Posted on 04/27/2007 11:50:46 AM PDT by 2ndDivisionVet
Makes sense to me. You see the low-price drill, and then you say “how much more for the next-best one”. That’s a big price jump. But is it worth it? Well, you see the one more espensive is only SLIGHTLY more. You subconsciously expect a linear relationship between features and price.
So, you decide that the mid-range model is “overpriced” compare to the cheap and expensive model. And if you know you didn’t want the most expensive model, you also determine that the “cheap” model is a “bargain”, since by linear theory it should be $110, but it’s $90, a $20 savings.
By lowering to $110, they simply put the linear model back in play, and people who didn’t want to be “the cheapest model” saw a “fair price” for the next-higher model, and purchased it.
If you lowered it’s price to $100, people would see it as an “uncommon value” relative to the expensive item. More people would buy it over the $90, but you’d lose sales on the $130.
What is new about this ? Pricing software has been around since the dawn of man. eg, all airline ticket fares are computer generated and updated in real time
Sounds like you work/shop at Kroger.
Exhibit A: My mother-in-law. She serious comes to us with 'I know the kids don't need another jacket, but it was only $4.00'
One thing that kills me now days it to see a sign that says 50% off. Right next to that they have a chart
$10 - $5
$20 - $10
$30 - $15
How pathetic are americans that they can't calculate percentages?
The name 'Khimetrics' sounds a lot like 'Chemometrics,' a branch of chemistry that builds models around existing data to make predictions. Then it says one of the guys studied physics and chemical engineering. That makes a lot of sense. If this is the approach used, the software will be very useful. It will be able to pull out relationships in large quantities of data that would be incredibly tedious, if not impossible for a human to identify.
I'm not sure I'd be claiming Albertson's as a success story. There's a chain that's pretty well crashed and burned over the last 3 years.
Percentage?
Ain’t that something like FRACTIONS?????
What’s the DIFF?
Yup. The software extends that logic by sorting out buying habits so you can optimize your profits and sales volume across an entire product line or inventory.
They needed software to tell them that?
ping
FWIW, the pricing strategies sound exactly like your rivals. I have seen "Buy One Get One" work where the first of an item rings up at retail and the second rings at $0. What drives me batty are the customer loyalty cards. So, I drive my wifes car and don't have my loyalty card because it is on my other key chain and I have to pay 10% more for my groceries. Makes no sense. I have heard this is really just a way to jab it to the government. Purchases with Food Stamps can't use a loyalty card.
Yoplait is on sale this week for $0.50 at Safeway.
"Boss, Model B isn't selling as well as the others."
"OK Snerdly, drop the price ten bucks and see if it moves."
The article makes scant mention of Oracle Retail Solutions (Formerly ProfitLogic). This firm manages prices for 18 of the top 25 retailers, so you would think it would be interesting to get a comment from them, rather than from has beens I have never heard of.
What is interesting also with grocery stores is the pricing of the same product in different quantities or sizes. the last two digits (cents) are always different which make it harder to divide the cost per unit. Peanut butter is a great example to write down the prices and go home and figure out the cost per oz.
The prices of 14 oz coffee is 60 cents more than the 10 oz, but the 20 oz coffee is 20 cents more than the 14 oz. DUH. (Actually, the XL is more cost-effective, but I never finish it before it's too cold to drink.)
But there's more to it. All the franchises have this 2 donut and 1 coffee special that varies in price according to the size of the coffee. EXCEPT THAT THESE prices vary even when the coffee prices are the same (from franchise to franchise) and you DON'T get the same bargain.
The end result is that two donuts might be more expensive (relatively speaking) if you buy a larger coffee rather than a smaller one. Oddly enough, if most Dunkin Donuts, i refuse to buy doughnuts when I'm there for coffee.
TS
(Actually, I usually go to McDonald's now, where the coffee is usually 50 cents cheaper anyway.)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.