Reduce Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RETAIN CUSTOMERS
CHOICE 2 ISOLATE SEGMENTS: INDIVIDUAL CUSTOMER SEGMENT
CHOICE 3 COMPONENT: CHANGE THE BASIS OF CHARGE
| No. | SIC | Year | Notes |
| 1 | 7311 | 2001 | Nestlé is shifting the way it pays ad agencies amid a change in its emphasis from TV to less expensive forms of marketing. Nestlé spends $2.2 billion each year to market Toll House morsels, Butterfinger bars, Lean Cuisine, Stouffer's, Ortega foods, Powerbar, and more. In the past, it paid ad agencies as much as 15% of total ad spending in commissions. Now, it will pay all agencies in the US annual fees based on their hours invested in developing advertising. It will pay bonuses to its agencies when an advertised product gains market share or posts higher sales. Its goal is to get better performance, not lower what it pays. |
| 2 | 8011 | As health care providers, such as HMOs, had to face capitation, they often had cost structures where physicians were on staff . The payers have now forced the independent physician industry to captitate as well. | |
| 3 | 8742 | 2009 | For decades, marketing firms, accountants and other professional-service companies have all billed nearly the same way—by the hour, or, on occasion, with long-term contracts. But the recession is chipping away at that tradition, with companies forced to adopt performance-based pay and fixed prices in an effort to retain and attract clients. The change affects marketing, advertising, accounting, recruiting, and even a few law firms. At San Francisco recruitment-outsourcing company Accolo Inc., clients recently began backing out of existing contracts, which require that a company pay Accolo several thousand dollars a month to fill a certain number of jobs. Now, new and existing clients were allowed to start working under what the company calls a "No/No" Contract. The clients pay no fixed monthly fee, and they aren't required to fill a certain number of jobs. Instead, when they need to fill a job, the clients pay a higher one-time fee. |
<< Return to Choice 3