Bed Bath & Beyond is well – perhaps best – known for its ubiquitous 20% off coupons. The chain of domestic merchandise retailer stores recently announced disappointing financial results. While revenue increased slightly, net profits dropped by 10%. So what’s the profit drain culprit? An “order of magnitude” increase in redemption rates, claims the company’s CFO!
While it’s easy to blame “those” coupons, my question is what would have happened to Bed Bath & Beyond’s profits if those coupons hadn’t been omnipresent. Please check out my latest article for the Harvard Business Review, which discusses the use of surgical strike discounts – a tactic that every company should incorporate into its overall pricing strategy.
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Posted on October 6th, 2015 (0 Comments)
Boy, it must be tough being Apple. What other company commands such a consumer and media frenzy every year it releases a new product? Now the scrutiny is on “first weekend” sales. Apple announced this morning that weekend sales were in excess of 13 million. Any figure less than 12 million would have likely deemed the new iPhone a disappointment.
The new phone has been well reviewed, but I think Apple’s new iPhone Upgrade Plan deserves credit too. A key way to drive growth is getting existing customers to upgrade more. Apple rolled out a new hybrid leasing/no interest financing ownership plan which makes it easy for purchasers to upgrade frequently. More importantly, the new upgrade plan makes Apple a rival to the wireless carriers. Feeling the heat of competition, cellular carriers heavily promoted and creatively priced the new iPhones.
Please check out my latest piece for the Harvard Business Review which hammers home my consistent theme that the real creativity of pricing is not the price tag, but in how consumers pay the price.
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Posted on September 28th, 2015 (0 Comments)
Anger over American pharmaceutical drug prices has been simmering for quite some time but boiled over in the past few days with one company raising drug prices by 5,000% and presidential candidate Hilary Clinton promising big price changes if elected.
Many proposals for drug price reform (regulation, single payer) are short sighted as they treat the symptom (high prices) without addressing the root causes. The truth is pharma companies aren’t evil, they are just playing by the rules set by the U.S. Government and their stockholders. It’s time to address the root causes of the drug price bubble by having a frank discussion on regulation, what role the U.S. has in funding R&D, and the realities of R&D budgets.
Please check out my latest piece – which I believe is my best ever – in the Harvard Business Review which outlines my proposal to reform pharma pricing.
Thank you – as always – for reading and please consider following me on Twitter: @cultureofprofit
Posted on September 22nd, 2015 (0 Comments)