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A 1 percent rise in price raises profits by 11 percent, far more than an equivalent reduction in costs or increase in sales volume. Two professors in the Wharton marketing department say that's why it's critical that companies pay attention to pricing, both in terms of what customers will pay and what competitors are charging. Manufacturing firms should consider pricing to be part of the product development cycle. And any type of company needs to understand that pricing can be a key differentiator for products and services. Too many companies take only one approach'whether it's cost plus, customer research or determining competitors' prices'when the most powerful way to handle pricing uses elements of all three methods. Pricing strategies will be particularly crucial for products that tend to be viewed as commodities if the economy heads into deflation, as some economists fear.
Complete article at http://www.knowledge.wharton.upenn.edu/articles.cfm?articleid=792&catid=4. Free registration required.
Sales managers, salespeople and stress
Sales managers and salespeople can eliminate the three major causes of stress between the parties, but both have to be willing to change. SellingPower magazine says that managers and sales staff need to explore why paperwork is needed, how to ensure that it gets done and that it truly needs to be done. Stress can be lessened by managers exploring why a salesperson may be in a slump and salespeople being more forthcoming. For example, a problem at home can affect performance but needn't indicate a permanent condition if the manager understands the situation. Sales quota stress can be lessened by focusing more on the process than the results and making a distinction between behaviors and activities. An activity is making five cold calls, but behavior focuses on what goes on during those calls. Sales managers should measure activities and behaviors, not just outcomes, helping sales reps to understand the repeatable steps that lead to consistently meeting quota.
Six-page July cover article at http://www.sellingpower.com.
Succeeding with online self-service
Five years ago hip shoe manufacturer Skechers USA had a printed mail-order catalog, an inhouse call center and a website. Printing the 18 million copies of the catalog every year cost a great deal, plus there was the expense of the 40 people who worked in the call center and the support staff. With about $950 million in total annual sales, the company was spending $13 million to produce $20 million in sales. The company decided to switch to an e-business model, using an electronic knowledge base. The gamble was a success: The company's human interactions with customers dropped dramatically, the online traffic doubled since the print catalog was dropped and costs dropped 90 percent.
Article at http://www.line56.com/articles/default.asp?articleid=4819.
CEO performance-related dismissals rise<p>
CEO dismissals for poor performance in 2002 increased a whopping 70 percent over the previous year, according to the latest annual global study of CEO succession by Booz Allen Hamilton. The company has been studying succession at 2,500 of the world's largest companies since 1995. The new report says that boards are looking harder at performance and demanding that it come from growing the current business rather than from mergers and acquisitions. The difference between total shareholder returns of companies whose CEOs were removed and those who retired voluntarily dropped to 6.2 percentage points, from 13.5 points in 2000 and 11.9 points in 2001.This implies that boards are firing CEOs for performance shortfalls that might have been tolerated a few years ago.
Eleven-page report at http://www.strategy-business.com/press/article/?art=48356727&pg=0
Many companies that implemented