Case Studies

Case Study Summary

Origins and Deregulation

In the late 1970s, airline deregulation sparked fierce industry competition, allowing new, smaller carriers to undercut traditional airlines on price. To retain market share and incentivize repeat business without lowering fares, American Airlines launched the first major frequent flyer program, AAdvantage, on May 1, 1981. Inspired by retail prize stamps, the initial concept was simple: reward loyal customers with free flights based on miles flown.

The Mileage Arms Race

Competitors like United and TWA matched American's program almost immediately. When United launched its version without an expiration date on miles, American was forced to follow suit. This open-ended structure sparked an industry-wide arms race to offer tiered statuses (e.g., Gold) and complimentary upgrades, fundamentally changing the economics of air travel.

From Aviation to Banking

The most significant shift occurred when airlines began treating miles as a proprietary currency, selling them directly to banks for cash. Banks then offered these miles as credit card rewards, meaning consumers could earn free flights through everyday spending rather than just flying. Today, loyalty programs are often more profitable than the actual airline operations; in 2023 alone, American Airlines generated $5.2 billion from credit card and other partnerships, while Delta brought in $6.6 billion.

Current Challenges and Scrutiny

As these programs have expanded, airlines have continuously recalibrated them to maintain profitability—often by changing the benchmarks for status or increasing the miles required for a flight. This has led to several modern challenges:

• • Consumer Frustration: Flyers frequently complain about the sudden "devaluation" of their accumulated miles, making it harder to book the flights they want.

  • Federal Scrutiny: In 2024, the Department of Transportation launched a probe into the four largest airline loyalty programs to investigate potentially unfair, deceptive, or anti-competitive practices.

  • Dwindling Influence: Recent research indicates that the ability of these programs to actually influence consumer behavior is declining, pushing airlines to find new, broader ways for customers to earn and spend their miles.

• Acquisition Event: On September 20, 2017, the inbound marketing, sales, and CRM software provider HubSpot announced its acquisition of Motion AI, a platform that enabled companies to easily create and deploy artificial intelligence-powered chatbots.

• The Strategic Goal: HubSpot aimed to incorporate Motion AI's technology into its customer relationship management (CRM) software to help its business-to-business (B2B) customers automate human-staffed interactions and converse with buyers efficiently at scale.

• Core Challenges & Decisions: Chief Strategy Officer Brad Coffey and Chief Marketing Officer Kipp Bodnar faced several critical strategic questions before rolling out the bot-building technology:5

  • Evaluating when and where chatbots are appropriate to use versus human agents within the marketing, sales, and post-sale customer service processes.

  • Deciding how much to anthropomorphize the chatbots (make them human-like) and whether to disclose to users that they are interacting with a machine.

  • Finding the right balance between a conversational user interface (UI) to drive engagement and a functional UI to deliver utilitarian efficiency.

  • Developing an industry framework and best practices for "doing bots the right way" to ensure companies do not abuse the technology and harm their brands with spam.

• Internal Implementation: The HubSpot team also had to determine whether to practice what they preached by replacing their own live chat representatives with chatbots to manage and nurture HubSpot's own prospective customer relationships.

Brief Summary

• Founding and Core Identity: Founded in 1996 by Kevin Plank in his grandmother's basement, Under Armour originated from Plank's frustration with sweat-soaked cotton shirts while playing football at the University of Maryland. He developed a lightweight, form-fitting, sweat-wicking compression shirt that launched the brand with a mission to improve athletic performance.34

• Early Growth and Guerilla Marketing: The company initially expanded through grassroots efforts, leveraging word-of-mouth recommendations among college and professional football equipment managers and players. National visibility spiked following product placements in film and high-impact sports magazine advertising in the late 1990s and early 2000s.56

• Public Offering and Cleat Launch: Under Armour launched a successful IPO in late 2005 to raise capital, famously driving its pitch with the mantra "cotton is the enemy". Soon after, the company directly challenged industry leaders like Nike and Adidas by successfully expanding from apparel into the footwear market, beginning with football cleats.78

• Brand Extensions and Strategy: Over two decades, the company aggressively leveraged its brand into adjacent segments—including women's sportswear, golf apparel, and lifestyle fashion lines—while navigating the tension between driving growth and maintaining brand authenticity.9

• The Wearables Moonshot: In an effort to lead through technological innovation, Under Armour spent nearly $1 billion to acquire digital fitness tracking platforms like MapMyFitness and MyFitnessPal. This "Connected Fitness" initiative aimed to utilize user data to inform product development, despite adding financial and operational complexities.1011

• Strategic Crossroads: By 2017, the company reached over $5 billion in revenue but faced its first-ever financial loss and sluggish growth. The case concludes with CEO Kevin Plank and senior leadership evaluating how to sustainably scale to $10 billion without diluting the core purpose and authenticity of the brand.

Brief Summary

Overview of GROW: Developed by Masahiro Fukuhara (founder and CEO of Tokyo-based startup Institution for a Global Society), GROW is a gamified mobile app designed to evaluate job candidates objectively.

Core Components:

• Competency Assessment: Utilizes peer feedback to evaluate candidates across 25 specific social science-based competencies.

