United Airlines Reveals New Dreamliner

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United Airlines revealed the newest addition to their fleet – the Boeing 787-10 Dreamliner.  While it’s not the largest passenger plane (the 747-400 holds 416 passengers versus 318 on the 787-10) it is the largest Dreamliner in Boeing’s product line and United is expanding consumer seating choices with the new plane.  Consumers are used to the standard economy, business, and first class cabins.  Years ago United added their “Economy Plus” seating which provides slightly more legroom for their frequent fliers or those willing to pay extra.  Now United has added a fifth class titled “Premium Plus”.  They have also upgraded their business class seats to a new “Polaris” design that includes a large entertainment display and lie-flat seats.  As a side note, United is trying to build a sub-brand around Polaris with themed amenities, Polaris airport lounges, and premium service.  You can read more about the new plane in this USA Today article.

Offering more seat choices to customers and upgrading amenities on the plane shows how much United is investing in trying to provide a differentiated customer experience in a highly commoditized market.  You might consider having a discussion about the target market for this new plane, how United could determine if adding a fifth class of seats is a good or bad idea (remember they take up more space than a standard economy seat), and whether the experience actually affects purchase behavior or if that will be driven entirely on price.

Marketing Exclusivity and Status

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Luxury goods can facilitate good discussions when talking about consumers and their buying behavior.  If you’re looking for a current topic to use when talking with your students, consider the new Lamborghini Aventador SVJ.  The new luxury sports car is faster and pricier ($518,000) than the base Aventador model.  Only 900 of the new model will be produced which can add to the status achieved by owners of the car (and can further influence purchasing decisions).  You might also use this in a discussion about segmentation or marketing strategy.  Who would be the target market for this car?  How can Lamborghini effectively target that market and what might their marketing mix look like?

New Year’s Resolutions

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Every New Year people make their resolutions and so many of those resolutions are related to fitness or weight loss it creates a situational market opportunity for companies in the fitness industry.  Those companies focus much of their marketing spend on the first few months of the year to capitalize on consumers’ best intentions.  If you consider gyms, there are many different gyms to choose from and they all offer the same basic equipment.  Ask your students how a particular gym could differentiate itself from others in the same geography.  Write their ideas on the board and afterward show them this video from Planet Fitness.  Afterward, ask them how Planet Fitness tried to differentiate itself (products and services) in the commercial and see how it compared to their initial brainstorm list.

Stereotypes and Segmentation

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The concept of segmentation is important to us as marketers.  We use segmentation to help us focus our strategies so we can do a better job of marketing to a specific group rather than poor, generic marketing to the masses.  However, it’s easy to fall into the trap of equating stereotypes and segments.

This cartoon from marketoonist.com illustrates this concept as it relates to millennials.  Millennials represent 25% of the US population and have buying power in excess of $1 trillion so it’s no wonder that companies want to find a way to tap into that demographic but “millennial” isn’t generally a good definition of a market segment.  In Essentials of Marketing we define a market segment as a relatively homogeneous group of customers who will respond to a marketing mix in a similar way.  Consider that there’s a 23 year age difference between the oldest and youngest millennials and that over half of all millennial households have children.  It quickly becomes obvious that further definition is required to truly specify a target market.  Try discussing this dilemma with your students.  How can companies develop a marketing mix that focuses on “millennials” when that demographic is so diverse?

Promoting differentiation in a mature market

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Bloomberg’s short article/interview entitled “A Folding Bike Helmet That Looks Good and Still Shields Your Brain” shows inventors can still find room to innovate, even in a mature product market.  Spanish inventor, Carlos Ferrando, created a bike helmet that has two unique features – it collapses/folds to reduce space when not in use, and it is designed to be more aesthetically appealing than the traditional bike helmet.  Ferrando said he wants his helmet to “normalize the idea of wearing one (bike helmet) as a fashion accessory”.

Ask your students who they think the target market for this product would be.  If they say “bicycle riders” push them to go deeper.  It’s true that anyone who rides a bicycle could benefit from this product but a mass market strategy is unlikely to be as successful for a product like this.  A segmented strategy has a better chance of success.  In chapter 4 we offer a possible market segmentation for the bicycle-riders product-market.  If students believe this product could effectively serve multiple segments you might want to break them into groups and have each group focus on a particular segment.  Ask each group to develop a promotional strategy for their target market.  After a few minutes have each group share their strategy and discuss the differences.  If the students did a good job there should be distinct strategies for each market.  If the strategies are generally similar then they’ve taken a “Combiner” approach which doesn’t really cater to the unique attributes of each segment.  Either way, you have a good discussion!