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'We have to get
our prices up.' This is a common refrain in businesses around the
world today as competitive pressures have sliced margins. Often,
however, the exhortation which follows is an unrealistic one -- for
example, 'Boost prices, sales volume and profitability each by ten
percent in the next year!' Opportunities to do this are rare; but
opportunities to improve profit dramatically by better pricing are
the norm. . . Consider the CEO of a $10 billion company meeting
with the marketing managers of his various divisions. 'Get me a
nickel, get me a dime – every day. Find a way to convince the
customer that we are worth it. Pick up these nickels and dimes all
around the world -- everyday -- they drop right to our bottom line
-- and pretty soon we are talking big improvements to our net
income.' . . . The forms of interrelatedness [due to global brands
and worldwide procurement] and information [which as created smarter
more powerful
customers] have created more complex price schedules. No longer
able to charge customers different prices just because of their
geographic separation, firms attain price customization by applying
the same pricing schedule to all customers, fully aware that because
of the specific terms and conditions of the sale different prices
are received at the end.
— Robert J. Dolan and Hermann Simon in
Power Pricing: How Managing Price
Transforms the Bottom Line,
New York: The Free Press, 1996, pp. 3-6. |