Reduce Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: ATTRACT CUSTOMERS
CHOICE 2 ISOLATE SEGMENTS: PRODUCT SYSTEM COMPONENT SEGMENT
CHOICE 3 COMPONENT: CHANGE THE LIST PRICE
| No. | SIC | Year | Notes |
| 1 | 1521 | 2004 | Gillette's new Sensor is $3.75, well below Atra and Trac II, hoping to lure shavers from the older products. But cartridges will cost 25% more than those for Gillette's old systems, giving it about 8 cents more gross profit per cartridge. |
| 2 | 3421 | 1990 | Gillette is trying to reemphasize the importance of the shaving system vs. the disposable razor. (Higher profit margins: 8-10 cents/disposable razor, vs. 25-30 cents/cartridge refill). |
| 3 | 3651 | 2009 | Hoping to attract more e-book fans, Amazon.com has sliced $60 off the price of its 6-inch Kindle 2 electronic reader. The Kindle became available for $299 on the online retailer's Web site Wednesday. This is the first time Amazon has dropped the Kindle's price from its original $359 since the product came out in 2007. The second-generation Kindle 2 went on sale in February. |
| 4 | 6021 | 1991 | Sanwa Bank offers a no-points home loan. It saves you about 1.5% of purchase price at time of purchase, then raises interest over the life of the loan by .5% (10.5 v. 10). So, on a $250,000 house, the customer saves $3,750 but pays (assuming 20% down, 8% interest, and 30-year term) $890 per year more over the life of the loan–NPV of $11,044. At five years, the customer breaks even. Customers who keep their homes for fewer than five years realize a lower net price and receive higher savings. Customers who do not have the money to pay the points benefit from this (increasing the market for the bank). |
| 5 | 6211 | 2004 | Ameritrade charges a flat $10.99 for online market and limit orders, for an unlimited number of shares. Automated phone trades cost $14.99, and broker-assisted trades cost $24.99. Ameritrade has a maintenance fee of $15 per quarter if you don't trade at least three times per quarter, or if you have less than $2,000 in your account. Scottrade charges a flat $7 per trade for market orders and $11 for limit orders. There are no fees for small or inactive accounts. |
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