Reduce Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: REWARD CUSTOMERS
CHOICE 2 SEGMENTS: CUSTOMER COST SAVING SEGMENT / CUSTOMERS WHO USE LESS RESOURCES IN THEIR REGULAR PURCHASES
CHOICE 3 COMPONENT: CHANGE THE LIST PRICE
| No. | SIC | Year | Notes |
| 1 | 2854 | 2005 | Express Scripts has taken Lipitor off its preferred list in order to push clients toward the generic Zocor. Switching patients from Lipitor to Zocor will help Scripts and its clients save money. Express Scripts says it will try “therapeutic substitution” on patients in an attempt to get them to switch brands. Even though therapeutic substitution has never been effective before, there's never been another drug class where benefit managers have had more incentive to try. Some 80% of Express Scripts' patients take low-dosage Lipitor, which is no stronger than Zocor. The remaining 20% can take Crestor, made by AstraZeneca, or Vytorin, made through a partnership between Merch and Schering-Plough. |
| 2 | 3572 | 1993 | Conner cut prices for distributors and began selling direct to computer makers; competitors matched prices. |
| 3 | 5961 | 2008 | Airlines have long known that business travelers will pay higher fares in return for maximum booking flexibility, and that leisure travelers are willing to give up some flexibility in order to pay less. The lesson for e-tailers: They, too, can reap rewards from managing demand—in their case, by segmenting customers according to how they want their goods delivered. People who shop online can differ greatly in what they're willing to pay for delivery, and how flexible they can be on the time and date, when they have to be home to receive the package. If e-tailers adjust their fees and delivery options accordingly, they can not only increase revenue but also efficiency. The more delivery time slots one can choose from, the more attractive the service is for the customer, potentially increasing sales. The most obvious tool for segmenting customers is the delivery fee. Discounts should be offered for less-desirable slots to smooth demand. Prices can also vary based on the width of the time slot (hours during which the recipient can receive the shipment), with bigger discounts for wider time slots. |
| 4 | 6321 | 2005 | State Farm Insurance recently heard from its online community how unpopular its plan was to offer reduced rates for safe drivers willing to drive with "black boxes" (which would monitor how and when they drove). |
| 5 | 6321 | 2008 | State Farm Mutual Insurance Cos., Travelers Cos., and Farmers Insurance Group say that drivers who log less than about 7,500 miles a year may be eligible for "low mileage" programs that reduce premiums an average of about 10% to 12%. Car owners who drive more than that but less than they used to may also save on premiums. Consumers could save 5% to 15% by cutting their driving to drop into different ratings categories (for example, from "drive to work" to "pleasure driving") |
| 6 | 6321 | 2008 | State Farm Mutual Insurance Cos., Travelers Cos., and Farmers Insurance Group say that drivers who log less than about 7,500 miles a year may be eligible for "low mileage" programs that reduce premiums an average of about 10% to 12%. State Farm's program earns drivers discounts ranging from 12% to 18%. Car owners who drive more than that but less than they used to may also save on premiums. Progressive Group of Insurance Cos. pioneered its "MyRate" program, in which drivers in Oregon, Minnesota, and Michigan get a 25% discount off regular rates for using an installed monitoring device to track driving habits. The insurers charge drivers according to when, how, and how many miles they drive, so that those who log fewer miles pay less. |
| 7 | 6321 | 2008 | State Farm Mutual Insurance Cos., Travelers Cos., and Farmers Insurance Group say that drivers who log less than about 7,500 miles a year may be eligible for "low mileage" programs that reduce premiums an average of about 10% to 12%. State Farm's program earns drivers discounts ranging from 12% to 18%. GMAC Insurance from General Motors Corp. offers eligible On-Star subscribers who drive less than 15,000 miles savings of up to 54% on their premiums, including an automatic 11% discount. |
| 8 | 6321 | 2008 | State Farm Mutual Insurance Cos., Travelers Cos., and Farmers Insurance Group say that drivers who log less than about 7,500 miles a year may be eligible for "low mileage" programs that reduce premiums an average of about 10% to 12%. State Farm's program earns drivers discounts ranging from 12% to 18%. Travelers and Farmers Insurance has rolled out discounts for drivers who switch to hybrid and other gas-saving vehicles; since 2005, Travelers recently started offering a 10% discount on most coverages for owners of hybrid or other gas-saving cars in 44 states. |
| 9 | 6331 | 1997 | Chubb Group is offering a separate vacation home policy that can lower premium costs. It adjusts for differences in the way people use their first & second houses. |
| 10 | 6331 | 2008 | Insurers are using high-tech devices to track customers' habits, and offering deep discounts to those who not only drive less, but also cautiously. Progressive Corp and GMAC Insurance of GMAC Insurance, as well as at least two smaller companies including Unigard Insurance Co. of Bellevue, Wash., a unit of QBE Insurance Group of Australia, are starting this plan. Drivers who participate in this plan have devices installed in their cars that, depending on the technology used, can track the number of miles driven, the speed at which cars are driven and even how hard the brakes are used. Usage-based insurance would mean an estimated two-thirds of households would pay less in premiums than they do now. Researchers calculated average savings at $270 per car, per year. Progressive says 34% of its customers in Michigan, Minnesota, and Oregon chose the usage-based program since 2004. |
| 11 | 6331 | 2008 | Insurers are using high-tech devices to track customers' habits, and offering deep discounts to those who not only drive less, but also cautiously. Progressive Corp and GMAC Insurance of GMAC Insurance, as well as at least two smaller companies including Unigard Insurance Co. of Bellevue, Wash., a unit of QBE Insurance Group of Australia, are starting this plan. Drivers who participate in this plan have devices installed in their cars that, depending on the technology used, can track the number of miles driven, the speed at which cars are driven and even how hard the brakes are used. GMAC Insurance's low-mileage discount program with Onstar, grants discounts to users of vehicles equipped with GM's GPS and communication systems; customer retention rates are higher for those using the device. In order to receive a discount, the driver must subscribe to OnStar, which is free for the first 12 months but costs $199 to $299 after that. New customers who agree to have odometer readings sent directly will earn a discount if they drive less than 15,000 miles annually. |
| 12 | 8011 | 1998 | Discount-for-cash upfront programs are aimed at patients who don't have health insurance or have a high deductible and would otherwise have to pay a doctor's full fee on their own. |
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