Simon Confessions of the Pricing Man

How Price Affects Everything
1. Auflage 2015
ISBN: 978-3-319-20400-0
Verlag: Springer International Publishing
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 231 Seiten, eBook

The world's foremost expert on pricing strategy shows how this mysterious process works and how to maximize value through pricing to company and customer.In all walks of life, we constantly make decisions about whether something is worth our money or our time, or try to convince others to part with their money or their time. Price is the place where value and money meet. From the global release of the latest electronic gadget to the bewildering gyrations of oil futures to markdowns at the bargain store, price is the most powerful and pervasive economic force in our day-to-day lives and one of the least understood.The recipe for successful pricing often sounds like an exotic cocktail, with equal parts psychology, economics, strategy, tools and incentives stirred up together, usually with just enough math to sour the taste. That leads managers to water down the drink with hunches and rules of thumb, or leave out the parts with which they don't feel comfortable. While this makes for a sweeter drink, it often lacks the punch to have an impact on the customer or on the business.It doesn't have to be that way, though, as Hermann Simon illustrates through dozens of stories collected over four decades in the trenches and behind the scenes. A world-renowned speaker on pricing and a trusted advisor to Fortune 500 executives, Simon's lifelong journey has taken him from rural farmers' markets, to a distinguished academic career, to a long second career as an entrepreneur and management consultant to companies large and small throughout the world. Along the way, he has learned from Nobel Prize winners and leading management gurus, and helped countless managers and executives use pricing as a way to create new markets, grow their businesses and gain a sustained competitive advantage. He also learned some tough personal lessons about value, how people perceive it, and how people profit from it.In this engaging and practical narrative, Simon leaves nothing out of the pricing cocktail, but still makes it go down smoothly and leaves you wanting to learn more and do more-as a consumer or as a business person. You will never look at pricing the same way again.

Hermann Simon is Chairman of Simon-Kucher & Partners Strategy & Marketing Consultants, which has 27 offices in 22 countries. He is the world's leading authority on pricing.Simon was a professor of business administration and marketing at the Universities of Mainz (1989-1995) and Bielefeld (1979-1989). He was also a visiting professor at Harvard Business School, Stanford, London Business School, INSEAD, Keio University in Tokyo and the Massachusetts Institute of Technology. He studied economics and business administration at the universities of Bonn and Cologne. He received his diploma (1973) and his doctorate (1976) from the University of Bonn. He has received numerous international awards and honorary doctorates and was voted the most influential management thinker in German-speaking countries after the late Peter Drucker.Simon founded Simon-Kucher & Partners in 1985 together with two of his doctoral students. After advising the firm for a decade, Hermann left his academic career in 1995 to assume the full-time role as CEO of Simon-Kucher & Partners, where he led the firm's international expansion. When he left that role in 2009, Simon-Kucher & Partners had become the world's largest pricing consulting practice, active in all major industries. The firm has consulted with almost 100 members of the Fortune 500, some in decades-long relationships. Simon has published over 30 books in 26 languages, including the worldwide bestsellers Power Pricing (Free Press, 1997), Manage for Profit, Not for Market Share (Harvard Business School Press, 2006), Hidden Champions (Harvard Business School Press, 1996), and Hidden Champions of the 21st Century (Springer New York, 2009). He has served on the editorial boards of numerous business journals, including the International Journal of Research in Marketing, Management Science, Recherche et Applications en Marketing, Décisions Marketing, European Management Journal as well as several German journals. Since 1988 he has been a columnist for the business monthly Manager Magazin. He is also a board member of numerous foundations and corporations.    

Zielgruppe

Popular/general

Autoren/Hrsg.

