Reduce Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RETAIN CUSTOMERS
CHOICE 2 SEGMENTS: TARGETED COMPETITOR SEGMENT / STANDARD LEADER PRICE AGAINST ESTABLISHED STANDARD LEADER / AGAINST A TOP TIER STANDARD LEADER
CHOICE 3 COMPONENT: SET A PRICE CAP
| No. | SIC | Year | Notes |
| 1 | 4512 | 2005 | Delta announced plans that would cap one-way coach airfares in the continental U.S. at $499 and one-way prices in first class at $599. Frequent fliers worry that the small difference between coach and first-class tickets will make it difficult to obtain free upgrades. America West announced similar changes in 2004 and has seen only slight drops in upgrades for frequent fliers because it has higher cost differentiation on certain routes. |
| 2 | 5900 | 2003 | In retail markets, especially those focusing on electronics and hardware, price matching is a common way to build the trust of the consumer. Tweeter, a New England consumer electronic retailer, guarantees customers the lowest price. If a competitor offers a lower price, any customer who spent more in the last 30 days will be automatically sent a refund of the difference. |
| 3 | 6211 | 2007 | Hedge fund fees usually include an annual management fee and 20% on any profits. The fund is allowed to keep performance fees even when they later lose money for their investors. With this pricing structure, the interests of clients and money managers are at odds. Some companies are working to remedy this problem and in return encourage loyalty. Orbis Investment has shifted their income, Orbis puts the money into a reserve account. If the fund later underperforms, this money is used to pay back clients. |
| 4 | 6211 | 2007 | Hedge fund fees usually include an annual management fee and 20% on any profits. The fund is allowed to keep performance fees even when they later lose money for their investors. With this pricing structure, the interests of clients and money managers are at odds. Some companies are working to remedy this problem and in return encourage loyalty. Sleep, Zarkaria & Co. will charge a 20% performance fee only on gains above a 6% annual hurdle, if this hurdle isn't cleared in future years, the firm will pay a refund. |
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