Board of Directors

Basic Strategy Guide

Reduce Price to Improve Revenues and Margins

CHOICE 1 OBJECTIVE: ATTRACT CUSTOMERS

CHOICE 2 SEGMENTS: OCCASION SEGMENT / A SPECIAL SALE PERIOD

CHOICE 3 COMPONENT: CHANGE THE LIST PRICE

No.	SIC	Year	Notes
1	1521	2006	Builders and developers have turned to auctions to unload newly built homes as the market slows and contract cancellations increase. Builder confidence is at a low and both builders and developers are struggling to pay overhead, taxes and interest on their loans. As builders make up to a 40% gross profit on homes, they can reduce prices to sell quickly. This measures can translate into a 20% discount for buyers.
2	1521	2007	As the housing market slows, home builders are rolling out incentives to encourage sales. Hovnanian Enterprises launched a "Deal of the Century" promotion which offers discounts of up to $149,000. The best discounts were available on homes that were already started.
3	2037	1986	In 1980, 47% of COJ was purchased on deal. By 1986 this number had increased to 63%.
4	2037	1989	There are three forms of prices in the industry: regular retail price, deal pricing and coupon pricing. Deal prices are those offered to customers during sales or discounts on the retail level. Traditionally the major competitors offer a significant amount of their product at deal prices. For example, in 1988 FCOJ had 45% of its sales at deal and RTS had 47%. Both of these figures are down from the previous year. Deal pricing did increase substantially beginning in 1983 when overcapacity set in. By 1989 deal pricing was particularly prevalent in the COJ market and within that market in the Not From Concentrate segment, which is the fastest growing segment in the industry.
5	2840	1992	In forward buying, supermarkets pounce on special wholesale deals & stock up on far more merchandise than they plan to sell during the promotion. Later, they get a wider margin by selling goods at reg. price. Or they sell it to other retailers.
6	3651	2007	Syntax offered its 32-inch Olevia LCD TV sets for $475, half of its normal price on the day after Thanksgiving. This tactic, which allowed Syntax to outsell Sony, forced rivals to lower their prices and put Olevia on the radar. As a result, consumers are seeing lower prices in stores even as consumer electronics stores suffer.
7	3711	2007	Ford Motor's Ford Family Plan allowed customers to buy most 2005 models at the employee rate. The popular Mustang, GT and Escape hybrid were excluded. The promotion was combined with existing cash incentives, taking even more off the price. A Ford Explorer XLT which normally sells for $32,895 is sold to employees for $28,739. After incentives, customers will pay only $24,749.
8	4481	2000	Most cruise costs are fixed whether a ship's berths are filled or not, so it is better to sell cheap than not at all. Last minute cruise bargains are widely available. Some are finding that it is cheaper to go on a cruise than to stay home.
9	4512	2005	United Airlines is auctioning off prizes such as a new Chrysler Crossfire, the services of a gourmet chef, adventure trips and tours. However, these products cannot be bought and must be bid on with United Plus miles.
10	4724	2009	Orbitz Worldwide Inc. plans to announce Wednesday that it will reduce the service fee it charges travelers to book hotel rooms on its Web site through July 15, upping the ante after recent online travel-agency moves to cut the fee on airline-ticket bookings. Booking a hotel room on Orbitz will be cheaper than it will be on competitor sites like Travelocity.com and Expedia Inc.'s Expedia.com about 80% of the time. When Orbitz is cheaper, the average savings will be $7 a night. Expedia Inc. says its fees are and will be competitive with Orbitz, and, in addition, it is often able to use its size to negotiate better base rates than Orbitz. Sabre Holdings says its site charges fees only on hotel rates that have been negotiated at a discount. Orbitz "Dare to Compare" promotion aims to grab market share from competitors.
11	4813	1993	To generate interest in its new collect-call service, AT&T said it would cut 10% off the price of collect calls on the Fourth of July and would offer a 30% discount throughout the summer on collect calls made from selected airports.
12	5311	2001	End-of-season sales were introduced in the 1950's as a way to clear inventory and free up cash. In the 1960s, department stores added back-to-school sales to draw in customers. However, with new competition from discount stores and their improved offerings, department stores have found themselves forced to constantly stage sales to lure in customers.
13	5331	2008	Costco is known for its constantly changing selection of high quality goods, which entices shoppers to make impulse buys. Anyone can walk into Wal-Mart for cheap underwear, but getting a discount Cartier watch is something else, especially when customers know it may not be there when they come back. Costco is a place where even the highly affluent like to brag about shopping. The average member household makes upward of $75,000 a year.
14	5621	2004	The issue facing Talbots is how to keep prices up in a world of discounting, one of the biggest challenges facing retailers today, ever since the explosion of low price formats. In the 1990s stores of every type have fired back with an ever expanding number of sales. In addition to the traditional markdown, retailers try to entice shoppers with one day sales that often stretch to two. White Sales, Back to School Sales and sales for every major holiday.
15	5719	2003	As the nation's biggest chain of upscale closeout home goods, Tuesday Morning follows a unique schedule tied to peak selling seasons. The company stages 10 multiweek sales events a year for a total of 250 shopping days.
16	5999	2004	At Restoration Hardware, which has done little discounting so far, customers will get 20% off their entire purchase on Dec. 5 and 6.
17	6021	1991	One Banc One affiliate has "sidewalk sales." Branch owner grills hot dogs and hamburgers, there's a petting zoo, and there are one-day bargains like a quarter percent added to the prevailing rate on 6-month CDs.
18	7900	2009	Some discounts occur around occasions. Northstar at Tahoe ski resort offered a $25 tax relief ticket. This ticket saved the skier $54 and allowed the owner to ski or ride on Wednesday, April 15, for that low price.

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