Simon, Hermann

Inhaltsverzeichnis

1;Preface: Confessions;6
2;Acknowledgements;8
3;Contents;10
4;About the Author;16
5;1: My First Painful Encounters with Prices;17
5.1;Pricing Student: The Journey Begins;18
5.2; Pricing Professor: Academia Was Still My Only Option;21
5.3; Pricing Consultant: We Take Theory into the Real World;22
6;2: Everything Revolves Around Price;25
6.1;What Does “Price” Actually Mean?;26
6.2; “Price” Goes by Many Aliases;28
6.3; Price = Value;29
6.4; Creating and Communicating Value;31
6.5; What Smart Pricing Can Achieve: The 2012 London Olympics;33
6.6; What Smart Pricing Can Achieve: The BahnCard;34
6.7; Supply and Demand;37
6.8; Scarcity and Boom-and-Bust Cycles;38
6.9; Price and Government;39
6.10; Price and Power;40
6.11; Pricing Pushes Its Boundaries;41
7;3: The Strange Psychology of Pricing;43
7.1;The Prestige Effect of Price;44
7.2; Price as an Indicator of Quality;45
7.3; The Placebo Effect of Price;46
7.4; Price as a Defused Weapon;47
7.5; Price Anchor Effects;47
7.6; The Magic of the Middle, or the Story of the Padlock;49
7.7; Neither the Cheapest nor the Most Expensive Wine;49
7.8; A Profit-Generating Product No One Ever Buys;50
7.9; Creating Scarcity;50
7.10; Selling More by Offering Additional Alternatives;51
7.11; Price Thresholds and Odd Prices;53
7.12; Prospect Theory;56
7.13; Prospect Theory and Price;57
7.14; Business or Economy?;57
7.15; Free or Paid: A Big Difference;58
7.16; Better to Pay in Cash;58
7.17; The Temptation of Credit Cards;59
7.18; “Cash Back” and Other Absurdities;59
7.19; Moon Prices;60
7.20; Price Structures;61
7.21; Mental Accounting;62
7.22; Neuro-Pricing;63
7.23; In Conclusion: Be Cautious!;64
8;4: Price Positioning: High or Low;66
8.1;Success Strategies with Low Prices;66
8.2; Aldi;66
8.3; IKEA;67
8.4; H&M and Zara;68
8.5; Ryanair;68
8.6; Dell;69
8.7; Less Expensive Alternatives;70
8.8; Amazon and Zalando: Revenue vs. Profit;70
8.9; Success Factors for a Low-Price Strategy;71
8.10; Ultra-low Prices: Can You Go Lower than Low?;72
8.11; Dacia Logan and Tata Nano;73
8.12; Honda Wave;73
8.13; Ultra-low price Positioning in Other Consumer and Industrial Goods;74
8.14; Ultra-low Price Products Also for Sale in Highly Developed Countries?;76
8.15; Success Factors for an Ultra-low Price Strategy;77
8.16; Success Strategies with High Prices;78
8.17; Premium Pricing;78
8.18; Apple vs. Samsung;79
8.19; Gillette;80
8.20; Miele;81
8.21; Porsche;81
8.22; Enercon;82
8.23; “Bugs” Burger Bug Killers;83
8.24; Premium Strategies Can Also Backfire;84
8.25; Success Factors for a Premium Price Strategy;85
8.26; Success Strategies for Luxury Goods Pricing;85
8.27; How Much Does a Luxury Watch Cost?;86
8.28; Swiss Watches;87
8.29; LVMH and Richemont;87
8.30; Stumbling Blocks in Luxury Goods Marketing;88
8.31; Maybach;88
8.32; Are There Limits to Prices of Luxury Goods?;90
8.33; The Challenge of Creating Enduring Value;90
8.34; Observing Volume Limits;91
8.35; Success Factors for Luxury Goods Price Strategies;92
8.36; What Is the Most Promising Price Strategy to Pursue?;93
9;5: Prices and Profits;96
9.1;Chasing the Wrong Goals?;98
9.2; How Does a Price Increase of 2 % Affect Profits?;101
9.3; Price Is the Most Effective Profit Driver;102
9.4; Now … Let’s Change Your Prices and See What Happens;103
9.5; Back to the Future: The General Motors Employee Discount Program;106
9.6; Prices, Margins, and Profits;107
9.7; Price Is a Unique Marketing Instrument;108
10;6: Prices and Decisions;111
10.1;Who, What, Where, When, Why … and How?;111
10.2; The Effects of a Price Decision;113
10.3; Price and Volume;114
10.4; Using Costs to Set Prices;115
10.5; Following the Competition;116
10.6; Market-Based Price Setting;117
10.7; Sharing Value Fifty-Fifty;118
10.8; How to Determine Demand Curves and Price Elasticities;120
10.9; Expert Judgment: Making Direct Estimates of Price Elasticities;120
10.10; Asking Customers About Prices Directly;122
10.11; Asking Customers About Price Indirectly;122
10.12; Price Tests;123
10.13; The Big Data Myth: Using Market Data for Demand Curves and Price Elasticities;123
10.14; So … What About the Competitors’ Prices?;125
10.15; The Prisoner’s Dilemma: Let the Game Begin;126
10.16; Price Leadership;127
10.17; Signaling;127
10.18; Competitive Reaction and Price Decisions;128
10.19; Inflation: What It Is and Why It Matters for Price Decisions;131
10.20; Price and Inflation: A Lesson from Brazil;133
11;7: Price Differentiation: The High Art;135
11.1;Going from the Profit Rectangle to the Profit Triangle;136
11.2; What Does a Can of Coca-Cola Cost?;137
11.3; The Difference Two Prices Can Make;139
11.4; Why the First Beer Should Be More Expensive;140
11.5; Nonlinear Pricing for a Cinema;141
11.6; Price Bundling;143
11.7; Price Bundling for Optional Accessories;145
11.8; Unbundling;146
11.9; Multi-Person Pricing;146
11.10; The More, the Cheaper? Be Careful!;147
11.11; Differentiation or Discrimination?;148
11.12; Price and Location;150
11.13; Price and Time;152
11.14; Perishable Goods;154
11.15; Patents for Dynamic Pricing;154
11.16; Juggling Capacities and Prices;155
11.17; Price and Scarcity;156
11.18; Hi-Lo vs. EDLP;157
11.19; Advance Sale Prices and Advance Booking Discounts;158
11.20; Penetration Strategy: Toyota Lexus;159
11.21; Skimming Strategy: The Apple iPhone;161
11.22; Information and Profit Cliffs;163
11.23; Fencing;164
11.24; Pay Attention to Costs;165
12;8: Innovations in Pricing;166
12.1;Radical Improvements in Price Transparency;166
12.2; Pay Per Use;167
12.3; New Price Metrics;169
12.4; Introducing a New Price Parameter: The Case of Sanifair;170
12.5; Amazon Prime;172
12.6; Industrial Gases;172
12.7; ARM;172
12.8; Freemium;173
12.9; Flat Rates;176
12.10; Prepaid Systems;178
12.11; Customer-Driven Pricing;178
12.12; Pay What You Want;179
12.13; Profit-Oriented Incentive Systems;180
12.14; Better Price Forecasts;181
12.15; Intelligent Surcharges;182
12.16; à la Carte Pricing;185
12.17; Harvard Business Review Press;186
12.18; Auctions;187
13;9: Pricing in Crises and Price Wars;189
13.1;Crisis: What Does That Mean?;189
13.2; Cut Volume or Cut Price?;191
13.3; Making Intelligent Price Cuts;192
13.4; Offer Cash or Goods Instead of Lower Prices!;194
13.5; Staying Off the Customers’ Radar Screen;195
13.6; The Arch-Nemesis: Overcapacity;197
13.7; Price Increases in Times of Crisis;199
13.8; Price Wars;200
14;10: What the CEO Needs to Do;204
14.1;Price and Shareholder Value;205
14.2; How Price Can Increase Market Capitalization;206
14.3; $120 Million More Through Pricing;207
14.4; Price and Market Capitalization;208
14.5; The Day the Marlboro Man Fell Off His Horse;208
14.6; 20 % Off on Everything: The Praktiker Case;208
14.7; The Devastating Effect of Price Wars: The Potash Oligopoly Case;210
14.8; Pride Before the Fall: The Netflix Case;211
14.9; A Failed Attempt to Trade Customers Up: The J.C. Penney Case;212
14.10; Discounts and Promotions: The Abercrombie & Fitch Case;214
14.11; Price Discipline Increases a Company’s Market Value: A Telecom Case;215
14.12; Pricing and Financial Analysts;216
14.13; Price and Private Equity Investors;218
14.14; The Key Role of Top Management;219
15;Name Index;222
16;Companies and Organizations Index;224
17;Subject Index;227

