Reduce Price to Improve Revenues and Margins

CHOICE 1 OBJECTIVE: ATTRACT CUSTOMERS

CHOICE 2 SEGMENTS: PRODUCT COST SAVINGS SEGMENT / MANUFACTURING BUSINESS FUNCTIONAL COSTS / MAKE COST

CHOICE 3 COMPONENT: CHANGE PRODUCT FUNCTION AND PRICE TOGETHER

No.	SIC	Year	Notes
1	2731	1990	Dover has an eclectic backlist of 4,000 titles on art, science, crafts, chess, music and architecture. Because some of these are in the public domain, they require no royalty payments – so Dover’s books sell for 30% below comparable books elsewhere.
2	2800	2004	P&G is even producing special, smaller sizes of its products so that the discount stores can hit their low prices. For example, P&G produces 18-ounce bottles of Dawn dish soap to sell at $1.
3	2893	2005	Facing pressure from off-brand ink sellers and sticker-shocked customers, Hewlett-Packard and Lexmark International are launching lower-capacity ink cartridges with smaller price tags. HP is selling cartridges of different capacities – with prices starting under $15 per cartridge – for the first time this year. It also has been pushing “Value Pack” bundles of ink and paper for making a specific number of prints. Lexmark, meanwhile, has launched two printers that use a single $20 ink cartridge. That price is about a third cheaper than the typical cartridge. Not that either company is ready to give up the famously high margins associated with their ink business. Drop for Drop, the new ink costs more, not less.
4	3571	1998	News that Hewlett Packard would offer a $799 computer powered by an Intel chip is just the latest shot at a price war that is only expected to intensify. Compaq is expected to turn up the heat today with its own $799 computer.
5	3571	2006	Ncomputing Co. is reviving the ’90s concept of thin clients that could bring computers cheap enough for the world’s PC-less masses. The thin client, once attached to a mouse, keyboard, and monitor, can be used to tap into a PC somewhere else, across the room or across the continent, at a far lower cost than owning a PC for yourself. Ncomputing’s cost is less than $50 per user, vs. $250 for a cut-rate desktop PC. And if volumes rise as it hopes, that price could fall below $10.
6	3651	2005	Apple Computer Inc. is departing from its well-known path of high-end gadgets to try low prices on a new line of products. The new $99 iPod Shuffle lists for nearly $150 less than the starting price on other iPods. The device, smaller than a pack of gum, lacks two of the most distinctive features of the iPod: a screen and a scroll wheel for navigating through song lists. With the new iPod, Apple is competing from a position of far greater strength than it enjoys in the PC market. The iPod accounts for more than 60% of new sales in the digital music-player market.
7	3661	2006	Low-priced cellphones, particularly those $60 or less sold in emerging markets like India and China, are starting to make a bigger difference to the bottom lines of the industry’s big handset makers. Nokia began touting cheaper phones two years ago and now has the leading market share in India and China. But Nokia is starting to feel the heat from Motorola, which started building phones in India for the first time in December. Motorola’s Indian-made C115 phones, which has a simple black-and-white screen, sells for $40, about $15 less than Nokia’s lowest-price model in the country. The difference cost Nokia sales of 2-3 million units in India during the first quarter.
8	3711	2004	BMW’s modifications and new designs are closely watched by the company leadership, financial analysts, the automotive press and Beemer fanatics. The entry-level 1 Series has received positive early reviews and enthusiastic sales, 5,600 in a little under two weeks, in Europe and Asia. With a base price of about $25,300, the 1 Series costs about $5,000 less than BMW’s current lowest-priced sedan and makes club membership available to a whole new kind of customer.
9	3713	1985	In 1984-5 several manufacturers, Ford a leader among them, began to introduce what came to be called “vanilla trucks,” ie. Trucks with standard specifications but no customer options – in short, price leader products. Up until that time all trucks were designed specifically to customer specs. Beforehand. Most major manufacturers developed some trucks that were “spec’d out” in this way. Paccar was the only one that didn’t even bother to look at the idea and remained a custom manufacturer throughout. The trucks were not a terribly successful product.
