Perspectives: Pricing

“Can We Raise Margins With a Price Increase?“
Before a company commits itself to a price increase, it should check marginal costs in the industry and the ability of low cost producers to expand.

“The Dart Player’s Guide to Pricing When Prices Fall“
A company in a falling price environment can reduce the loss of sales and margins threatened by falling prices the way a dart player wins at darts.

“Discovering Hidden Pricing Power“
A company’s effective use of the pricing tool in a price-sensitive market requires more flexibility and market knowledge than is needed in a less hostile environment. The pathways to the pricing opportunities in tough markets lay in three actions a management can take to use price effectively in a market that appears intolerant of price increases.

“Entering a Different Dimension“
Understanding key differences between hostile and non-hostile markets can help leaders make the transition between the two.

“The Grasshopper and the Ant“
Leaders of industries coming out of hostility would do well to remember the grasshopper and the ant. Hostility, like winter, always returns.

“Hallmarks of Hostility
Companies whose industries are in hostility will have to confront several symptoms of this hostility that show themselves in the channels of distribution.

“Hostility in a Differentiated Market“
A bottle of wine is surely a differentiated product. Nevertheless, the table wine industry underwent the same economic traumas faced by more traditional industries.

“How Price Kills Profits“
Many people use their costs to determine their prices. But customers don’t care about a company’s costs. By thinking more like customers when pricing products, a company might increase its profits.

“Is Your Industry Ripe for Hostility?“
A company enjoying above average margins probably has a competitive advantage. But if margins are high for an entire industry, tough times may lie ahead.

“The Leader’s Trap“
Being the market share leader should be an advantage. But leadership also has its dangers. Many times, in a range of industries, leaders have allowed themselves to be trapped.

“The Lessons AT&T Holds for Industry Leaders“
When a strong industry leader is in a Leader’s Trap, the industry may stay relatively attractive for the follower companies. However, once the leader gives up its Leader’s Trap pricing, the industry has a very different future.

“Managing Before and After Hostility Starts”
Low levels of profitability for most competitors make a hostile industry a tough place to compete.

“Meeting Falling Prices with Creativity”
Sooner or later, most companies face the prospect of falling prices in their industry. Many companies will respond to falling prices with price cuts across a wide spectrum of the market. Some companies, though, have found ways to limit the price reduction to carefully selected segments. In order to succeed at this, a company must make three specific choices. These choices should result in higher margins and better revenues than is the case with an across the board price reduction.

“Must the Cycle Start Again?“
Does hostility represent an inevitable cycle at work or can an industry prevent, or at least delay, the return of bad times?

“The Myth of the Hockey Stick“
From the early stages of hostility, real improvement in price was a long time in coming.

“The New Pricing Structure“
The structures of industry prices are fundamentally different in hostile and non-hostile markets.

“Overcapacity: Threat or Opportunity?“
Overcapacity is a problem that occurs in service, as well as manufacturing industries. When it strikes, the problem affects most functions in a company, and astute managements in a wide range of industries have found common formulas to outperform competition in markets with overcapacity.

“The Price Segment“
The price segment is not nearly as attractive as many assume.

“Rare Mettle: Gold and Silver Strategies to Succeed in Hostile Markets“
Managements of winning companies have common themes for success in hostile markets. They each follow five basic themes. While virtually all successful companies are aware of these themes, their implementation differs according to their market situation at the onset of hostility.

“Sandlots and Super Bowls”
A market that is not hostile is something like a sandlot game in sports.

“Staying Alive in a Hostile Marketplace“
A few companies survive and even prosper during periods of hostility. How do these companies avoid being the victims of tough market conditions?

“Success Under Fire: Policies to Prosper in Hostile Times“
A hostile market evolves through six predictable phases. Most companies fail, withdraw or become acquisitions before this evolution is complete. They fail because their management policies were not effective. The few who survive and prosper do so by making decisions that follow two rules: attract customers and discourage competition. Losers lose by not following the second rule.

“Turmoil Below: Confronting Low-End Competition“
There are four major types of competitor who offer your customers low prices. Each of them have distinct weaknesses. Your response to them depends on your answer to several tests that you would apply to your market and your competition.

“Use Subtle Strategy in Tough Markets“
A hostile market operates differently than a market with “normal” competitive conditions. But as difficult as a tough market can be, it can also present an astute management team with an unusual opportunity.

“What Ends Hostility?“
The challenge for business leaders is to recognize the true end of a hostile market place when it arrives and to avoid being deceived by a temporary ending.

“Who Has Pricing Power?“
One of the first clear signs that a market has become hostile (or that hostility has ended) is a change in who sets prices. Pricing power shifts as a market moves into and through hostility.

“Why Price Cuts Don’t Build Share“
Customers often say they buy on price. But the real buying process is more complicated. Price is not the customer’s first consideration. It is his last.

“The Wisdom of Salomon“
In the late 80s’, the investment banking firm of Salomon Inc. decided to leave the municipal bond market – a market the firm had lead. This withdrawal showed just how limited management’s options are when a market goes into overcapacity and how the best choice under such conditions may be the painful decision to leave the industry.

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