Dells PC Pricing

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Dells PC Pricing

• Only PC company to report a profit
• How? ? Through Flexible Pricing
• Traditional Pricing Method for PC industry
• Sales forecast ? component bids ? unit cost ?
  list price based on bid cost, sales forecast, and
• desired markup.
• 4. Problems of the traditional pricing model
• - less flexible - less control
• 5. Flexible pricing easy to gauge customer
  sensitivity ? make them variable!

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Dells Pricing

• 6. What does it take to do Flexible pricing?
• Suppliers forecast changes ?sharing cost
  information ? schedule production
• Dell cost information package adjust prices
  based on quantity, profit target, proposed
  delivery dates ? price transparency and
  flexibility
• Customers advanced order or staggered delivered
  date

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Sales Incentives (FT article)

• Two different types of incentives
• What is the problem with Chryslers incentive
  scheme?
• Stretch Goals Pros and Cons
• Mike Jensen Linear Compensation Scheme based on
• Performance past sales and profits
• Current Market Conditions
• 5. Reeducate CFOs!

4
Trust in Markets

• Sherman Act (1890) To outlaw anticompetitive
  trusts and certain predatory tactics ? political
  motives ? Being big is bad
• If high market share ? merger proposals were
  rejected
• By 1960s The dangers of a vertical merger were
  grossly exaggerated (Robert Bork)

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Trust in Markets

• Recent changes
• Government Visible hand ? Invisible hand
• Focus Political motives ? Microeconomic outcomes
  (products and prices)
• 30,000 Ft view ? 30 ft view
• Enforcement blocking merger ? negotiation
  between parties

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Making Fashion Faster (WSJ)

• Value Propositions of High End Boutiques
• New Value Proposition of Knockoffs
• Affordable
• Speed
• New and Variety
• What are High End Fashion Houses Doing To Fend
  Off Knockoffs?
• Speedy production
• Differentiation (quality price)
• Private fashion shows

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Wine Distribution

• Key Issue Fostering Competition versus
• Regulating Alcohol Consumption
• 2. Source of the Problem Misalignment between
• Federal Law (Interstate Commerce) and State
• Law (Alcohol Regulation)
• 3. Case for Transshipping More Competition ?
• More Choices and Lower Price ? High
• Consumer Welfare (www.freethegrapes.org)

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Small Wineries at the Bar (WSJ)

• 4. Case for Wholesalers Ability to control
  alcohol consumption and underage drinking
• (www.pointclickdrink.com) collection of liquor
  taxes ? Distributor Welfare State Welfare
• 5. Which side do you support?
• 6. The Supreme Court Verdict
• 7. Response by big wineries

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Selling Chocolate In India

• Challenges to sell chocolate
• Weather
• Distribution
• Consumer purchasing power
• Responses (by Nestle and Cadbury)
• Product solid ? liquid change ingredients
• Price Make it affordable! ( 1 rupee)
• Distribution Cold chain network (piggyback)
• Cadbury dual-distribution system

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Developing Wal-Mart Account

• Selling to Wal-Mart
• Opportunity 5300 stores and 138Million shoppers
  a week
• Challenge 2 acceptance rate
• Birth of PenAgain
• Problem (Need) ? new product opportunity
• Persistence from high school on

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Developing Wal-Mart Account

• 3. What Wal-Mart (Retailers) look for
• 1. Unique product, but with mass appeal
• 2. Sales history
• 4. How to lay the foundation?
• 1. Start from local stores
• 2. Go to trade shows
• 3. Who need this product? ? why it deserves a
  place on Wal-Mart shelf

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Developing Wal-Mart Account

• 5. Serving the Wal-Mart Account
• 1. High volume manufacturing capacity
• 2. Lower price
• 3. Broad product mix
• Sell me a program!
• 6. Foot in the door (Trial period)
• 1. 500 store, 6-week trial ? 85 test

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One Month to Make it Pen Makers Trial

• Mantra 500 stores, 30 days, 85 sales
• After you sold it,
• Promotion Push ? Pull (core base)
• Nontraditional promotion
• Price channel conflict
• Inventory Tracking
• Packaging Shipping

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One Month to Make it Pen makers Trial

• 3. Passed the test ? additional order for 150
  stores
• 4. Key challenges as they grow
• 1. Survive weak times ? Make it an everyday item
• 2. Shortage of workforce ? merchandise service
  organization
• 3. Too many orders? (Office Depot)
• 4. Do not forget small accounts product
  relationship

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You Got the Big Break Now What?

• Their goal Hit It Big
• After Wal-Mart
• Office Depot
• Walgreens 470,000 unit order
• CVS, Office Max, Staples, Bed Bath Beyond
• Challenges of serving National Chains
• Financial gap
• Labor shortage
• Slotting fees
• Packaging
• Product expansion
• Adjust the priority of orders
• Other challenges Home