Abstract
In Chapter 2, we dealt with the relation between supply and demand. During a crisis, supply outpaces demand, leading to unfavorable pricing and competitive outcomes. While it is hardly possible to overcome these negative effects altogether, it is crucial to mitigate their impact. What measures are effective against these threatening developments? Supply needs to be reduced as quickly as possible while fighting the price decreases. Price cuts may be unavoidable in the crisis, but they must be implemented intelligently. By proceeding cautiously it is possible to selectively increase prices in the crisis.
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Notes
- 1.
“Freude am Sparen,” Focus Money, February 4, 2009, p. 76.
- 2.
“U.S. Industrial Production Drops More Than Forecast,” bloomberg.com, April 15, 2009.
- 3.
“Nach Ostern beginnt wieder das normale Leben,” Interview with Burkhard Weller, founder of car dealer Autoweller, Frankfurter Allgemeine Zeitung, March 9, 2009, p. 15.
- 4.
“Dow Chemical to Cut 5,000 Jobs,” cnnmoney.com, December 8, 2008.
- 5.
Hermann Simon and Martin Fassnacht, Preismanagement, third edition, Wiesbaden: Gabler 2009.
- 6.
Klaus Meitinger, “Wege aus der Krise,” Private Wealth, March 2009, pp. 26–31.
- 7.
Geoff Colvin, “Yes, You Can Raise Prices,” Fortune, March 2, 2009, p. 19.
- 8.
In linear price–sales curves the optimal price is in the middle between variable unit costs (here $60) and the maximum or reservation price, that is, the point of intersection of the price–sales curve and the price axis. In the left case the maximum price is $140, in the right case $132 (cf. Hermann Simon and Martin Fassnacht, Preismanagement, third edition, Wiesbaden: Gabler 2009).
- 9.
Statement made in September 2003 during the International Automotive Fair in Frankfurt.
- 10.
In a personal conversation with the author, Georg Tacke, Senior Partner at Simon-Kucher & Partners, reported this statement by Wendelin Wiedeking.
- 11.
“Sportwagenhersteller Porsche muss sparen,” Frankfurter Allgemeine Zeitung, January 31, 2009, p. 14.
- 12.
Robert J. Dolan and Hermann Simon, Power Pricing, New York: Free Press 1996, Hermann Simon and Martin Fassnacht, Preismanagement, third edition, Wiesbaden: Gabler 2009.
- 13.
Robert J. Dolan and Hermann Simon, Power Pricing, New York: Free Press 1996.
- 14.
The price elasticity is defined as the change in sales volume in percent (here: 125%) divided by the change in price in percent (here: 22%). It is a negative figure because a price reduction has positive effects on sales (and vice versa).
- 15.
The scrapping bonus was 2,500 Euros, which at an exchange rate of $1.30 per euro corresponds to $3,250.
- 16.
For a more detailed description of non-linear pricing, cf. Georg Tacke, Nichtlineare Preisbildung, Wiesbaden: Gabler 1989.
- 17.
Prices in $ are rounded. Actual prices in Euros are 225 for the second class and 450 for the first class BahnCard. At an exchange rate of $1.30 per Euro, this results in the approximate $-prices.
- 18.
For a more detailed description of price bundling, cf. Georg Wübker, Preisbündelung: Formen, Theorien, Messung und Umsetzung, Wiesbaden: Gabler 1998, and Georg Wübker, Power Pricing für Banken, second edition, Frankfurt: Campus 2008.
- 19.
E-mail to the author from consultant Dr. Nathan Swilling, Boston, March 23, 2009.
- 20.
Hermann Simon and Georg Wübker, “Mehr-Personen-Preisbildung: Eine neue Form der Preisdifferenzierung mit beachtlichem Gewinnsteigerungspotenzial,” Zeitschrift für Betriebswirtschaft, 2000, pp. 729–746.
- 21.
Welt am Sonntag, March 15, 2009, p. 11.
- 22.
$-figures are rounded; the exact amounts in Euros were 2,365 Euros base discount plus 1,500 Euros per child.
- 23.
“Kulinarische Kostverächter,” Frankfurter Allgemeine Zeitung, March 5, 2009, p. 19.
- 24.
“Ohne Wühltische an die Wäsche gehen,” Frankfurter Allgemeine Zeitung, March 10, 2009, p. 17.
- 25.
A basis point is a term from financial economics and means one hundredth of 1%.
- 26.
For a more profound description, cf. Frank Bilstein and Sebastian Voigt, “Früher war das doch umsonst?”, Absatzwirtschaft, March 2009, pp. 40–42.
- 27.
$-prices rounded, exchange rate $1.30 per Euro. Ryanair’s actual luggage charges in Euro were 3.50 Euros in 2006 and 10 Euros in 2009.
- 28.
This fee was introduced in 2008 by Tank & Rast, the company operating motorway service areas in Germany.
- 29.
The price of the TV function in Germany in 2009 was 1,650 Euros corresponding to $2,145 at an exchange rate of $1.30 per Euro. Cf. price list of BMW 7-series, manufacturers homepage (http://www.bmw.de), March 11, 2009.
- 30.
Hermann Simon, Frank Bilstein and Frank Luby, Manage for Profit, Not for Market Share, Boston: Harvard Business School Press 2006.
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Simon, H. (2010). Quick Solutions for Managing Offers and Prices. In: Beat the Crisis: 33 Quick Solutions for Your Company. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0823-0_6
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