In the summer of 2022, it became clear that Netflix would introduce an ad-supported tier alongside its existing subscription plans in the near future. Speculation abounded as to the details of the new tier: How many minutes of advertising would it include? What picture quality would it offer? How many screens could be viewed at the same time? And, critically, how much would it cost the consumer per month? In this exercise, students are tasked with trying to assess whether Netflix should indeed go ahead with introducing a new ad-supported tier - and if so, how? - or whether the company would be better off sticking with its existing tiers and repricing them - and if so, by how much? Students need to evaluate which of these options would maximize the number of subscribers, and importantly, profits. Students have at their disposal results from market research (specifically a conjoint analysis study), financial reports, and industry data. The exercise also allows for a conceptual discussion of the merits of alternative revenue models: ad-driven vs. pure subscription-driven vs. a hybrid of the two.
To augment the growth of a restaurant's business, its owner began selling coupons on a New York City deals website. However, the owner wondered whether selling these steeply discounted coupons was a sound business decision. In this case, students are presented with a spreadsheet with 34 months of sales data and are asked to develop a regression model of sales as a function of key variables. This case is accompanied by a Solutions note that details the steps in developing a model of sales as a function of seasonality, a time trend, and current and past promotional activity.
Twenty five years after it was initially proposed, Clay Christensen's theory of disruptive innovation continues to be a major reference for entrepreneurs, corporate innovators, and investors. However, the term "disruptive innovation" is often used in ways and contexts that are not consistent with Christensen's original theory, which argues for initially accessing the market from the low end. For example, there has been controversy as to whether a firm like Tesla, which clearly accessed the market by targeting high-end consumers, should be thought of as having "disruptive" potential. Should all disruptions start at the low-end of the market or from unserved segments who can't afford the incumbents' current solutions (a "new market" foothold in Christensen's terminology)? Is it possible for an innovation that will ultimately disrupt and displace incumbents to start off by serving high-end segments that are currently participating in the market and are willing to pay top dollar? In this note, using several examples, including the emerging market of cultivated meat, a distinction between High-End Access Disruptions (HEAD) and Christensen's original Low-End Access Disruptions (LEAD) is proposed. Both strategies support innovations that have the potential, at scale, to dominate incumbents, but that are not able to do so initially due to a "handicap," i.e., a product shortcoming that mainstream consumers aren't willing to accept. The exposition analyzes similarities and differences in the disruptive processes implied by these two strategies, and provides practical guidelines to help entrepreneurs, innovators and investors choose the approach that best fits their situation.
Conjoint Analysis has become one of the most commonly used quantitative market research methods. It has been successfully employed across a wide variety of industries to quantify consumer preferences for products and services. This technical note is intended to provide practical guidelines for designing, conducting and analyzing a conjoint analysis survey. The note discusses the six steps needed to effectively run a conjoint analysis study, and includes advice on best practices to follow and what pitfalls to avoid. Several user-friendly Microsoft Excel spreadsheets accompany this note and can be used as aids when implementing and analyzing a conjoint study.
In 2011, Lebanese television station LBCI partnered with Impact BBDO to develop Cheyef Halak, a marketing and social media program that aimed to create meaningful social change in Lebanon. The first campaign, which targeted the chaos of road traffic in Lebanon, captured the imagination of the Lebanese population. But how should the impact of the campaign be measured? And what were the linkages between the traditional advertising venues and the social media that were employed? This case includes videos of the television campaign, excerpts from the social media campaign, and associated tracking data to analyze the success of the campaign from a qualitative and quantitative perspective.
In early 2012, supported by a seed grant from PepsiCo, Nithya Raman, then a masters student in marketing at Columbia Business School (CBS), partnered with Rich Donovan, CBS '02, a world-renowned expert in the convergence of people with disabilities (PWD) and corporate profitability. Together, they framed a lead user study to gain PWD-inspired insights into innovation in the retail space. In this case, students learn of past applications of the lead user method to achieve breakthrough innovation and the step-by-step process by which Raman framed and carried out her study.
Aliza Freud partnered with Josh McKay (both CBS '01) to launch SheSpeaks, a word-of-mouth (WOM) marketing community, in 2007. What business model would help them to compete in the world of Facebook and Twitter - and by what means should they measure the success of their marketing campaigns?