Page 319 - NEWNORMAL_ANIMATED

PRICING & ECONOMY

en, we cannot sell below the cost, especially the profit surcharge is higher than 20%. If the
not in the long run. profit surcharge is lower than 20%, then we
already sell below the cost price. This makes
DEMAND-ORIENTED PRICING sense only when we want to get rid of excess
In the case of demand-oriented pricing, inventories or need to attract customers in the
the basis for its determination is the value of short-term.
the product perceived by the customer and The above calculations will change if we use
the size of the demand for the given product. the „6 + 1“ discount, i.e.
Branded products are usually sold at a much when we add a free bottle to the purchased
higher price than similar quality non-branded wine package.
products. The basis of this pricing strategy is For our basic wine, we must be aware that with
long-term investment in brand building. each bottle sold in this way, we give the custo-
Finally, when creating the price, we take into mer another CZK 1.50 from our own pocket.
account other factors, such as the psycholo- For premium wine, our margin dropped from
gical perception of the price of CZK 99 versus 25% to less than 8% but we achieved at least
CZK 101, up to 150 and over 150, up to 200 and a minimal profit from sales and in addition, the
over 200, which are the generally known deci- seventh bottle can be another type of wine
sion limits of the Czech consumers today (the that we want the customer to try (so we created
exchange rate is actually about 1€/25 CZK). another sales opportunity, which has its price)
or one which does not sell so well and we have
DISCOUNT AS A SALES PROMOTION excessive inventories (so it can be expected
TOOL- HOW NOT TO GET INTO THE that the actual selling price would be lower).
RED NUMBERS?
0RGHO RI ERWWOHV IUHH %$6,& :,1(
Discounts are a frequently used sales pro-
motion tool. Read each word carefully. For sa- WƌŝĐĞ ŽĨ ϭ ďŽƚƚůĞ s d ĞdžĐů͘ ϯ͕ϴϱ Φ
les promotion, not for your own loss of money! WƌŝĐĞ ĨŽƌ ϱ ďŽƚƚůĞƐ s d ϱ dž ϯ͕ϴϱΦ ϭϵ͕Ϯϱ Φ
The basic idea of the discount is to make the ŽƐƚ ƉƌŝĐĞ ĨŽƌ ϲ ďŽƚƚůĞƐ ϲ dž ϯ͕ϯϱΦ ϮϬ͕ϭϬ Φ
customer feel that he or she is buying goods WƌŽĨŝƚ ͬ ůŽƐƐ ͲϬ͕ϴϱ Φ
with a higher value at a lower price. The dis-
0RGHO RI ERWWOHV IUHH 35(0,80 :,1(
count is one of the marketing tools but it has
WƌŝĐĞ ŽĨ ϭ ďŽƚƚůĞ s d ĞdžĐů͘ ϰ͕ϴϯ Φ
a fundamental impact on the financial results
of each producer. WƌŝĐĞ ĨŽƌ ϱ ďŽƚƚůĞƐ s d ϱ dž ϰ͕ϴϯΦ Ϯϰ͕ϭϱ Φ
So, what are the economic impacts of the ŽƐƚ ƉƌŝĐĞ ĨŽƌ ϲ ďŽƚƚůĞƐ ϲ dž ϯ͕ϴϯΦ ϮϮ͕ϵϴ Φ
most common discounts and incentives? WƌŽĨŝƚ ͬ ůŽƐƐ ϭ͕ϭϳ Φ
If we choose the „5 + 1“ discount, where we 0RGHO RI ERWWOHV IUHH %$6,& :,1(
give the sixth bottle for free with the purchase
WƌŝĐĞ ŽĨ ϭ ďŽƚƚůĞ s d ĞdžĐů͘ ϯ͕ϴϱ Φ
of 5 bottles, we use all the profit to cover the
WƌŝĐĞ ĨŽƌ ϲ ďŽƚƚůĞƐ s d ϲ dž ϯ͕ϴϱΦ Ϯϯ͕ϭϬ Φ
cost of the bottle, delivered free of charge and
ŽƐƚ ƉƌŝĐĞ ĨŽƌ ϳ ďŽƚƚůĞƐ ϳ dž ϯ͕ϯϱΦ Ϯϯ͕ϰϱ Φ
we sell our basic wine with a loss of CZK 21.60,
so we lose CZK 3.60 for each bottle sold. WƌŽĨŝƚ ͬ ůŽƐƐ ͲϬ͕ϯϱ Φ
For premium wine, where we have set 0RGHO RI ERWWOHV IUHH 35(0,80 :,1(
a higher margin, the situation is more accepta-
WƌŝĐĞ ŽĨ ϭ ďŽƚƚůĞ s d ĞdžĐů͘ ϰ͕ϴϯ Φ
ble and we are still making a profit. Let‘s com-
WƌŝĐĞ ĨŽƌ ϲ ďŽƚƚůĞƐ s d ϲ dž ϰ͕ϴϯΦ Ϯϴ͕ϵϴ Φ
pare it:
ŽƐƚ ƉƌŝĐĞ ĨŽƌ ϳ ďŽƚƚůĞƐ ϳ dž ϯ͕ϴϯΦ Ϯϲ͕ϴϭ Φ
It is clear from the above that the „5 + 1“
WƌŽĨŝƚ ͬ ůŽƐƐ Ϯ͕ϭϳ Φ
discount can be used to make a profit only if
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