Case Studies

STARZPLAY: Shooting for the Stars

Harvard Business School

In mid-2021, Maaz Sheikh, cofounder and CEO of STARZPLAY, a Dubai-based subscription video on demand (SVOD) provider that catered to the Middle East and North Africa region, was wrestling with how to find the right balance between continued subscriber growth and profitability. Founded in 2015, the company was the first major SVOD player in the region providing high quality and affordable Hollywood content. STARZPLAY rapidly grew its subscriber base through a business model sensitive to the varied tastes and payment preferences of households in the region, and was able to maintain leadership even after global players like Netflix and well-funded homegrown companies entered the market. At the time of the case, several U.S. major studios, including the likes of Disney, Paramount, and HBO, were in talks with local operators about potential partnerships. Sheikh needed to prepare an appealing proposal, knowing full well that other regional players were likely doing the same, and that these studios might decide to enter independently. He had to think carefully about the company’s brand position, and its plans regarding content, pricing and payment options, and marketing spend in order to fuel continued growth while managing the increasing pressure from investors to drive the business toward profitability. Sheikh and his management team had big ambitions for STARZPLAY. What would be the plan that ensured the company continued to prosper despite the mounting competition?

Worldreader: Helping Readers Build a Better World

Harvard Business School

Founded in 2010, Worldreader was an international nonprofit organization that promoted reading to children around the world. For many years, Worldreader distributed e-readers to under-resourced communities and funded its operations primarily through philanthropic donations. In 2019, Worldreader launched the BookSmart mobile reading application, and soon thereafter came the idea of a new, self-perpetuating funding structure: the “flywheel.” Worldreader began charging schools and community-based organizations a $6 monthly subscription fee per child to use BookSmart, with the goal of using earned revenue to sustain operational costs and philanthropy to cover other strategic priorities. However, Worldreader soon realized that ability to pay varied greatly among potential “customers,” leading to several exceptions to the initial price. The team also worried that the subscription disincentivized scale and conflicted with Worldreader’s ultimate goal of impacting millions of children. As Co-Founder and CEO David Risher and his team prepared for an upcoming meeting with UNICEF, which typically sought fixed-price contracts, they considered whether a price per-child, per-month would be acceptable. More broadly, they considered whether they had landed on the optimal price point and funding strategy – and the potential implications of pursuing earned revenue on Worldreader’s ability to bid for international development grants.

Project Maji: Pricing Water in Sub-Saharan Africa

Harvard Business School

In July 2021, Sunil Lalvani, founder and CEO of Project Maji, a non-profit social enterprise headquartered in Dubai that had already provided sustainable, clean water solutions to 80,000 people living in rural communities across Ghana and Kenya, was facing an important decision. Traditionally, fees collected from community members covered the operating and maintenance costs of the solar-powered water kiosks, while donations paid the initial capital expenditure and setup costs. Yet Lalvani needed a more scalable financing solution to reach a hefty goal: impacting 1 million lives by 2025. Serving larger, more affluent peri-urban communities was a viable alternative, as the additional revenue could be channeled to rural projects. Thus, Lalvani and his team worked on a pilot for three peri-urban sites and looked to Danone Communities, a venture capital fund that invested in social businesses, to provide a loan. The team mapped out a feasible system, but debated what fees to charge residents. A low price meant that Project Maji would pay off the loan for the first four years, and only then start accumulating funds to support its activities in rural areas. This would delay scaling. Alternatively, a high price, coupled with an offer to establish direct connections in more well-off households, would allow Project Maji to generate excess earned revenue from the get-go, but it would also raise questions of equitability. All of this weighed on Lalvani as he pondered what price point to include in the investment proposal.

