For any business launching a new product or service, the subscription model is an attractive one.
Once reserved to gyms and fitness centres, the subscription model has permeated through almost every single vertical in recent years.
Services like Spotify and Netflix are well-known and used by a sizeable portion of the global population, but there are many smaller Direct to Consumer (DTC) subscription services like Dollar Shave Club, Who Gives a Crap, Hello Fresh and Zipcar which have all proven successful in their respective industries.
For businesses, such a model offers the prospect of customer retention as a default state, rather than the usual churn.
It’s the promise of reduced costs and increased penetration by simply replacing ‘ownership’ with ‘usership’.
But as enticing as it is, the subscription model is not for everyone and does carry with it some challenges.
navigating the challenges
Launching Subscriptions and Pivoting – a white paper produced by the Launch Marketing Council and brought to life by global independent launch agency Five by Five – details the journey of Tummify, a dairy probiotic founded by entrepreneur Simon Micarone.
Aiming to disrupt the gut health market dominated by Yakult, the product differentiates itself by being low in sugar and high in performance.
Brought to market in November 2019, Tummify found an ideal launch partner in the form of Harris Farm, where it could reach a health conscious consumer willing to pay for a premium product.
But it was unable to enjoy as much success with a DTC subscription model, which has been unable to have any real impact yet owing to a lack of marketing spend.
Tummify is by no means the first business to face challenges when launching a subscription.
LG Electronics former CMO Angus Jones warned of some potential dangers that come with launching a subscription service.
“We are generally happy to subscribe to give us access to something like a gym, a streaming service or a newspaper but when it comes to goods, not so much,” he said.
“Years ago we had bottles of milk delivered each day now we buy from the supermarket and wine subscriptions tend to be cancelled to give us more flexibility in a bottle shop. Maybe it’s about getting the ratio of quantity and commitment duration right?”
Jones also mentioned the challenges for manufacturers specifically looking to disrupt a retail environment by launching a subscription service.
“There are a number of barriers to a manufacturer operating a subscription model: Firstly, established global accounting practises would not easily support it,” he said.
“Secondly, we’d create a conflict of interest against existing bricks & mortar strategy with retail partners who hold all our customer data. Lastly, resources to plan and execute such a strategy would need to be very different from normal practices.”
There’s also the matter of ‘subscription fatigue’, as consumers begin to feel overwhelmed by the seemingly endless number of services available.
A study last year found 75 per cent of respondents find it harder to choose a subscription due to a high variety of options.
And sometimes, a subscription model is simply flawed, a point proven by movie ticket service MoviePass which initially promised unlimited movie tickets for a flat monthly fee but ultimately was unable to deliver on the promise profitably.
To learn more about the ins and outs of launching a subscription, you can download Launching Subscriptions and Pivoting here.
The International Tennis Federation (ITF) has announced the results of a first-of-its-kind global research project examining sports gender equality across the media and social media, commissioned as part of its ITF’s Advantage All gender equality strategy. Conducted and delivered by Ipsos MORI, the research explored how the representation of male and female athletes varies, identifying […]
Adelaide-based creative agency KWP! brings more than one hundred volunteers together in an onscreen battle against life threatening diseases for the sequel to The Hospital Research Foundation (THRF) Group’s ‘Together Fight’ campaign. Two 30-second TVC’s feature the return of ‘The Beast’, who comes up against a young patient and army of real-life patients, researchers, staff […]
Leading Australian podcast agency, The Peers Project, has partnered with global e-commerce company, Shopify, to amplify diverse millennial voices through the podcast series ‘Peers2Peers’. The 150 episode podcast, powered by Shopify, showcases the entrepreneurship and personal journeys of inspiring millennial leaders from across the globe. The podcast provides real life advice from young leaders and […]
David Beckham has been announced as the new global brand ambassador of Maserati and has revealed his first work for the famous Italian marque. The accompanying TVC sees Beckham, 45, doing donuts in a Miami parking lot with his new Maserati SUV, the Levante Trofeo, all while dressed as an extra from Miami Vice. The […]
Barilla repositions itself on a global level with a new Global Brand Campaign signed by Publicis Italy, which puts emotions back at the core of its communication and marks a new strategic path for the brand worldwide. As in the memorable campaigns of the past, the brand speaks to people’s hearts giving a special value […]
Tribal Australia, part of DDB Group, has hired Colin Jowell (left in main photo) as its first-ever chief strategy officer, further bolstering its strategic capabilities and credentials. Jowell was most recently at KPMG as part of the consultancy firm’s Customer, Brand and Marketing advisory. Jowell first joined KPMG in 2018 following its acquisition of UDKU, […]
H&H Group (parent company of Biostime, Swisse, Solid Gold, Dodie, Good Goût, and Aurelia Probiotic Skincare) stands for Health and Happiness, a sentiment that extends to everything they do. To celebrate these values and the Group’s shared culture across their teams in Asia-Pacific, Europe, North America and Oceania, the Group has partnered with creative studio […]
One of Asia Pacific’s most experienced human resources leaders, Jean-Michel Wu, has been appointed Head of Talent at TotallyAwesome. The new position will see Jean-Michel Wu work with TotallyAwesome CEO, Will Anstee, and a growing regional management team TotallyAwesome provides a forum for kids, teens and families to safely interact with brands across thousands of […]