Showing 1-20 of 28
Andreas Hinterhuber and Stephan Liozu write that pricing scholars lean toward recommending customer value-based pricing. They provide a mini case study of how to use this method to make sure that you don’t leave money on the table.
Companies differ in their approaches to price setting, but most fall into one of three buckets: cost-based, competition-based or customer value-based. Customer value-based pricing uses data on the perceived customer value of the product as the main factor to determine prices.
However, implementing customer value-based pricing is not easy. Developing a customer value-based pricing program is a multiyear project demanding executive attention and requiring substantial changes in corporate processes.
Since the mid-1990s, many companies have outsourced or offshored their manufacturing operations. For most, one crucial enabling factor was cheap oil: Long supply lines were economically feasible because transportation costs were relatively low. Hence, companies emphasized reducing manufacturing costs through (1) offshoring or outsourcing; (2) plant rationalization; and (3) consolidating distribution centers and warehouses to reduce inventory levels and minimize fixed facility costs.
Students and companies have changing expectations for executive MBA programs. How should business schools respond?
Should you price a consumer product at a price that ends in 99 cents — or price it at a round dollar amount?
advertisement
Want to increase sales of a bundle of goods or services that includes both pleasurable and utilitarian items? Research suggests that a discount will increase sales more effectively if it’s offered on the pleasurable item.
When should a company “nickel-and-dime” customers by charging separately for various extras, and when is it better to combine all of the charges into one total price? It depends on a variety of factors, such as whether customers comparison shop, whether they are more sensitive to the prices of some components (delivery) than to others, whether the price of one component is small or large relative to the others, and whether the company controls the costs and quality of a particular component.
There are several questions an organization should ask to improve its pricing strategy, including: What is the marketing strategy in this segment? What is the differential value that is transparent to target customers? What is the price of the next best alternative offering? What is the customer’s expectation of a “fair” price?
By asking these questions and others, an organization can choose a price point that provides the largest long-term value to the supplier.
Mixed news this week from American Airlines: On the plus side for most people, American plans to respond to flight attendants' concerns and ban porn on its in-flight Wi-Fi system.
Increasing length, complexity and interdependence in supply chain contracts is resulting in more critical and costly supply disruptions, yet despite that risk, commodity procurement is mainly handled via long-term, fixed-price contracts containing naive terms and clauses in the case of breach. The risk of these breaches is very real.
advertisement
More and more companies are now able to change their prices in real time to capture the full possible value of goods and services. Here’s how to do dynamic pricing right.
New product launches are highly complex and can pose major challenges to companies. But managing the interplay between product generations can greatly increase the chances for success.
How leading companies use price, speed, quality and flexibility to drive innovation and shareholder value.
Executives, entrepreneurs and investors are too ready to believe that commodity is destiny. The result is a dulling of strategic focus and a narrowing of the business mind.
The history of the successful Swedish furniture retailer IKEA illustrates the role that adaptation and experimentation play in the development of an innovative strategy.
advertisement
Are you battling imports and losing market share? Has your product become an “unplanned commodity” as your sales negotiations with customers more and more revolve around price rather than value? Is your marketing team launching new products that support your brand and differentiate your company in the marketplace? Do you
Consumers are a fickle lot. Case in point: It’s long been known that a consumer will be unhappy if he or she realizes that someone else got a better deal. So marketers tread very carefully when considering a promotion that targets one set of consumers for fear of alienating another.H
Every company lives in fear of competitors that offer seemingly similar products for much lower prices. Dealing with such discounters is no simple matter, as Hewlett-Packard, May Department Stores, Salomon Brothers and others have discovered. Nevertheless, various strategies — ignoring or blocking the competitor, strengthening your value proposition or even strategic retreat — can help slow or even stop the low-end competitor without destroying the industry’s profit margins.
The past decade has seen a virtual explosion of information about customers and their preferences. Many companies have the ability to gauge customers’ willingness to pay for their products and can determine with some accuracy the effect of price changes on sales volumes.
Industry competitiveness should dictate how much companies rely on advertising revenue as part of their business model.
Showing 1-20 of 28