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Winning the Profit Game
Book

Winning the Profit Game

Smarter Pricing, Smarter Branding

Robert G. Docters, Michael R. Reopel, Jeanne-Mey Sun and Stephen M. Tanny
McGraw-Hill, 2004
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Editorial Rating

7

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  • Applicable

Recommendation

Re-engineering, downsizing TQM, CRM - you’ve seen them all. But businesses are still trying to find ways to lead their markets and beat their competition. The authors of this book suggest that pricing deserves the kind of attention that, a decade ago, your organization lavished upon procurement. They believe pricing strategy will be the important competitive differentiator in times to come. That is certainly plausible, and this book offers extensive guidance on how, when, why and according to what guiding principles businesses should change prices. Its copy editors should have been more diligent, because spelling and grammatical errors abound, but the book is nonetheless surprisingly readable. The book makes some valuable points, and getAbstract.com believes it merits marketing officers’ scrutiny.

Summary

Why Pricing MattersRevenue and profit depend largely on price. Set the price too low and you lose money. Make the price too high, and you lose customers. The spectrum of possible price points stretches widely between too high and too low. Companies can do relatively better or relatively worse within this spectrum. Your mission is to pick the right price point, the one that exploits the connection between price and brand to maximize revenue and enhance brand strategy. Every manager should know these foundation principles of pricing:Price is integral to brand — You can’t separate the two. AT&T could charge premium prices for its pay telephone service because customers knew AT&T payphones weren’t "pirate" operations that would hit them with enormous, unexpected bills.Pricing and cost are mutually related — Sometimes cost drives price, but at firms such as Dell, price drives cost. Dell determines the price it needs to get to achieve its goals and then works backward, pushing costs to the level necessary to support the price.Pricing and product work together — Pricing options can determine the market. Smart companies develop product/service packages to meet the market. ...

About the Authors

Robert G. Docters is president of Abbey Road Associates. Michael R. Reopel is a senior officer in the strategy practice at A.T. Kearney. Jeanne-Mey Sun is a consultant with A.T. Kearney. Stephen M. Tanny is a professor at the University of Toronto.

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