Reduce Price to Improve Revenues and Margins

CHOICE 1 OBJECTIVE: ATTRACT CUSTOMERS

CHOICE 2 SEGMENTS: LOSS LEADER SEGMENT / A LOW PRICE ON ONE PRODUCT TO OBTAIN REVENUES FROM ANOTHER PRODUCT IN A MANUFACTURING SERVICE BUSINESS

CHOICE 3 COMPONENT: CHANGE THE LIST PRICE

No.	SIC	Year	Notes
1	3571	2004	This past September, Nintendo dented Xbox sales when it lowered the price of its GameCube console to $99.
2	3571	2005	Sun Microsystems sells cheaper hardware based on Intel-compatible chips and is giving away a version of its Unix software, Solaris, that runs on inexpensive hardware. The company hopes to make up for this segment's lower margins by increasing volume and selling related services.
3	3571	2007	Videogame console makers typically cut prices as the product matures. They often lose money with every system they sell, relying on videogame sales to make up. However, Microsoft has yet to turn a profit with its videogame business.
4	3577	2005	Printer rivals of Hewlett-Packard are dialing up the pressure. Dell says its inkjet printers cost 10% to 15% less than H-P's, though its ink cartridges are priced about the same. Dell says the total cost of its laser printer, toner and service is 30% to 40% less expensive than H-P's.
5	3651	2004	TiVo Inc. raised the stake in the digital video recorder market by offering free TiVos to Bay Area Comcast customers. The promotion requires its standard one-time $299 fee and $12.95 per month subscription. The device normally costs $200.
6	3724	1993	Pratt offered a 96% discount on its engine for new Boeing 777 aircraft. GE bettered Pratt's offer with concessions worth an extra $30 million.
7	3944	1996	Video game systems at new lower prices will probably cause their makers to lose money, but the companies hope to make up the difference on stronger sales of games. Nintendo announced last week that it would begin shipping its long-delayed Nintendo 64 player at a $249 price.
8	4813	2004	Prepaid firms such as TracFone and Virgin Mobil USA sell their mobile phones retail at below cost. Unlike big wireless companies, TracFone doesn't charge activation fees to start a service.
9	5731	2002	Best Buy, a consumer electronics retailer, relies on warranty as "they subsidize unattractive product sales with low margins." It is the largest consumer electronics store in the U.S., posting $764 million in warranty sales in 2002.
10	6324	2006	In order to enroll seniors in comprehensive healthcare plans, Humana Inc offers pricing for drug premiums far below the industry average, at $10 a month compared with $32. A retail drug bill of $2,000 costs a Humana enrollee just $766 while the average bill for other insurers is nearly double.
11	7372	1992	Nintendo and Sega have cut prices on their advanced video-game systems for a second time in recent months. Both dropped prices about 20%. Sales are expected to increase only 5% this year.

<< Return to Choice 3