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.

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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.

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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?

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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.

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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?

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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.

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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.

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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.

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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.

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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?

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