Summary of Hermann Simon's Confessions of the Pricing Man

Everest Media

Description

Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 Prices determine how much money you make. They are the most important factor in your business, so you should never have to live month to month or quarter to quarter. If you have that influence, what is the best way to wield it.
#2 I was fascinated by pricing theories in college, and I learned that pricing is about how people divide up value. I later met three people who would influence my career path and lay the groundwork for pricing to grow from an academic topic to a vital corporate function.
#3 I wanted to conduct unconventional research into pricing. I wanted to go outside the realm of sophisticated functions and elegant theories and actually produce something that a manager or salesperson could understand and apply to their own business decisions.
#4 In 1979, I followed up on the referral Kotler gave me and met with Dan Nimer, a price consultant. I was impressed by his enthusiasm and knowledge, and began to see the importance of pricing and its applications in the business world.

Sujets

• Marketing
• General
• Business
• Economics
• General officer
• Marketing et communication

Informations

• Publié par: Everest Media LLC
• Date de parution: 11 mai 2022
• Nombre de lectures: 0
• EAN13: 9798822503557
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Insights on Hermann Simon's Confessions of the Pricing Man
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4 Insights from Chapter 5 Insights from Chapter 6 Insights from Chapter 7 Insights from Chapter 8 Insights from Chapter 9 Insights from Chapter 10
Insights from Chapter 1

#1

Prices determine how much money you make. They are the most important factor in your business, so you should never have to live month to month or quarter to quarter. If you have that influence, what is the best way to wield it.

#2

I was fascinated by pricing theories in college, and I learned that pricing is about how people divide up value. I later met three people who would influence my career path and lay the groundwork for pricing to grow from an academic topic to a vital corporate function.

#3

I wanted to conduct unconventional research into pricing. I wanted to go outside the realm of sophisticated functions and elegant theories and actually produce something that a manager or salesperson could understand and apply to their own business decisions.

#4

In 1979, I followed up on the referral Kotler gave me and met with Dan Nimer, a price consultant. I was impressed by his enthusiasm and knowledge, and began to see the importance of pricing and its applications in the business world.

#5

I began teaching business administration in 1979. My research focused on pricing, and I published my first book on the subject in 1982. The English title Price Management under which I published a book in 19895 may seem very simple, but I thought long and hard about what to call the book.

#6

I had been teaching in a 3-week management seminar for high potentials at Hoechst, a large chemical company, in 1975. I began to advise companies. In 1985, I founded a consulting firm with my two doctoral students, Eckhard Kucher and Karl-Heinz Sebastian.

#7

I have helped companies create and launch new pricing approaches that have benefited consumers and the company. In 1992, I helped introduce a discount card with an upfront fee for the German Railroad Corporation, and consumers loved it because it made travel planning much simpler and provided unprecedented price transparency.

#8

The first pricing triumph I had was with Professor Selten’s game, which taught me about the importance of value, incentives, and communication. I have had many flops as a pricing consultant, but they were few and far between.
Insights from Chapter 2

#1

The central hinge of a market economy is prices. Everything revolves around prices. Yet many people still know little about prices, where they come from, and what effects they have.

#2

Prices are high-stakes decisions with dramatic consequences. They can affect customer and shareholder opinion, which is why managers will keep their hands off the pricing lever if they have any doubt.

#3

Prices are the by-product of this complexity. It is hard to make sense of the pricing structures of telecom companies, banks, airlines, and utilities. The Internet has increased price transparency, but the sheer volume of available information and the overwhelming number of products and sellers neutralizes that advantage.

#4

The complexity and many dimensions of pricing create opportunities that can be extremely lucrative if you make the right decision, but the same complexity also increases the downside risk if you make a mistake.

#5

The price you see on a list or sign is not always the final price. In business-to-business transactions, where most prices are negotiated, suppliers and middlemen see price as a battle on many fronts.

#6

The price a customer is willing to pay is always a reflection of the perceived value of the product or service in their eyes. The Romans understood this connection, as they incorporated it into their language. In Latin, the word pretium means both price and value.

#7

The moral of the story is that one should not lose sight of quality in pursuit of a better deal. Good advice is not expensive. It is affordable if you can recognize its value. The challenge is that we tend to appreciate the value of advice only after the fact.

#8

Price is often forgotten, but quality stays with us. We have all bought a product, only to realize that it did not meet even our most modest expectations. Many of us have also paid a price that seemed too high, but ended up surprised by the exceptional quality of the product.

#9

Offering true value is a necessary but not sufficient condition for success. Managers must be able to communicate that value effectively. Customers understand and appreciate what they are buying, but they also consider second-order effects and intangible benefits when deciding whether to buy.

#10

The most effective way to communicate value is to express it in terms of money. Whenever possible, you should try to communicate value using hard data, especially in a business-to-business situation.

#11

The 2012 Olympic Games in London was a great example of how pricing can be used to send a message. The lowest standard price was £20. 12, and the most expensive was £2,012. The number 2012 appeared over and over again in the price points, and everyone knew immediately that such price points referred to the Olympic Games.

#12

The German Railroad Corporation Deutsche Bahn was in deep trouble in the early 1990s. Hemjö Klein, its CEO for passenger traffic, issued a challenge to find a way to make travel by rail more price competitive with travel by car. The BahnCard was born.

#13

The BahnCard project, which was launched in 2003, showed that the more people use their cards, the more they save off regular ticket prices. The cards also help retain customers, as they feel they have gained an advantage of 50 percent but it only cost the company less than 30 percent to create that impression.

#14

The BahnCard is DB’s most popular product. It is also the company’s most effective loyalty instrument. The card gives a discount on all tickets for the continent, and customers who buy it never need to buy a ticket again.

#15

I am proud to have contributed to the BahnCard, a two-dimensional price scheme that was introduced in 1992. I believe that we will see more of these schemes in other industries.

#16

The most important role price plays in economic is in creating a balance between supply and demand. Higher prices mean that supply increases. The supply curve has an upward slope. Higher prices also mean that demand goes down. The market-clearing price, the only price at which supply and demand are in equilibrium, is the point where the two curves intersect.

#17

A price cycle is a delayed effect that can occur when prices for a product rise and then fall. It can take years for these cycles to play out, and they exert a strong influence on national economies and their policy making.

#18

The oil price cycle is a good example of how prices change. In July 2008, the price of oil reached $147. 90 per barrel, an all-time high. This decade-long run-up in price encouraged companies to invest more in exploration and new sources of production.

#19

The government can disrupt price mechanisms in many ways, and the biggest of these is by setting prices.