Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
My First Painful Encounters with Prices Read chapter Read first chapter

2015 | OriginalPaper | Chapter

4. Price Positioning: High or Low

Author : Hermann Simon

Published in: Confessions of the Pricing Man

Publisher: Springer International Publishing

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

Are high prices or low prices better for the profit and the survival of a company? You should avoid becoming one of the fools in the Russian proverb: neither the one whose prices are too high nor the one whose prices are too low. Both fools sacrifice profit unnecessarily. The question remains, though: Where is a company’s optimal price position? A company must make a conscious decision about price positioning. In fact, whether a company selects a high-price or low-price positioning is one of its most fundamental strategic decisions. Often the founders of the company make that call. For many reasons—as we will see throughout this chapter—a company’s chances of changing course later on are limited.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
previous chapter The Strange Psychology of Pricing
next chapter Prices and Profits
Footnotes
1
ALDI press release, December 20, 2013.
 
2
The profit metric here is Earnings before Interest and Taxes (EBIT); one also uses operating profit. Because Aldi Nord has no debt, the after-tax yield may be even higher.
 
3
Manager-Magazin. April 16, 2012.
 
4
IKEA annual financial report. January 28, 2014.
 
5
IKEA’s Focus Remains on Its Superstores. The Wall Street Journal, January 28, 2014.
 
6
H&M Full-Year Report, 2013.
 
7
Ryanair Orders 175 Jets from Boeing. Financial Times. March 20, 2013, p. 15 and “Ryanair will von Boeing 175 Flugzeuge,” Handelsblatt, March 22, 2013, p.17.
 
8
Der milliardenchwere Online-Händler. Frankfurter Allgemeine Zeitung, February 16, 2013, p. 17.
 
9
Woo S (2012) Amazon Increases bet on its loyalty program. The Wall Street Journal Europe, November 15, 2012, p. 25.
 
10
Alibaba flexes its muscles ahead of U.S. Stock Filing. The Wall Street Journal Europe, April 17, 2014, pp. 10–11.
 
11
Mahajan V (2006) The 86 % Solution—how to succeed in the biggest market opportunity of the 21st century. Wharton School Publishing, New Jersey.
 
12
Prahalad CK (2010) The fortune at the bottom of the pyramid. Pearson, Upper Saddle River, NJ.
 
13
The Future is Now: The $35 PC. Fortune, March 18, 2013, p. 15.
 
14
Number of mobile phones to exceed world population by 2014. Digital Trends, February 28, 2013.
 
15
One billion smartphones shipped worldwide in 2013. PCWorld, January 28, 2014.
 
16
Kessler A (2014) The cheap smartphone revolution. The Wall Street Journal Europe, May 14, 2014, p. 18.
 
17
VDI-Nachrichten March 30, 2007, p. 19.
 
18
Ernst H (2009) Industrielle Forschung und Entwicklung in Emerging Markets – Motive, Erfolgsfaktoren, Best Practice-Beispiele. Gabler, Wiesbaden.
 
19
Podium discussion on “Ultra-Niedrigpreisstrategien” at the 1st Campus for Marketing, WHU Koblenz, Vallendar, September 23, 2010.
 
20
Vgl. Govindarajan V, Trimble C (2012) Reverse Innovation: Create Far From Home, Win Everywhere. Harvard Business Press, Boston.
 
21
Talk with Tata Auto CEO Carl-Peter Forster in Bombay on May 11, 2010.
 
22
Talk with Siemens CEO Peter Löscher at the Asia-Pacific Conference in Singapore, May 14, 2010.
 
23
Data collected by the London office of Simon-Kucher & Partners. The price per blade is based in the largest available pack size.
 
24
Annual Report Procter & Gamble 2012.
 
25
Newcomer Raises Stakes in Razor War. The Wall Street Journal, April 13, 2012, p. 21.
 
26
“Erfolg ist ein guter Leim, Im Gespräch: Markus Miele und Reinhard Zinkann, die geschäftsführenden Gesellschafter des Hausgeräteherstellers Miele & Cie.”, Frankfurter Allgemeine Zeitung, November 13, 2012, p. 15.
 
27
Ibidem.
 
28
Ididem.
 
29
A coupé is a hard-top.
 
30
A slight modification boosted the Cayman’s engine performance by 10 horsepower.
 
31
Enercon doesn’t do business in the USA and in China and it is not in offshore. In spite of these confinements it is the third largest wind technology manufacturer in the world.
 
32
Hart CWL (1988) The Power of Unconditional Service Guarantees. Harvard Business Review pp. 54–62.
 
33
For a comprehensive look at pricing for luxury goods, please see Henning Mohr, Der Preismanagement-Prozess bei Luxusmarken, Peter Lang-Verlag, Frankfurt, 2013.
 
34
The Grand Complication is not the world’s most expensive watch. That title belongs to a watch from Hublot, presented at Baselworld 2012 and priced at $5 million.
 
35
Baselworld is the world’s largest trade fair for watches, with 1,800 exhibitors and over 100,000 visitors. The Geneva Watch Salon positions itself is more exclusive. It has only 16 exhibitors and 12,500 visitors.
 
36
Große Pläne mit kleinen Pretiosen. Frankfurter Allgemeine Zeitung March 12, 2012, p. 14.
 
37
Revill J (2013). For Swatch, Time is Nearing for Change,” The Wall Street Journal Europe, April 11, 2013, p. 21. The data on this question are contradictory. Another report placed the average price for a Swiss watch at 430 Euros, while the CEO of a Swiss watchmaker put the average price at around 1,700 Euros.
 
38
Boom time ahead for luxury suites. The Wall Street Journal, March 21-23, 2014.
 
39
See Aviation-Broker.com.
 
40
Soaring luxury-goods prices test wealthy’s will to pay. The Wall Street Journal, March 4, 2014.
 
41
Tesla misst sich an Mercedes. Frankfurter Allgemeine Zeitung, April 4, 2013, p. 14.
 
42
Porsche verkauft so viele Autos wie nie zuvor. Frankfurter Allgemeine Zeitung, March 16, 2013, p. 16.
 
43
Revill J (2013) Swatch boosts profit, forecasts more growth. The Wall Street Journal Europe, February 5, 2013, p. 22.
 
44
Raynor ME, Ahmed M (2013) Three rules for making a company truly great. Harvard Business Review online, April 11, 2013.
 
Metadata
Title
Price Positioning: High or Low
Author
Hermann Simon
Copyright Year
2015
Book
Confessions of the Pricing Man

Print ISBN: 978-3-319-20399-7

Electronic ISBN: 978-3-319-20400-0

Copyright Year: 2015

DOI
https://doi.org/10.1007/978-3-319-20400-0_4