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  • 4:04 pm on July 24, 2009 Permalink
    Tags: Business Tips and Strategies

    Apple's Mac Pricing Strategies In A Downturn - Joe Wilcox:

    Apple must be doing something right to go from, in the US retail premium PC market, 66 percent revenue share in first quarter 2008 to 91 percent at the end of second quarter 2009.

    The company has masterfully navigated the stormy economic waters that battered so many other companies.

    While competitors slashed prices to protect market share and to pull sales, Apple sought to preserve the perceived value of the Mac brand.

    Rather than lower entry-level pricing and move big time into the sub-$1,000 PC market, as some analysts recommended, Apple chose to do something else, in early June:
    - Lower 15-inch and 17-inch MacBook Pros by $300
    - Replace 13-inch MacBooks with Pro models for $100 less
    - Effectively lower the Pro entry price to $1,199 from $1,999

     

  • How not to respond to lower consumer buying power

    4:17 pm on May 3, 2009 Permalink
    Tags: Business Tips and Strategies

    Thom Hogan on what a company should, or should not do, when consumer buying power is reducing in general, using Nikon as an example:

    Nikon has already felt the closing of wallets. It's called "fewer unit sales." You can respond to that in a number of ways. You can lower prices, taking less profit on each item, and Nikon has done that for some of their highest volume products (mostly Coolpix). You can lower production, and Nikon has done that for most of their highest priced products. You can increase efficiencies (both in producing and selling your product), and Nikon seems to be trying to do that, too.

    But you're missing one of my points: you want to RESIST lowering prices for as long as you can, otherwise you won't be able to regain that price when the economy recovers. The American car companies found this out the hard way: incentives became a way of life and permanently reduced the price of their product. On top of that, they didn't manage to have corresponding efficiencies in production that offset the loss of profit margin, so "poof", out went the dollars.

     

  • Companies that do well in the current recession: Is Apple the only one?

    4:11 pm on May 3, 2009 Permalink
    Tags: Business Tips and Strategies

    Thom Hogan on the hows and whys of companies which are doing fine in the current recession, and to a suggestion that "Apple is pretty much the only company that continues to do well":

    No, they're not. There are plenty of companies that continue to do well. From Walmart to Verizon. Even though Microsoft posted lower revenues, they're still enormously profitable and have no debt. And that's part of the thing people don't get when they read the headlines of company failures: many of the problems have to do with over leveraging the company. Even the NYT got caught in this one. If you're dependent upon debt to finance your company's current situation, the econalypse just bit your butt big time. You've got no way to refinance that debt, you have no way to boost sales to get more cash, you can't issue new bonds or stock, the list goes on. The whole crisis is about over leveraging, from subprime mortgages to buying CDS as insurance to leveraged buyouts turned sour (e.g. Chrysler). It's all overextension. Over extend and you're in trouble. Be in control and yes your sales may be down, but you'll survive. If the econalypse had hit five to ten years ago, Nikon would have been in trouble, as their debt load was much higher then and probably would have been unmanageable in a severe recession. Today, they're in much better shape, probably good enough to survive an extended downturn.

    References:

    1. Apple
    2. Walmart
    3. Verizon
    4. Microsoft
    5. The New York Times Company
    6. Chrysler LLC
    7. Nikon
    8. Subprime mortgages - the crisis, what is it?
    9. CD (Certificate of Deposit)