3D Printed House for Under $10,000

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I love disruptive innovation.  Disruptive innovation challenges existing companies to adapt, evolve, and improve while creating opportunities for new companies to grow and thrive.  Disruptive innovation can often provide significant benefits for consumers as well creating a great win-win.  3D printing has been in existence for several years but it continues to mature and businesses are starting to find ways to directly sell products created by these printers.

A recent example is detailed in this SingularityHub article, “This 3D Printed House Goes Up in a Day for Under $10,000”.  A startup company, ICON, partnered with a housing nonprofit, New Story, and together designed and developed a 650 square foot house that can be constructed in under 24 hours for less than $10,000.  Their goal is to build these homes in developing countries for $4,000.  Advancements like this can provide affordable housing to millions who live in much more primitive structures.  While this may seem like a niche market, the technology can be leveraged for other purposes.  Will this someday threaten traditional construction processes?  At what point do legacy companies need to develop strategies that incorporate the potential threat posed by disruptive innovations?

Regulation and It’s Role in Marketing

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In Chapter 3 of Essentials of Marketing we discuss the role the greater market environment has on marketing decisions.  Legal changes along with cultural and social movements can have a profound effect on marketing.  One example would be Germany’s recent decision to ban high-polluting diesel cars starting with some models next year and others in 2019, as detailed in this article.  The move is similar to a broader ban passed by France last year (read more in this NY Times article).  In this case, France will ban all gas and diesel cars by 2040.

Regulations like these have significant impact to automobile manufacturers and can significantly impact their product roadmaps.  That won’t be a surprise to most students but what they might not think about is the opportunities that can be created as well.  In this particular case, public transit companies have an opportunity to look at service expansion and companies working on low-emission vehicle technology have an opportunity for significant growth.  For the automobile manufacturers, this can create opportunity as well.  Those that saw the trend coming have an opportunity to get to market faster and capture market share.  Companies can also redirect their promotional strategies to highlight compliance with the new regulations.

Discriminatory Pricing

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Dating app Tinder was recently found guilty of age discrimination based on their pricing policies.  Tinder charges individuals over 30 twice the price they charge those under 30 for their premium service, Tinder Plus.  Their rationale was that younger people have less money to spend but the court said that older members can be budget constrained as well.  You can read more about the issue in this Slate article.  Tinder argued that companies like Amazon do the same thing (with a lower price for Prime membership for students) but there’s an important distinction.  Ask your students why what Amazon does is legal and what Tinder does is not.  The key is the concept of protected classes.  Amazon provides their discount based on status as a student.  While most students are younger, there can be older students as well.  Most importantly, “student” is not a government recognized protected class whereas age, race, sex, etc. are recognized as protected classes and subject to discriminating scrutiny.

Social Media’s Fight for Younger Members

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Facebook started as a platform for college students and quickly became popular with teenagers as well.  As the platform went through the adoption curve it started to pick up older users.  As the Facebook demographic shifted, so too did it’s appeal to the younger audience that helped establish its dominance.  This USA Today article, “Facebook losing young users even faster to Snapchat, eMarketer says“, talks about some of the challenges currently facing Facebook and how Snapchat is now growing its user base faster than Facebook.  Better privacy control, faster viewing, and limited permanence are some of the factors that are driving 12-17 teenagers toward Snapchat and away from Facebook.  6 years ago Facebook recognized the threat and acquired Instagram as a means of continued access to teenagers but Snapchat is now getting new users even faster than Instagram.

The consequences of this change can be significant for Facebook.  Their business model relies on advertising and if they can capture users early in life it is much easier (and cheaper) to retain those users rather than trying to switch users off of competing platforms.  Should Facebook modify their platform to cater to younger viewers?  What would they have to do?  Could they be successful with a redesign or is their present brand identity too strong for younger viewers to consider using them?  Can they succeed if they stay focused on an older demographic?

Pricing as Impacted by Supply and Demand

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USA Today article, “Gas prices head up when they usually head down in winter“, talks about a nationwide increase in gas prices during a period that typically sees a decline.  The winter generally leads to less driving which results in lower gasoline demand.  That lowered demand typically results in lowered pricing as suppliers try to move their inventory but, in this case, the primary gasoline suppliers have limited production which has kept prices artificially high.  That gasoline supply industry operates as an oligopoly (leaning toward monopoly through the OPEC consortium) which we discuss in Chapter 3 as well as Appendix A.

Beyond the impact on pricing, the article also discusses the impact gasoline prices have on consumer preference when it comes to buying a new vehicle.