10	3861	2004	To tackle the cost of home printing, H-P focused first on paper. H-P had been using paper from expensive specialty mills. Then, last year, H-P executives say they figured out how to make photo-quality paper at a cheaper mass-market mill in Europe, slashing the consumer’s price for a 4-by-6 sheet of photo paper to 10 cents, from 30 cents. Trimming the cost of ink was a more delicate task, because the company relied so heavily on ink profits. So, it borrowed a trick from cereal-makers, reducing cartridge prices by putting less ink inside, and making the cost of ink overall appear cheaper.
11	4481	2004	Carnival Corp, the world’s largest cruise line, had to reroute ships, change ports and cut short itineraries in response to bad weather in the summer of 2004. However, losses were minimized by the company’s ability to move its ports. This flexibility also helped the company survive the decrease in pleasure travel after September 11. Boats were moved to closer-in ports, fares were cut and shorter trips were offered to appeal to the nervous or budget-conscious traveler.
12	4512	2003	Midwest Airlines, known for premium service aimed at business travelers, spelled out plans for a low-fare service catering to leisure fliers. New MD-80 jets for new air service will be reconfigured to boost seating by 25%. Midwest Express Holdings has been posting losses. Walkup fare for one way flight to Orlando will decrease from $423 to $194.
13	4512	2005	Gol Intelligent Airlines traffic, revenue, and profits have soared, thanks largely to its low-fare and low-cost business model. Many of Gol’s late night red-eye flights cost about the same as a bus ticket. Cut-rate fares between 1 a.m. and 5 a.m. are part of the airline’s strategy to lure more passengers. It’s working. The flights operate at 92% of capacity or more, and about 15% of passengers have never flown on a plane before.
14	4813	2003	The Bells are stepping up their fight against rival cable broadband operators, lowering their monthly Digital Subscriber Line broadband-subscriptions rates and gearing up to offer a host of niche features such as downloadable movies and games. They are offering a new service called DSL Lite which is 5x faster than dial-up connections but slower than the standard DSL service. New service costs $35 per month.The aim is to appeal to a new customer segment without eroding the revenue from its current customer base. Bells will also offer more extra DSL broadband services: Firewalls and parental protection.
15	4813	2004	If cable firms lose significant market share in 2004, many analysts expect them to roll out more tiered pricing plans. Those plans cost less than the typical $45 monthly cable Internet fee, but data speeds are slower. The Bells already offer discounts on slower DSL speeds.
16	4813	2009	In a sign that the recession is forcing phone companies to take bold measures to hold onto land-line customers, Verizon Communications Inc. is considering a $5 monthly voice plan that would let customers receive calls but only dial 911 and Verizon customer service. The telecom provider could begin offering the new $5 plan by summer, along with a second, $10 monthly plan that would allow some limited local calling. Only customers with high-speed Web access from Verizon would qualify for the new plans.
17	6211	2004	Exchange-traded funds have become popular due to their flexibility and low fees. Expenses for ETFs that invest in domestic stocks average just 0.37% of assets against 0.73% for comparable no-load index funds. ETFs can be more tax-efficient than funds too. ETFs are better suited to larger, lump-sum investments.
18	7372	2009	PCs aren’t selling like they used to, and prices are falling. Notebooks’ prices have plummeted to $788 from nearly $1,420 in 2004. The average notebook is now cheaper than the average desktop, and declines in notebook prices got faster last year with the growing popularity of low-cost netbooks for checking e-mail and surfing the Web. Netbooks that sell for less than $400 account for a fifth of total unit sales.
19	7375	2004	Microsoft also offers a stripped- down service called MSN Plus for $5.95 a month but it lacks most of the compelling features of Premium except for the larger e-mail attachments.
20	7375	2009	Some small businesses are overhauling their pricing strategies amid the recession and finding new growth through lower offerings and discounts. Towerstream Corp., a company that delivers high-speed Internet access to businesses, last year began finding it harder to gain and keep clients for an eight-megabit-per-second product that then cost $999 a month. In January, the company introduced a midrange product offering a five-megabits-per-second for $500 a month. Although the average ticket item’s price decreased as a result, the company had a record quarter for installations and revenue increased 64% in the quarter from a year earlier.

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