Reduce Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RETAIN CUSTOMERS
CHOICE 2 ISOLATE SEGMENTS: PRODUCT COST SAVINGS SEGMENT
CHOICE 3 COMPONENT: CHANGE THE BENEFIT PACKAGE
| No. | SIC | Year | Notes |
| 1 | 2043 | 1998 | Quaker has been rolling out a line of bagged cereals that are cheaper versions of its rivals' national brands. By skimping on packaging and marketing costs, Quaker can sell bagged products for about $1 less than boxed counterparts. |
| 2 | 2339 | 2006 | Chinese factories are ramping up production of knock-off denim meant to compete with the expensive Japanese fabric that has become the hallmark of premium jeans. To hit that lower price point, the Paper Denim and Cloth label is cutting its jeans prices this month to $88 from $120, and to $180 from $220. The company says it's still using Japanese denim, but has shifted its final wash prices to much cheaper facilities overseas, in China and the Dominican Republic. |
| 3 | 2731 | 2004 | In an effort to lure back students who buy used textbooks because the costs of new textbooks are too high, Pearson PLC is offering 300 of its most popular U.S. textbooks online at half the price for print versions. Online versions of texts are being sold through a program called Safari Books Online, a joint venture between Pearson and O'Reilly Media Inc. Books that usually cost $100 in hardback will cost only $50 online. The online texts can be printed out section by section at multiple sittings, which makes it harder for students to copy or print a whole book at one time. As of now, hardcover books are loaded up with CD-ROMS and links to additional websites, thus boosting the costs. |
| 4 | 2834 | 1994 | Syntex introduced a generic version of Naproxyn 2 months before its patent expired, grabbing 68% of generic market. That forced the generic price to plunge as much as 90% below Naprosyn's, causing very low profit margins. |
| 5 | 2834 | 2006 | Some pharmaceutical companies are now making settlements with generic drug companies by agreeing to shorten the patent life of a drug in return for assurance that they can market it for a few years free of their generic rivals. The Federal Trade Commission has found that generic prices are typically 40% to 50% lower than branded pills, but they drop even lower as additional generic versions come on the market. The FTC has maintained that settlements delay competition and hurt consumers. |
<< Return to Choice 3