Dell

1
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!

2
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

3
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)

5
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

6
Making Fashion Faster (WSJ)

1. Value Propositions of High End Boutiques
2. New Value Proposition of Knockoffs
3. Affordable
4. Speed
5. New and Variety
6. What are High End Fashion Houses Doing To Fend
   Off Knockoffs?
7. Speedy production
8. Differentiation (quality price)
9. Private fashion shows

7
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)

8
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

9
Selling Chocolate In India

1. Challenges to sell chocolate
2. Weather
3. Distribution
4. Consumer purchasing power
5. Responses (by Nestle and Cadbury)
6. Product solid ? liquid change ingredients
7. Price Make it affordable! ( 1 rupee)
8. Distribution Cold chain network (piggyback)
9. Cadbury dual-distribution system

10
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

11
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

12
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

13
One Month to Make it Pen Makers Trial

1. Mantra 500 stores, 30 days, 85 sales
2. After you sold it,
3. Promotion Push ? Pull (core base)
4. Nontraditional promotion
5. Price channel conflict
6. Inventory Tracking
7. Packaging Shipping

14
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

15
You Got the Big Break Now What?

1. Their goal Hit It Big
2. After Wal-Mart
3. Office Depot
4. Walgreens 470,000 unit order
5. CVS, Office Max, Staples, Bed Bath Beyond
6. Challenges of serving National Chains
7. Financial gap
8. Labor shortage
9. Slotting fees
10. Packaging
11. Product expansion
12. Adjust the priority of orders
13. Other challenges Home