Archives posted in: Pricing
C. Larry Pope, CEO of Smithfield Foods, Inc. has frankly told the market to expect rising pork prices to keep rising. We have seen protein producers fail in price management before, so should we believe him? This time, I believe they got the message.
More Most pricing strategists would agree that having a low price is not a competitive advantage in and of itself. In fact, thinking that low prices are always a good strategy for competition is deeply misguided. However, at times, targeting low prices can lead to a strategic focus which delivers tremendous results. For example, Ikea, Wal-Mart, and Southwest Airlines all have low prices and profitably take market share. In this article, we will examine the flaws of assuming low prices is a good competitive strategy, then demonstrate how one firm, Southwest Airlines, redefined the product through target pricing to win the market profitably.
More Executives are living in a time of strong market disruptions that are driving costs up across industries. The recession already squeezed the potential for productivity gains to make up for the lost margins. Now, for many executives selling tangible goods, it is time to push the price lever up. How should they raise prices? Read for the two keys to raising prices successfully.
More The chances are high there is very little left you can do to cut more costs and drive worker productivity. We must turn our focus towards increasing revenue in order to improve profitability. The only realistic way we can increase our price is to do so by driving our “average price” up. In other words, by selling more of the products and services our customers’ value and making sure we are priced as high as our next best competitor plus or minus the added value we bring. This article takes you through why pricing is your next most important area for focus and provides a glimpse into what we mean by raising price.
More In January 2011, American Airlines (AMR) and Sabre Holdings, parent company of Travelocity, came to loggerheads over content, fees, and the role of global distribution systems in the future of air travel. While American Airlines seeks to gain efficiencies and customer intimacy by encouraging customers and ticket brokers to connect directly with the American Airlines information systems, Sabre Holdings decries a reduction of choice and transparency and responds with a lower placement of American Airlines offerings in their distribution system.
Is American Airlines squeezing the distributors and harming customers or is this a strategic shift that improves welfare?
More Our understanding of pricing has come a long way since the 1890 when Alfred Marshall published his treatise on the economic scissors of supply and demand, and it is time for practice to catch-up. To go beyond the price to value mantra and create clarity in the actions and decisions executives should make, we can draw from the marketing orientation of the firm and an economic understanding of value exchange. In this article, we provide an outline of the path to better pricing.
More The concepts associated with creating sustainable processes for monitoring market-based pricing is fairly intuitive. In past articles, I have shared a bit about how to get started and where to focus your energies. Because it is imperative for your company’s survival, this article addresses the hardest part of creating a sustainable pricing system; adapting pricing concepts to your way of doing business.
More In the past six months, both AT&T (NYSE:T) and Verizon (NYSE:VZ) have altered their mobile data service price structures. First, they added a metered fee based on the megabytes of traffic. Now, Verizon is considering a price structure based on the speed of traffic provided. With all these new forms of charges, some have feared customer backlash: defection, brand betrayal, and a public relations nightmare. Yet they needn’t worry much. Both these titans are in well traversed territory.
More Nowhere in marketing today do emotions run hotter than when it comes to the role of (low) prices highlighted in advertising. Only it’s a bad idea to lead with price in advertising.
More Most of us accept that if we go to a convenience store to buy groceries late at night, the price of many of the items will be more than if we bought them at a major grocery chain during regular hours. Yet when it comes to operating our businesses, many of us are not convinced that cost has no bearing on price.
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