Have each team develop a list of possible research questions that Ford and Domino’s would use to evaluate and revise the service.

Source:  New York Times, Associated Press, other news sources

 

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Who Needs Advertising? Not Tesla.

Tesla continues to defy common advertising and marketing conventions, yet still managed to become a valuable brand and hot product. The company does not advertise or promote its cars through traditional media. This lets the company save a great deal of money, and focus on its design and manufacturing.

Tesla’s Model 3 goes on sale for an estimated delivery in the fourth quarter of this year. To date, without any advertising other than word-of-mouth and free media coverage, customers have put down $1,000 deposits on nearly 500,000 cars! According to the company, it continues to average 1,800 net orders per day.

This is an enviable position for the automaker considering that Nissan spent $4.3 million in advertising on its electric Nissan Leaf car, and General Motors spent $3.7 million on the Chevy Bolt electric car. Tesla may not sell as many vehicles, but its cost per vehicle is virtually non-existant.

The top five and bottom five spenders based on 2016 advertising are:

  • Hyundai Genesis – $6,821/vehicle sold
  • Lincoln – $2,719/vehicle sold
  • Jaguar – $2,376/vehicle sold
  • Fiat – $2,350/vehicle sold
  • Cadillac – $1,493/vehicle sold
  • Toyota – $353/vehicle sold
  • Dodge – $348/vehicle sold
  • Honda – $322/vehicle sold
  • Porsche – $283/vehicle sold
  • Tesla – $0/vehicle sold

It shows that while advertising is an important marketing tool, it is far from the only way to gain customers.

Group Activities and Discussion Questions:

  1. Discuss the various promotional tactics that can be used for launching a product.
  2. Have students come up with tactics and list all the tactics on the white board (ex: billboards, print, direct mail, etc.).
  3. Divide students into groups to work on this exercise.
  4. Show Tesla’s Web site: https://www.tesla.com/
  5. Videos are available on Tesla’s YouTube channel: https://www.youtube.com/user/TeslaMotors
  6. For Tesla, have each team select three different tactics. For each tactic, explain why it was selected and how it will be used.
  7. Debrief by putting together the entire suggested lists on the white board. As a final step, have the entire class vote on the top three tactics to use.

Source:  Ad Age Daily, Kantor Media, Automotive News

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Economics of Airline Class Seating

Plane fares are frustrating. From the time someone searches for a flight in the morning, until they book it later in the week (or day), the price changes. And don’t even get started about how little leg-room and seat space there is in the economy class section! But then again, the economy class is not how airlines make money. How does an airline make money on fares?

First class and premium cabin seats!

Here is an example of a flight’s pricing: British Airways 777, round-trip, non-stop between London and Wash. D.C.

  • 224 seats total
  • 122 economy seats @ $876/seat = $106,872
  • 40 premium economy seats @ $2,633/seat = $105,320
  • 48 business class seats @ $6,723/seat = $322,704
  • 14 first class seats @ $8,715/seat = $122,010

The front sections of the plane account for 45% of the seats, but generate 84% of the revenue! While this model does not always hold true, in general airlines get 66% of revenue from the premium, business, and first-class seats.

In essence, airlines are able to sell the same service (transportation) to different people, at vastly different prices (enhanced amenities and the onboard experience). Airlines realized that passengers could be segmented into two categories: tourists, and business people.

What else will future air travel hold?

Group Activities and Discussion Questions:

  1. 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).
  2. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  1. Show this video that explains the basic economics of airfare:
  2. https://youtu.be/BzB5xtGGsTc
  3. Draw the price structure on the board.
  4. Divide students into teams. Have each team work on a possible re-design of planes to address more market segments.

Source: Wendover Productions, YouTube

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