• Personality Assessment: Employs a gamified, mobile version of the Implicit-Association Test (IAT) to measure personality traits and uncover hidden biases.

How the AI Works: 

GROW uses artificial intelligence and machine learning algorithms to analyze core data and metadata (such as response times, clicking behaviors, and swiping patterns) from both candidates and evaluators. This helps weight the reliability of peer evaluators and build a highly calibrated candidate profile.

Client Use Cases: 

Prominent Japanese firms use GROW in unique ways to streamline recruitment:

• Septeni Holdings replaced labor-intensive, in-person group interviews with GROW data to source talent outside Tokyo, cutting administrative processing efforts by 90%.

• All Nippon Airways (ANA) used GROW to screen "in" highly capable candidates who traditionally would have been prematurely filtered out by initial resume screenings.

• Mitsubishi Corporation leveraged candidate social graphs within GROW to identify and recruit highly talented peers of their "ideal" candidates.

Future Outlook:

As GROW collects more performance data of hired candidates, the tool is poised to shift toward "reinforcement machine learning". This would allow the AI to automatically adjust and potentially overrule human-defined recruitment criteria based on actual job performance.

Brief Summary:

• The Incident: In March 2008, professional musician Dave Carroll witnessed United Airlines baggage handlers roughly handling and damaging his $3,500 Taylor guitar during a flight connection at Chicago's O'Hare airport.

• The Bureaucratic Impasse: Over the course of 15 months, Carroll attempted to seek compensation from United Airlines. His efforts were met with systemic customer service runarounds, ultimately ending in India where a representative officially denied his claim because he failed to report the damage within the airline's strict 24-hour window. Frustrated, Carroll informed the representative that he would write and release three songs about his experience on YouTube.

• Going Viral: On July 6, 2009, Carroll posted his first music video, "United Breaks Guitars". Promoted heavily by friends via Twitter and digital news aggregate sites, the video rapidly exploded, gaining three million views within its first week and reaching the top spot on YouTube's music video charts.

• The Aftermath and Brand Fallout: The massive public relations crisis coincided with a 10% drop in United Airlines' stock price, costing shareholders an estimated $180 million.

  • United rushed to make things right, offering Carroll $1,200 in cash and $1,200 in flight vouchers, which he rejected, requesting they donate the funds to charity instead. United ultimately donated $3,000 to the Thelonious Monk Institute of Jazz.

  • The airline publicly committed to using the viral video as an internal training tool to teach employees and customer service representatives to use discretion when applying rigid policies.

  • The incident completely transformed Carroll’s career, opening up global opportunities for speaking engagements, music distribution, and business partnerships.

Brief Summary:

• Strategic Shift: The case details Nike's strategic evolution from traditional publishing advertisements toward interactive, experience-driven consumer conversations. This shift included cutting TV and print budgets by 40% since 2009 while maintaining massive overall marketing investments targeted at digital networks.34

• Early Social Media Experiments: Nike initiated its digital experiments with campaigns like the Art of Speed blog in 2004, the viral "Touch of Gold" YouTube video featuring soccer star Ronaldinho in 2005, and a custom global social network called Joga.com in 2006.567

• The Rise of Nike+: In July 2006, Nike partnered with Apple to launch Nike+, syncing footwear sensors with iPods to track running data. This grew into a massive online community with over 5 million members by 2012, fueled by GPS app integrations, location-based games like "The Grid" in London, and localized engagement strategies such as the "Lunar Runs" in China.8910

• 2010 World Cup Campaign: Nike successfully bypassed official event sponsorship by leveraging Facebook and its own online portals. It introduced its "Write the Future" commercial directly on Facebook to build exclusive fan access and organized "The Chance," a highly public, social-network-integrated global player search.111213

• Nike Digital Sport and New Ecosystems: Formed in 2010, the Nike Digital Sport division was created to build products and platforms that merge physical sports with digital data tracking. This led to major 2012 product launches, including the Nike+ FuelBand (which tracked a normalized metric called NikeFuel) as well as pressure-sensor-equipped footwear for Nike+ Basketball and Nike+ Training.

Brief Summary:

• Background and Growth: Sworkit was initially created in 2012 by Ryan Hanna as a side-project to help build randomized workout routines. It eventually grew past one million downloads, leading Hanna to partner with Ben Young and Greg Coleman of Nexercise Inc. in 2014 to turn the app into a formal business. By the summer of 2017, the health and fitness app had reached 25 million downloads.

• Business Model Shift: The app originally relied on a "freemium" model that offered a free, ad-supported version alongside a paid premium version. In 2016, Sworkit shifted its premium tier from a one-time purchase to a recurring subscription model ($7.99 per month or $59.99 per year by 2017), which significantly increased its recurring revenue.

• The Strategic Dilemma: By October 2017, the leadership team faced intense frustration regarding the unpredictability and disruptive nature of mobile advertising. Even though the company was highly profitable, the founders began debating whether to completely eliminate the free tier of the app.

• Key Concerns: The leadership group clashed over whether moving away from a freemium model would alienate its user base, stop organic word-of-mouth publicity, and drastically shrink the funnel of new user acquisitions, or if it would successfully convert more users into highly profitable paid subscribers.