Board of Directors

Basic Strategy Guide

Reduce Price to Improve Revenues and Margins

CHOICE 1 OBJECTIVE: RETAIN CUSTOMERS

CHOICE 2 SEGMENTS: INDIVIDUAL CUSTOMER SEGMENT / OTHER TYPES OF INDIVIDUAL CUSTOMER

CHOICE 3 COMPONENT: CHANGE THE LIST PRICE

No.	SIC	Year	Notes
1	1021	1991	During hostility, Phelps Dodge offered to be competitive on price but didn't guarantee the lowest price in the market. In 1983, Phelps Dodge led the industry in switching from Producer Priced-based pricing to COMEX-based pricing. This didn't have much impact on market share, though, because all competitors followed quickly enough. Towards the end of hostility, competitors set a fixed premium over COMEX, which fluctuated given distance and payment terms. Phelps Dodge, however, would not release a fixed premium, preferring instead to calculate a unique price for each customer. This had the advantage of making price comparison difficult.
2	2499	2004	The company is attempting to meet the falling competitive price by meeting competitive prices as defined by the customer at key accounts. They have not gone after non company customers with their message that they will meet market prices, and at the moment the pricing pressure only exists in the west, not in the mid-west and east, and only with the big customers.
3	2824	1999	To make sure that our customers are not losing in the marketplace to that particular competitor that they have, we’ve had to take some rifle shots. We’ve gone in and helped them on specific accounts to make sure that they stay competitive.
4	3241	1991	Among domestic producers, share was won or lost due to innovations, not prices. Within domestic producers, price was commoditized. Each competitor was willing to match the other's price for long-standing relationships and large volume customers.
5	3442	2005	One company sets its price by product. It then makes exceptions to that price for individual customers as they run into competition. The company will also discount prices to help the customer's customer complete.
6	3571	1996	Rebound of IBM not due to technology, pricing or marketing moves–due to established relationships, focusing on the customers' needs. Mainframe prices cut when customers complained of high prices.
7	4911	1994	OPC's average revenues per kilowatt hour (kwh) sold to its members was 5.47 cents in 1993. Rates to member residential and large commercial/industrial customers averaged 8.29 and 4.87 cents/kwh, respectively. While OPC's average residential rates were 7% higher than those charged by Georgia Power Co., OPC's average large commercial/industrial rates are very competitive at 4.87 cents/kwh, compared to GPC's average rate of 4.71 cents/kwh.
8	6321	2009	Only Progressive gives you the option to name your price. They say that if you tell them what you want to pay, they will build you a policy to fit your budget.
9	7372	2004	Amid heavy competition, Linux firms are offering steep discounts. Red Hat cut the price of its Enterprise Linux AS software by 40% to $850 per server. At the same time, Microsoft has gotten more aggressive on pricing of its Windows software. The company has made major concessions to big customers who have threatened to use Linux.
10	7372	2005	When the English National Health Service was going to negotiate a new licensing agreement with Microsoft Corp., the company also met with Sun Microsystems Inc. about trying its Linux based software. The company announced significant savings could be wrung from using Linux and it would enable the company to give better care to its patients. In response, Microsoft lowered its prices.
11	7372	2005	Governments in Europe, South America, and Asia are turning to open source software, or using the threat as a leverage to get Microsoft to cut prices. Microsoft cannot afford to lose government agency clients which make up 10-15% of its revenue.
12	7374	1994	An industry competitor has found large price differences among merchants. These prices vary by the size of the merchant. Regional merchants are charged $.37 per transaction while the largest national merchants are charged only $.027 per transaction. Within a merchant size range, variations in pricing exist, from 50% below to over 200% above the average.
13	8011		Medicare and Medicaid both receive substantial discounts from list prices but only the managed care companies provide increased patient volume in exchange for their pricing discount.
14	8062	2003	Very few patients are actually charged the official prices that hospitals have to make public. All patients covered by insurance are assessed discounted rates negotiated by the payers. Only those with no insurance are billed the full costs. As work place health benefits erode, consumers are paying out of their own pockets for procedures not covered by insurance.
15	8062	2009	Rising health care costs, especially in the share paid by the patient, are making more patients try to bargain down prices. Hospitals often prefer to chop a bill down in percentage terms rather than fight over individual charges. Tenet Healthcare, says that a 40% discount off the inflated list price is the norm for cash-paying customers.

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