GoPro: Becoming a Subscription Hero

Harvard Business School

In 2021, Nick Woodman, founder and CEO of GoPro, was reviewing the company’s subscription offering, considering whether to extend it beyond benefits that are directly related to the company’s iconic camera. Founded in 2002, GoPro had gained renown for its innovative action camera. The brand became synonymous with living an active lifestyle and attracted a strong following on social media. GoPro was a Wall Street favorite when it went public in 2014 at $24 per share, rising to over $90 per share later that year. But just four years later the stock price had slid to $6 per share due to stagnating demand, inventory management issues, bloated expenses, and problems with new product launches. During the COVID-related retail slowdown in 2020, GoPro increased its direct-to-consumer footprint and aggressively marketed a new subscription. The stock price rebounded, in part due to investors placing a higher multiple on the predictable, recurring revenue generated by subscriptions. By 2021, however, subscription benefits were still largely tied to camera ownership. Woodman was considering whether GoPro could leverage its position as an active lifestyle brand to extend the subscription to benefits beyond the camera itself, similar to the way Amazon packed a host of benefits into Amazon Prime. Woodman saw enormous potential for GoPro’s subscription and believed that, someday, it could even become the company’s new flagship “product.” But how much license did the brand have to grow beyond digital cameras and image capture? What pricing options could the company explore for a bigger, better subscription? In concert with these decisions, should GoPro look to shift even more of its business away from retailers to direct sales?

NiPay’s Pricing Conundrum

London Business School
NiPay, a software provider competing in the Nigerian business-to-business payments market, sells an online transactions solution and a mobile transactions solution to retailers and other merchants. On the back of recent market research, the company’s founder Idaku Ibrahim is looking to set optimal prices for these products across four distinct customer segments. Complicating matters is the fact that the preferences of one segment are changing, and that the research agency sees an opportunity to sell “bulk” orders of a stripped-down online payments product to a range of intermediaries.

SenseAim Technologies: Pricing to Win

Harvard Business School

This exercise serves to help students understand the proper role and use of costs in a firm’s pricing decisions. The exercise is designed such that the learning of students evolves across a classroom session, starting from understanding which costs are relevant when setting the price of a product, progressing to a discussion on the wisdom or otherwise of the traditional “cost-plus” approach to pricing, and ending with a demonstration of how to leverage cost information to construct an iso-profit curve—which, in turn, serves as a useful benchmark to assess possible price changes. These topics emerge as the result of hands-on calculations, where students make recommendations based on the data provided in the exercise, and in-class discussion, where students defend their preferred course of action and reflect on the biases and heuristics that may lead managers to misuse costs in pricing decisions.

Twisterden: Pricing a Go-To-Market Strategy

London Business School

The goal of this exercise is to help students understand the problem of double marginalization in a firm’s go-to-market decisions and consider different means to address it. Specifically, in the first part of the exercise students are encouraged to calculate the financial impact on Twisterden, a British winery, of sticking with the direct-to-consumer strategy versus engaging with one or more wine merchants. The second part introduces two possible retail partners, Cult Drops and Fancy Grapes, as the idea is to engage students in a discussion of the type of mechanisms and retailer characteristics that may facilitate dealing with an intermediary. Overall, the debate in class is supported by hands-on calculations, where students defend their preferred course of action and make recommendations based on the data provided in the exercise.

Holaluz: Taking on the Spanish Energy Market

Harvard Business School

In 2020, the three cofounders of Holaluz, a newcomer to Spain’s electricity retail market, is preparing to launch a new offering: installing and managing solar panels on households’ roofs at no extra cost for the consumer, who would still benefit from the energy savings stemming from the panels’ production. Holaluz would fund the installations via a special purpose vehicle and use the surplus energy to power neighboring Holaluz clients at lower costs. There were many challenges in the new venture, like how to market the offering and if investors would buy into the new business. And what if Holaluz went a step further, got rid of all its tariff offerings and disrupted the market with a monthly “unlimited” flat rate for electricity consumption like telecom operators did with mobile phones bills? Was the market ready?

HP Instant Ink: (Self) Disrupting the Consumer Printing Market

Harvard Business School

Seeking to disrupt the consumer printing market (before being disrupted by others), and in response to customer pain points, in 2013 HP Inc. launched an ink replenishment service called Instant Ink, where customers pay a monthly subscription fee based on the number of pages printed. Replenishment cartridges are automatically sent to the customer prior to running out of ink. The service had reached 7.5 million subscribers by mid-2020 and senior management now expected to scale it substantially. Several growth opportunities were being considered, these included: targeting customers with printers enabled to be part of the service but who declined to join in the past; making instant ink the default option when buying a new printer; adjustments to the pricing tiers and other plan components; more extensive marketing efforts to generate awareness; geographical expansion; broadening the service to laser toners; attacking the remote work space; and thinking about ways to bundle additional elements, such as paper and hardware (printers, computers, etc.). A concrete growth plan to make Instant Ink a multi-billion-dollar business was needed before the annual Wall Street analyst conference to be held in the fall of 2020.

