Tag Archives: pricing

What businesses should learn from Netflix

Excellent commentary below from MDM about what business owners and managers can learn from recent Netflix snafus. ********* I was one of the millions of Netflix subscribers that received an email earlier this week from the CEO of the popular DVD-by-mail and streaming service Netflix apologizing for the way the company handled a recent price increase and explaining how it is going to move forward with two separate companies – Qwikster for its DVD sales and Netflix for its streaming. The company has been lambasted for its handling… Read More →

Guest Post: Viewpoint on availability and quality

I received this from an industry contact who preferred to remain anonymous, but agreed to let me share this on Making Cents. They make some excellent points regarding the availability turnaround that has occurred in the industry (from oversupply to shortages) and regarding plant quality. Over the last two plus years I have purchased from 65 nurseries and toured about 130 nurseries.  I talk with plant brokers, propagators, and other nurserymen about plant availability, quality, and pricing in the market.  I also attend several trade shows during the… Read More →

Why companies should not compete on price

This article on pricing was recently posted to the Executive Adviser, a business journal put out by the MIT Sloan Management Review. It is well worth the read.

Do price increases reflect value?

An interesting article appeared in Advertising Age this week regarding Restoration Hardware’s latest pricing strategy. Hint: It’s all in the marketing! Click here.

How will the current retail environment affect green industry sales in the spring?

Quick overview of some of yesterday’s December retail data (no real surprises): Wal-Mart cut fiscal Q4 earnings target about 10%.Costco posted a 4% drop in December same-store sales.Family Dollar gained 8%; Same store sales gained 6%.BJ’s Wholesale had 1.6% sales growth; the lowest in a year.Sears (the largest U.S. department-store) sales fell 7.3%.Target same-store sales fell 4.1%.Macy’s December sales fell 4%.Gap stores sales fell 14%.Abercrombie & Fitch fell -24%.Neiman Marcus reported a 28% drop off.Limited Brands reported a 10% drop. Also, a recent DJN press release states: Food… Read More →

Discounting can be dangerous!

During tough economic times, companies often rush to reduce prices on their products and services. That seems like common sense: People can’t afford to spend as much, so charge less to keep them buying. But discounting has its perils. To be sure, discounting is effective when done wisely and strategically. It can get consumers excited about a product, encourage them to buy more, and help your short-term bottom line. However, whether the purchase is a hot dog, a handbag, or a stay at a five-star hotel, customers want… Read More →

Pricing in a downturn

From the latest McKinsey Quarterly… Getting pricing right is always a challenge in an economic downturn, as decreasing demand, excess capacity, and greater price sensitivity all conspire to drive down prices. In most downturns, the cost of raw materials, feedstocks, and other upstream supplies—as well as the cost to serve customers (for delivering goods, for example)—tends to stabilize and even decrease as business activity slows. As a result, decreases in downstream prices are at least partially offset by lower upstream costs. But in the current environment, not only… Read More →

Solving the cost-price squeeze

According to Table 10 in today’s BEA report, real disposable personal income increased in July by 1.2% compared to July last year, following a 3.4% annual increase in June and 6.3% increase in May. Both growth rates (May and June) were above the 2.6% average growth in real disposable income since 2001, following 7 months (October 2007 to April 2008) of below-average growth. Although real disposable income growth showed weakness in the last quarter of 2007 (0.6%) and the first quarter of 2008 (-0.7%), the above-average, year-to-year growth… Read More →

Real versus perceived value

Marvin Miller’s latest musings in the August 18 America in Bloom newsletter is a must read. Click here to view his comments. Pay particular attention to his “perceived” value comments. Signaling perceived value is a key point in any successful differentiation strategy. The questions you must answer about these signals include: What mix of quality, price, service, convenience, and selection signals can influence perceived value? What signals work for your customers? Are multiple signals necessary? Does it depend on purchasing behavior, customer segment, or outlet(s) chosen, or all… Read More →

Gas prices actually do influence driving behavior

The chart below shows the annual vehicle traffic volume, measured in billions of miles traveled in the U.S., on a moving 12-month basis through February 2008 from the Federal Highway Administration. The flat trend in traffic volume over the last year or more, along with the declines in each of the last four months through February 2008, appears to be the most significant adjustment to traffic volume in any comparable period during the last 25 years. High gas prices appear to be having an effect on driving habits…. Read More →