Customer Reviews: The Strategy and Tactics of Pricing: A Guide to Growing More Profitably
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on June 6, 2016
good book. I used it for my pricing class while getting my master's degree
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on December 21, 2015
I really don't remember it.
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HALL OF FAMEon November 26, 2015
Our ValueScan survey, covering over 200 companies in both consumer and business markets, found that firms developing and effectively executing value-based pricing strategies earn 31% higher operating income than competitors whose pricing is driven by market share goals or target margins.

A prominent example is the iPhone. While out of line with competitive products, Apple understood that a hard-core group of innovators would place a high value on the iPhone's differentiation. Wal-Mart puts its deepest discounts on products, like disposable diapers, that drive frequent repeat visits by big spenders on other products. Since competitors with narrower product lines cannot justify an equally low price on a 'loss leader,' Wal-Mart can undercut them to generate more traffic without triggering a price war.

Cost-plus pricing is historically the most common pricing procedure. However, in most industries it is impossible to determine a product's unit cost before determining its price because unit costs change with volume. A price increase to 'cover' higher fixed costs can start a death spiral, while in strong markets it can lead to underpricing. One should instead ask whether the change in price will result in a change in revenue more than sufficient to offset a change in total fixed variable costs.

Two problems arise when prices reflect the amount buyers seem willing to pay. Sophisticated buyers are rarely honest about how much they are willing to pay for a product. Secondly, the job of sales and marketing is not simply to process orders at whatever price customers are currently willing to pay, but rather to raise customers' willingness-to-pay to a level that better reflects the product's true value. For example, only after extensive marketing to communicate value did photocopiers, mainframe computers, and food processors achieve market acceptance. Finally, letting pricing be dictated by market-share goals is analogous to 'letting the tail wag the dog.'

Because a price cut can be so easily matched, it offers only a short-term market advantage at the expense of permanently lower margins. Thus, unless a company has good reason to believe its competitors cannot match a price cut, the long-term cost of using price as a competitive weapon usually exceed any short-term benefit. Sometimes the most profitable price is one that substantially restricts market share - Godiva chocolates, BMW cars, Peterbilt trucks, and Snap-on tools would doubtfully benefit from added share by cutting price. A product with a 30% contribution margin could lose up to 25% of its volume following a 10% price increase before it resulted in lower profitability. When Alan Mulally took charge as Ford's CEO in 2006 he declared that Ford would focus on selling cars profitably, even if fewer of them. He cut Ford's 96 models to 20 and sold off its unprofitable Jaguar and Land Rover brands. While Ford initially gave up market share in the 2008 recession, it was the only one of the Big Three to avoid bankruptcy.
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on May 15, 2015
Great book with lots of practical ideas and insights. Strongly recommended!
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on March 18, 2015
By far one of the best books I've ever read and extremely useful for pricing strategies and marketing education.
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on March 2, 2015
SMU course
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on February 15, 2015
No drawbacks. Timely delivery
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on February 13, 2015
This is the worst text book I have ever had! It is poorly written and hard to follow. I was not the only one in my class that thought this.
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on December 13, 2014
Can I give less than 1 star? If yes, that will be that.
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on December 9, 2014
The content of the book is five stars. It loses one star for the tiny font, and general quirkyness derived from what I attribute to a lack of optimization to the Kindle.
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