Pearson: Efficacy 2.0

Harvard Business School

Under the leadership of CEO John Fallon, Pearson, the self-proclaimed “world’s learning company,” had made significant progress toward becoming a learner-centric organization. Several years prior, the company embarked on a path that put the learner at the heart of the business and committed to a new strategic orientation. This approach was meant to ensure that products and services were developed with outcomes that mattered to learners in mind and marketed touting their efficacy credentials. While several efficacy reports had been produced on legacy products to refine the framework, 2020 marked the first year that Pearson launched an offering with efficacy as the guiding principle from the very start. As Fallon neared the end of his tenure, he wanted to chart the next phase of the journey. Should the company aspire to develop all of its products and services with efficacy at the core? Which learner outcomes made the most sense to focus on in the future? How could Pearson better communicate efficacy in the marketplace and get it to resonate with various stakeholders—particularly educators and learners? How should Pearson combat “copycat” competitors that started touting efficacy in their own communications—albeit often without the same rigor that Pearson applied? Was efficacy a pillar upon which to build the Pearson brand? In short, should his successor bet the Pearson “farm” on efficacy?

Pricing at Netflix

Harvard Business School

Since its launch in 1998 as “the Amazon.com of DVDs,” Netflix had evolved from a DVD rental company to a video streaming platform and producer of original films and television shows. As the company matured, it regularly increased prices and adjusted its product offerings while continuing to add new subscribers. However, between late 2019 and mid-2020, competition within the streaming industry intensified with the launch of new entrants such as Disney+, Apple TV+, and HBO Max, jeopardizing Netflix’s position as the industry leader. In spite of the heightened competition in the streaming industry, some analysts and customer willingness-to-pay surveys suggested that Netflix had the opportunity to implement another rate hike in the near future. By May 2020, Netflix must decide whether to increase prices again, or whether it should consider a different pricing model altogether.

Revenue Model Innovation at Roche Diagnostics

London Business School

This case study involves the merger of Roche Diagnostics’ Molecular Diagnostics and Applied Science business areas in Germany. The merger, which was initially motivated by a combination of converging needs among commercial diagnostic laboratories and research hospitals, product-portfolio synergies, operational efficiencies, improved customer management, and an increasingly competitive marketplace, brought to light potentials in the way Roche Diagnostics generated revenue from its products and services. While these go-to-market-strategies may have well existed for a number of years, the move to a single sales force calling on customers across the two business areas required the need for a sustainable, integrated pricing approach. One of the key questions occupying Doctor Bodo Eickhoff (Senior Vice President of Sales and Marketing for Applied Science and Molecular Diagnostics in Germany) and his team concerned the appropriate revenue model under the revised organizational structure.

What’s the Deal with Livingsocial?

Harvard Business School

Tim O’Shaughnessy, the 29-year-old CEO of LivingSocial, is growing a revolutionary worldwide business of “daily deals”-in which retailers offer a heavily-discounted product or service available for purchase for brief (often 24-hour) windows. The case explores the complicated sharing of risks and rewards between LivingSocial, participating retailers, and customers, focusing on the return on investment in both the short- and longer-term for LivingSocial’s retail partners. In addition, given the rapid growth of the daily deals space and the accompanying proliferation of competitors including Groupon and Amazon.com, the case focuses on the need for constant innovation in product offerings to maintain differentiation from copycats.

Barceló Hotels and Resorts (A)

Harvard Business School

Barcelo Hotels and Resorts must decide whether to allow its many hotels to continue to undertake separate promotional campaigns or to run, for the first time, a broad corporate-level promotion. Complicating the decision is the fact that the many hotels in its portfolio vary greatly in their character, clientele, positioning, and locations.

