For those that have a serious fear of running out of toilet paper, Charmin has some really big news. The company launched a new roll of toilet paper that is 12 inches in diameter and weighs about 2 pounds. It’s so large it needs it’s own free-standing dispenser (though you can buy wall-mounted units or get them as part of a starter pack directly from Charmin). Another interesting twist is that the company is selling the new roll via monthly subscription. The largest “Multi-user” roll is $9.99 when purchased individually or $7.99 when purchased via subscription. Customers can choose the frequency of delivery when they sign up for the subscription. You can read more about the new product in this article.
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?
In Chapter 9 of Essentials of Marketing we talk about the new product development process. In the article “Facial gestures can move this AI-motorized wheelchair“, many elements of this process are covered when discussing a new motorized wheelchair that uses a 3D camera and artificial intelligence to recognize facial expressions and control the wheelchair based on those expressions. The new wheelchair is designed by Brazilian-based Hoobox Robotics in partnership with Intel. The article covers the target market for the new chair and also talks about some of the interesting findings discovered during user testing. It also talks about incentives to get customer feedback and an interesting pricing model (they’re planning on using subscription pricing rather than the traditional asset sale model). It’s a good reminder for students that even products that are highly technical require well managed marketing efforts if they want maximize their chance at success.
Jet Blue and United Airlines recently raised their checked baggage fees from $25 to $30 for the first bag checked (see this article to read more). Just 10 years ago checked baggage fees were unheard of but they are the norm today and airlines are increasingly looking for ways to add charges and fees to improve their bottom line. Air travel is basically commoditized and, as a result, leisure travelers tend to search for the lowest price when booking travel. This significantly hurt airline profitability until they started charging additional fees for checked bags, carry-on bags, early check-in, seat reservation, leg room, in-flight snacks, entertainment, and more. Now airlines can benefit from the high margin they get on these fees yet still advertise low fares.
This topic presents numerous angles for a conversation with students. Is it ethical for airlines to advertise low prices when the end price a consumer will pay will likely be significantly higher? Why were the airlines able to enact this trend in adding supplemental charges? i.e. if one airline started charging for checked bags, why didn’t others push free bags as a differentiator? How does the airline industry’s status as an oligopoly affect this market dynamic? How do business travel and loyalty programs make it easier for airlines to push price increases like this?
The video linked here is a short 3 minute video sourced from NPR’s Planet Money. It provides a brief, entertaining perspective on the history of the price tag. Students may be surprised to know that haggling was standard practice in this country for many years. The video does a good job of discussing not only the change itself but also various factors that led to the change – ethical considerations and issues with scale.