Preface: Confessions.- Chapter 1 My first painful encounters with prices.- Chapter 2 Everything revolves around price.- Chapter 3 The strange psychology of pricing.- Chapter 4 Price positioning: High or Low.- Chapter 5 Prices and profit.- Chapter 6 Prices and decisions.- Chapter 7 Price differentiation: The high art.- Chapter 8 Innovations in pricing.- Chapter 9 Pricing in crises and price wars.- Chapter 10 What the CEO needs to do.

Über Autor(innen)

Hermann Simon is Chairman of Simon-Kucher & Partners Strategy & Marketing Consultants, which has 27 offices in 22 countries. He is the world’s leading authority on pricing.

Simon was a professor of business administration and marketing at the Universities of Mainz (1989-1995) and Bielefeld (1979-1989). He was also a visiting professor at Harvard Business School, Stanford, London Business School, INSEAD, Keio University in Tokyo and the Massachusetts Institute of Technology. He studied economics and business administration at the universities of Bonn and Cologne. He received his diploma (1973) and his doctorate (1976) from the University of Bonn. He has received numerous international awards and honorary doctorates and was voted the most influential management thinker in German-speaking countries after the late Peter Drucker.

Simon founded Simon-Kucher & Partners in 1985 together with two of his doctoral students. After advising the firm for a decade, Hermann left his academic career in 1995 to assume the full-time role as CEO of Simon-Kucher & Partners, where he led the firm’s international expansion. When he left that role in 2009, Simon-Kucher & Partners had become the world’s largest pricing consulting practice, active in all major industries. The firm has consulted with almost 100 members of the Fortune 500, some in decades-long relationships.

Simon has published over 30 books in 26 languages, including the worldwide bestsellers Power Pricing (Free Press, 1997), Manage for Profit, Not for Market Share (Harvard Business School Press, 2006), Hidden Champions (Harvard Business School Press, 1996), and Hidden Champions of the 21st Century (Springer New York, 2009). He has served on the editorial boards of numerous business journals, including the International Journal of Research in Marketing, Management Science, Recherche et Applications en Marketing, Décisions Marketing,European Management Journal as well as several German journals. Since 1988 he has been a columnist for the business monthly Manager Magazin. He is also a board member of numerous foundations and corporations.