Mattress firms creating value (?) with financing deals…

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The mattress industry is a pretty crazy (check out “The Great Mattress Conspiracy: Why Are There So Many Mattress Stores?” on Endless Thread, podcast and story). You might check out the podcast for a fun example when you cover retailing. Or ethics. You might also check out one of our previous posts, “The Gray World of Online Reviews” (Teach the 4 Ps) — tags include ethics and online reviews.

Onto our story of the day and we are back in the retail mattress industry. With the emergence of new mattress products designed for easy shipping, online mattress stores (Casper, Leesa, Tuft & Needle), this market continues to be very competitive. Retail brick-and-mortar store Mattress Firm has closed 700 stores and is in Chapter 11 bankruptcy. Now they are competing on financing. In fact, Mattress Firm will give you six years of 0% interest on a mattress purchase of up to $3999. Financing is certainly one way to create value for customers — and the automobile industry has done it for years — but does it make sense for buyers of mattresses. We will see. Learn more reading “6-year, 0% loan for a mattress? Intense competition continues to grip mattress industry,” USA Today, October 25, 2019.

Delivering convenience and high quality meat from a vending machine

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Students don’t often think about how Place and choice of distribution channel can differentiate a product or deliver value (often through convenience). And not too many of us think about vending machines as a channel of distribution for much more than snacks and soft drinks. That is why this example, where the Applestone Meat Co. offers self-serve vending machines stocked with vacuum-sealed packages of meat, including everything you might expect to buy at a high-end butcher shop: Porterhouse steaks, rack of lamb, sausages, and ground beef. You can read more, and perhaps clip an image to drop into your slides when you cover Place in Chapters, 10, 11 and 12.

As an aside, if you, like me, didn’t get the “Horn & Hardart” reference in the article’s title, check out this Wikipedia entry and learn a little history.

#M4BW Amazon Commits to 100% renewable energy, 100,000 electric vans to fight climate change

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Our focus on Marketing for a Better World (#M4BW) continues with a look at a recent announcement by Amazon. Amazon promises to “meet the terms of the Paris climate agreement 10 years ahead of schedule.” Its recent announcement comes after some pressure from employees (Amazon Employees for Climate Justice).

This article provides an opportunity to discuss how creating shared value might actually create value. You could ask your students why Amazon is doing this? Is it good for shareholders? Why or why not? The answer is not clear, but students may not recognize that actions like this might make it easier for Amazon to recruit top talent. Many young people are concerned about the environment and want to work someplace that is doing something about it. This might also enhance Amazon’s brand and reputation among consumers. Finally, it may lower operating costs — as the initial cost of an electric van may be offset by lower operating costs (electric vehicles typically cost less to operate as compared to gas-power vehicles).

This issue might be discussed — with different emphasis — in Chapter 3 (Amazon is featured in our chapter-opening case), Chapter 11 (logistics), Chapter 12 (retailing) or in Bonus Chapter 2 (Marketing’s Link with Other Functional Areas — including human resource management).

Opposing Strategies for Customer Loyalty

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Marketing strategies universally need to incorporate mechanisms to attract, upsell, and retain customers.  Some companies focus more on one aspect than another but they’re all there somewhere.  Loyalty programs are one of the mechanisms used to help with both upselling and retention and this Marketing Dive article takes a close look at some of the changes taking place with retail loyalty programs.  Interestingly the article talks about conflicting strategies.  Some stores are moving more toward inclusivity and trying to let as many customers join as possible.  Others go the opposite direction.  Amazon increased the price of Prime membership, Wayfair implemented a $29.99/year fee for their loyalty program, and Lululemon is testing a program that would cost $128/year.  The article also talks about how services can impact loyalty as well.  For instance, offering same-day delivery increases loyalty for 61% of shoppers.  A significant benefit of loyalty programs is detailed information about the customer and their browsing/shopping history.  Stores are using that information to try to foster a stronger emotional connection and thereby increase loyalty even further.  The article is full of content that could be used for a great in-depth discussion with students debating the merits and drawbacks of different strategies.

Target’s Mysterious Price Changes

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This 5 minute news video covers some very interesting pricing strategies employed by Target.  Using location awareness, Target will change prices within their app making products more expensive when you walk into the store.  The video includes an interview with a University of Minnesota marketing professor who provides his hypothesis for why Target might be using this variable pricing model.

Beyond showing a more sophisticated pricing strategy, this is an opportunity for an ethical discussion with students as well.  Is it okay for Target to behave in this manner?  When you load the Target app it asks if it can track your location so it can keep track of your favorite store and help you navigate the store.  Should they have to disclose that they may change product prices based on your location as well?  If they did so, would that make it okay?