Archives posted in: Pricing
At the beginning of the Great Recession, Abercrombie & Fitch (ANF) had a clear policy against price promotions. By the end of the Great Recession, price promotions were clearly part of Abercrombie & Fitch’s retail strategy. What changed? Was Abercrombie & Fitch’s price promotion policy shift simply another shoot-from-the-hip shotgun response to declining sales, or was it a needed change to improve growth and profits?
More As health care spending consumes a greater and greater share of the nation’s economic output in the future, Americans will be faced with increasingly difficult choices between health care and other priorities. However, a number of opportunities exist to constrain health care costs without adverse health consequences.
More It’s once again that time of year where the kids are out of school, the stress of work is weighing us down and the thought of a relaxing getaway is on our minds. As we begin to investigate the options there are many factors we need to consider including costs, time constraints and of course destination. Unfortunately, a large majority of us don’t live in Hawaii, next to a four star resort or a world-class golf course. That means we have to get into a car, board a plane, find a train, ship or some other form of transportation to get to where we are going. After you consider all of the options – even with the inconveniences of security, over crowded flights and additional fees – you may find yourself with one viable alternative – air travel.
More As a customer of the Amazon online marketplace and self proclaimed elastic demander of new books in all forms and genres, I find myself intrigued by the pricing segmentation strategies employed. Forcing the consumer to self-identify their willingness to pay using tactical segmentation hedges circumvents the blind online interface between the customer and firm. The consumer’s marginal benefit is indirectly discovered by the time of purchase and method of delivery. Essentially, Amazon has captured a significant array of customers at different pricing points for the same desired good, resulting in revenue outcomes more consistent with quasi-complete price segmentation.
More 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.
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