Rafi Mohammed

Updates from Blogs of the Past: Valentine's Day, Flat Screen Televisions, Kodak’s Disruptive Pricing, and Pizza for Pesos.

Posted on February 15th, 2007 (0 Comments)

I must admit, back in my grad school days I used to watch a lot of daytime talk shows. The combination of few responsibilities and three foot snow storms resulted in plenty of time to devote to Oprah and Maury. Some of my favorite talk show “editions” were those that revisited people that had been previously featured on a show. In this spirit, I thought it might be fun to revisit issues that I’ve discussed previously in this blog. So let’s get going…

Valentine's Day Gifts: “It’s becoming clearer and clearer why I am single.”

“You’ve got to be kidding me” my friend Richard said with a hint of anger when I suggested that he offer his wife the choice of one pound of Godiva chocolate on February 14 or two pounds on February 15 (taking advantage of the inevitable day after Valentine’s Day 50% off sale, the total price would be the same). Funny thing…none of my other male friends were willing to try my pricing experiment either. They all shook their heads in disbelief and I sensed genuine fear in their demeanor at the very thought. Why can’t sentiment and value peacefully coexist?

Flat Screen Televisions: “It’s a crazy crazy market”

“Don’t worry, we’ll make it up on volume...” On Monday, Damon Darlin wrote an interesting article in the New York Times on flat panel television prices. The article mentions how Circuit City was selling 32 inch Olevia television sets for $475, almost half its regular price. Mr. Darlin commented that Syntax-Brillian (manufacturer of Olevia televisions) must have lost money on each television sold since the flat screen, which makes up about half the cost of an L.C.D. television, is about $350 on its own. You’d think this would concern a CEO, but Vincent F. Sollitto, Chairman and CEO of Syntax, seems cavalier about selling at a loss. “I think we are being annoying to those guys at the moment,” he commented. “We are going to be on that radar screen soon if we aren’t there already.” Yes Mr. Sollitto…few companies appreciate a competitor kicking off a price war by selling at a loss.

“Interesting…we can’t seem to translate volume into profits.” Circuit City recently announced record December revenues with net sales increasing by 5.9% from $1.98 billion to $2.1 billion. Great news…right? Notice how net profits were not mentioned… those have yet to be disclosed. But just last week, Circuit City announced that it would close 70 stores because of slim profit margins on televisions and other products.

“Do you really need that flat screen television today?” Mr. Darlin’s article mentions that flat screen television prices are expected to drop by 40% or more in 2007. Wait…please wait.

Kodak’s New Disruptive Pricing Strategy: “Is its pricing really that revolutionary?”

“Competition is no fun...” In my blog, I wondered with margins reaching 75% on their printer cartridge replacements, why won’t Kodak’s rivals simply lower their cartridge prices? Here’s what a rival inkjet printer executive said in a New York Times article written last week by Claudia Deutsch. Commenting on what would happen if consumers liked the higher printer/lower cartridge pricing, Taun Tan (VP at Hewlett-Packard) said “we can always raise our printer price and cut our ink prices, too.” It’s really that simple…

Pizza for Pesos: “The death threats were a bummer, but the publicity is great.”

“Make mine pepperoni…” Pizza Patron’s novel segment based pricing strategy of accepting pesos as payment for its food landed the pizza chain a nice one page feature in the New York Times Magazine. The article mentioned that Pizza Patron’s focus is selling pizza to Hispanics – who interestingly are the largest minority group in the United States. You may be wondering, what’s Pizza Patron’s best selling pizza? Pepperoni…just as it is for everybody else in America.

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