Global Graphics: Pricing in a New Market

London Business School

It is October 2009 and Gary Fry, chief executive officer of Global Graphics, is faced with a tough decision. Global Graphics — a technology expert with 20 years experience in developing and selling printing equipment and software exclusively to original equipment manufacturers — is about to release a revolutionary desktop PDF application targeted directly at office workers. With less than two months before the official launch, however, there is still considerable debate on what the actual price of the product should be. Fry is adamant that the “right” price will help Global Graphics achievethe ambitious sales and customer acquisition objectives set by the management team. In addition, he understands the importance of establishing Global Graphics as a viable alternative to Adobe, the undisputed leader in the end user market for business software. What is the price point that best serves these seemingly conflicting goals?

The London 2012 Olympic Games

Harvard Business School

It’s 2009 and Paul Williamson, Head of Ticketing, must finalize ticket prices for the 2012 London Olympic Games. Yet, there are many criteria to consider. First, given the importance of ticketing to the Games’ bottom line, he has a strong incentive to maximize revenues. Second, because the entire world will be watching, he wants to maximize attendance – not just at the Opening Ceremony and swimming finals, which are easy sells, but also at events such as handball and table tennis, which are not. Third, he wants to fill seats with the right people – knowledgeable fans who add to the energy and atmosphere of the event. Finally, tickets had to be accessible not only to the world’s elite but also to average Londoners, many of whom lived around the corner from the Olympic Park.

Bt Business: Responding to ‘Free Forever‘

London Business School

This case describes the actions taken by British Telecom’s business unit (BT Business) in response to the radical ‘free broadband forever’ offer introduced by The Carphone Warehouse (TCW) in April 2006. At the time of the campaign, BT Business held a dominant share of the lucrative (and fast growing) broadband market in the UK. TCW’s bold move clearly threatened that position. More important, BT Business was concerned that larger competitors (Vodafone, BSkyB, O2, etc) would follow suit, therefore initiating a price war that in all likelihood would erase profitability in the industry. The main learning points from this case involve pricing and competitive strategy. In particular, BT Business’ problem touches on a number of important questions, including: (1) maintaining price leadership; (2) managing price competition and the threat of customisation; and (3) designing product bundles that capture customer value and act to discourage competition. In addition, this case provides a good example of the challenges often faced by large firms (especially former monopolies) attempting to improve customer orientation. Prior to ‘free broadband forever’, BT had tried unsuccessfully on a number of occasions to shift its organisational structure away from product lines (fixed telephony, mobile voice and data, broadband, etc). Interestingly, they succeeded only in the face of a significant and immediate competitive that ‘helped’ generate the necessary motivation and momentum.

Viagogo (A) (B)

London Business School

This is two-case series discusses some of the key marketing decisions faced by Eric Baker and the rest of his management team immediately before and after the launch of viagogo in the United Kingdom and other European markets. viagogo is an on-line marketplace where sellers and buyers can exchange live event tickets (sports, entertainment, etc) in a legal and secure manner. The underlying business model replicated the one introduced by StubHub in the United States, a company founded by Eric Baker and a fellow Stanford MBA a few years earlier. The first part of the case is set in June 2006, just two months before the official launch of the website. At that time, the case protagonists faced important decisions with respect to the company’s revenue model. In particular, they had to determine what level of commission to charge, how to split this commission across sellers and buyers, and what pricing mechanism(s) to use (ie, fixed price, auction, and / or declining price). Eric was also considering a potential partnership with a major football club in the UK. A deal was expected to generate considerable exposure for viagogo but, on the other hand, required significant investment and likely constrained the company’s promotional options. The second part of the case takes place in early 2008. Following a brief review of viagogo’s initial performance, a series of new challenges are introduced: (1) how to deal with increasing competition; (2) how to improve the general perception of secondary ticketing in the marketplace; and (3) how to scale the business up from start-up to middle-sized enterprise. Overall, the case highlights common challenges when launching a new business venture. It also questions the common belief that a successful business model in one country can be easily replicated in another. Finally, the case allows for a discussion of how business models tend to change as industries ‘mature’ and new opportunities arise.