Why is Panera selling coffee subscriptions for $9 a month?

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This short article in Fast Company (February 27, 2020) describes a new business model being used by Panera, “Panera debuts $9/month unlimited coffee and tea subscription.” While short, the article offers an interesting example that can be applied across many topics:

  • Customer lifetime value and customer equity (Chapter 2) — Panera found that subscription customers visited the stores 3 times as often and purchased 70% more add-on items.
  • Subscription pricing model (Chapter 17) — Our new edition of Essentials of Marketing delves a bit more deeply into subscription pricing as many products now utilize the business model.
  • Marketing research (Chapter 7) — the article describes some of the findings from a test market Panera used before launching the new subscription pricing model.

“Buy one give one” business models — marketing for a better world (#M4BW) or not?

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The buy one give one business model has been around for many years. One of the early advocates was Tom’s Shoes which donates a pair of shoes for someone in need for each pair it sells. Warby Parker does the same for eyeglasses and Bombas for socks. In fact, you can find 16 examples in this article and slideshow at Refinery 29. This sounds like a great example of Marketing for a Better World (#M4BW).

I thought so, and then I read “Beware companies that promote ‘buy one, give one’ charity,” Vox, October 31, 2019). After thinking about this counterpoint, I wondered if the author had perhaps overstated her case — and I will still feel good that my purchase of Bombas helped put socks on a homeless person’s feet, my All Birds helped someone get shoes, and I still think Cotopaxi is a cool company with a powerful mission. But the Vox article does raise an important question and useful point of debate for the idea of marketing for a better world. It isn’t always clear when a company makes the world a better place. And if they make some people better off at the expense of others, how do we evaluate those tradeoffs? These examples and the article might prepare you for a class debate on this topic.

Will customers subscribe to Nike shoes?

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The Nike Adventure Club is an interesting new sales approach from the leader in athletic footwear. The target market is parents, who would pay a monthly subscription fee (of $20, $30, or $50 per month) to get new shoes every 90, 60 or 30 days. You can read more about the new business model in this Fast Company article, “Nike’s first shoe subscription, two years in the making, is here.” Part of the pitch is sustainability–as customers return the old shoes for recycling by Nike. But as the article notes, this may not be the best approach to lowering carbon emissions.

Companies love the subscription model as it can help drive up customer lifetime value (Chapter 2). You can now subscribe to get regular boxes of healthier snacks (SnackSack), date nights (Date Night in a Box), or doggie gifts (Dog Mom Box). These might be some interesting examples to offer when you get to the first pricing chapter (Chapter 17).

From green ketchup to Colgate lasagna: Companies’ biggest product failures

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It is always fun to show students product failures. Especially like those shown here. I think intuition alone would tell most of us that these were not such good ideas. But it is good for students to see that even big companies, with lots of money and smart people, can make mistakes.

You might want to add a few of these images to your coverage of product (Chapter 8) or new product development (Chapter 9). Colgate Lasagna (really?) could be used with the growth opportunity matrix in Chapter 2 as an example of why diversification is so risky. Or the Bic Her (pens designed for women) might be an example of segmentation and targeting gone too far.

Millennials are boosting some industries…

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As we point out in Chapter 3, marketing context, including the broader cultural and social environment can bring about threats or opportunities. As Millennials (those born between 1978 and 1994) have more discretionary income, they are being blamed for killing a number of different industries including cereal, department stores, beer, golf, and more (see list here). So this generation is definitely a threat to those industries.

On the other hand, Millennials buying behavior has boosted other industries, see “Coffee, travel, and skincare are among 12 industries millennials are boosting,” Fast Company, September 9, 2019. These examples can be used when you discuss SWOT (Chapter 2), the cultural and social environment (Chapter 3) or segmentation (Chapter 4).