Buy Now Pay Later Gets Easier!

by Leave a Comment

Credit cards have long been an easy way for consumer to “buy now pay later.” But not everyone could qualify for a credit card and the interest rates are very high!

These days consumers are seeing an explosion of point-of-sale “buy now pay later” (BNPL) options with companies like Klarna, Afterpay and Affirm. This article at Forbes shows BNPL is expected to grow from ~$24 billion in 2020 to almost $100 billion in 2021. While BNPL can be particularly appealing to young shoppers, who may have more limited access to credit, and it is most popular with Gen Z and Millennials, Gen X and Boomers are now using it as well.

BNPL’s biggest appeal may be convenience. At the point of online purchase, consumers have the option to split that $100 pair of shoes into four $25 payments. And BNPLs don’t charge interest. The risk is borne by the BNPL provider, with the seller typically giving the BNPL service a cut (say 3%) of each sale. That nudge may close some sales and helps retailers. And it looks good to consumers who do not have to pay a premium to buy now pay later.

The growth of BNPL raises all kinds of interesting questions you might want to discuss in your marketing class. There are ethical questions about whether credit is a good idea (see this article in The Atlantic for warnings from personal financial experts).

Inflation worries influence consumer behavior; how do companies respond?

by Leave a Comment

Several product categories have seen costs spike during the pandemic. While supply chains get plenty of well-deserved blame, there are more reasons than that.  These videos might provide an opening to discuss this topic in class. The Wall Street Journal video “The Surprising Ways Inflation is Hitting Diapers” (August 4, 2021), describes how diaper makers costs have risen – everything from raw materials to freight costs. In addition, changing demographics (fewer babies born) has the two big diaper companies raising prices to offset lower unit sales. The result has been an increase in diapers prices of 12% in the last year.

Along the same lines, coffee prices have also soared (up more than inflation over the last five years)– see another WSJ Video “Your Coffee Is Getting More Expensive. Here’s Why.” This article describes how shipping costs have contributed to those rising prices. Together, these articles can show your students how prices are influenced by demographic trends, raw material costs, and freight costs. And coffee (maybe diapers) are product categories students understand.

Do B-Corps react better to adversity? (#M4BW)

by Leave a Comment

A new key term in 17th edition of Essentials of Marketing, is B-Corporation (B-Corp) certification “a private certification that meets a high standard for social and environmental performance. An independent company, B Lab, conducts this certification process. Some B Corps are subsidiaries of publicly traded companies. There are more than 2,500 certified B Corps in more than 50 countries, a list that includes small companies and well-known names like Ben & Jerry’s, Patagonia, and Method.” (Chapter 17).

This article, “How businesses emerge better after COVID-19, according to B Lab” (Fast Company, March 31, 2020) describes how the challenges of this pandemic may get companies thinking differently. I think many consumers will emerge from the pandemic differently as well. It might be interesting to get your students thinking and talking about how the pandemic will influence consumer and company behavior.

Dutch Florist Gives People a Choice About What to Pay…(#M4BW)

by Leave a Comment

Occasionally brands allow customers to pay what they can or what they think is appropriate. You can learn more about the psychology of “pay what you want” pricing here. The florists at BOLT Amsterdam are now offering a bundle of 200 tulips for three different prices–one they acknowledge makes it a loss leader (35.95 euros), one price where the florist breaks even (39.95), and at one price (45.95), the florist makes a profit. The idea here is to help tulip growers and the florist, both of which who are faced with falling demand in the face of the Coronavirus. An interesting approach for dealing with falling demand for a perishable product. The example might stimulate useful discussion in class about how, when, and why to use pay what you want pricing. The linked article may provide you with some interesting closing thoughts.

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

by Leave a Comment

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.