Analysis - Prices and savings shield food groups from milk surge

Price increases in emerging markets and cost-cutting will help Europe's biggest food groups avoid a profit hit similar to that of the last milk crisis of 2007 when their dairy costs soared.

Swiss Nestle and Paris-based Danone are more exposed to milk costs than to other commodities, and prices have been rising this year due to strong emerging market demand and lower production in Europe and North America.

Nestle is the world's biggest milk buyer for its products such as Nido milk powder, Coffee-Mate and Cailler chocolate, while Danone has nearly two-thirds of its sales in dairy products such as Activia yoghurt and Actimel drinks.
There are also some fears that rising grain prices due largely to drought and an export ban in Russia will add to the pressure on milk prices as European farmers feed more grains to dairy cattle during the colder winter months. But analysts say the rise in milk prices is showing sign of cooling and the highest prices this year were well below 2007's peaks, even if it pays to keep a careful eye on Danone as milk accounts for more of its input costs than in the case of rivals.

"In terms of size Nestle has most exposure to milk. However, given the concentration of its portfolio Danone will be impacted most from higher milk prices," said analyst Jon Cox at Kepler Capital Markets in Zurich. Danone has recognised the rise in milk prices by raising its forecast of milk cost inflation in July to 10 percent for 2010 from 5-7 percent previously, but has also added that prices had peaked in the early summer and were now trending down. Analysts say milk accounts for 38 percent of Danone's raw material costs, 23 percent at Nestle and 6 percent at Unilever Plc/NV, and buying forward is quite difficult for liquid milk and companies often buy directly from farmers.

This means liquid milk prices can be more volatile than the more widely traded skimmed milk powder, and here Danone is the most exposed as the need for fresh milk is greater at the French yoghurt group, while Nestle is able to buy half of its requirement as milk powder for its milk drinks and chocolates.

Nestle, the world's biggest food group, spent 5 billion Swiss francs on milk in 2009.
"Dairy is one of the areas where we are seeing an escalation in costs and therefore it's one of the areas where you are likely to see some pricing action," Nestle finance director Jim Singh told an investor roadshow this month.
European Union milk powder prices peaked at around $5,500 (3,529 pounds) a tonne in 2007 falling to around $1,700 in early 2009 before edging back to just below $3,000 currently, and analysts say milk powder does give a pointer to future liquid prices.

"On the whole, milk prices have become much more volatile over the last two years which is due to the fact that the European Union intervenes less on milk prices," said Dieter Mirbach, manager of industry group European Dairy Farmers.
NOT SUCH A BIG ASK Danone raised its prices following the 2007 milk price surge, only to cut them in the middle of 2009 when costs fell, so analysts say investors are right to be wary when Danone starts raising prices in such a volatile market.

Analyst Alex Molloy at Credit Suisse said 40 percent of Danone's dairy sales are in emerging markets where general inflation runs at around 5 percent and so pushing up price is not such a big ask. Analyst Pablo Zuanic at Liberum Capital said United States liquid milk prices are starting to come down and West European prices are also peaking, and an LTO Nederland survey of European milk prices for July due on Sept 3 may confirm this.

The survey showed average European milk prices in June were up 23 percent year-on-year at 30.26 euros per 100 litres to reach an 18-month high. However, if prices have peaked then Zuanic says a Danone price rise of just 2 percent in Western Europe in the second half of 2010 will be needed.

"We continue to argue the price increase "needed" by Danone in Western Europe for the second half is quite manageable," he said. Pressure on Danone may intensify if grain prices continue to rise with Orianne Segaud at Natixis saying, "If wheat prices continue to rise, Danone has the least protection as it is the most exposed to liquid milk prices with no hedging mechanism." But New Zealand, the world's largest milk exporter largely through butter and milk powder trade, produces its milk from grass-fed livestock without any cereal-based supplement so any grain price rise will not affect production costs.

Barry Callebaut, the world's largest chocolate maker which counts Nestle and Hershey among its clients, is one of the top three users of milk powder in Europe but has been relatively insulated from price rises as it uses no fresh liquid milk in its chocolate production. Anglo-Dutch Unilever's main milk usage is at its world leading Cornetto, Magnum and Ben & Jerry's ice cream operation but it is a smaller milk buyer compared to Nestle and Danone.

Source: Reuters

Amazon keeps prices on Ebooks artificially low with new loyalty system

One of the success factors of the Kindle ereader, is that many American bestellers are available in a digital version for less than 10 dollars. At first, Amazon determined the ebookprices themselves, using the wholesaler model. However, the pressure of the publishers made the retailer decide to switch to the agency model where the publisher determines the prices. Amazon is trying to find another way to keep the ebookprices low.

The American publishers want to master their own price policy, as price is a complete part of the marketingmix. Amazon-boss Jeff Bezos has every interest in keeping the prices for ebooks low, so he can move consumers into choosing the Kindle platform for their ebooks. The retailer came up with a smart move. He offers the publisher 70% of the royalties that Amazon makes on the sales of the ebooks. But to get 70% of the royalties the price for an ebook needs to be under $10.

It is nice to see that different kinds of mechanisms are being brought to life, that forces publishers to think about their pricestrategy for ebooks. Otherwise it is also weird that retailers can enforce this way such a market power!

Eén van de succesfactoren van de Kindle ereader is dat veel Amerikaanse bestsellers in digitale vorm voor minder dan 10 dollar verkrijgbaar zijn. Aanvankelijk stelde Amazon onder het wholesaler model zelf de ebookprijzen vast, maar onder druk van uitgevers besloot de retailer over te gaan op het agency model, waarbij de uitgever de prijzen bepaalt. Amazon probeert nu op een andere manier de ebookprijzen laag te houden.

Toen de Kindle eind 2007 op de markt kwam waren er direct al tientallen boeken uit de bestsellerlijst van de New York Times voorhanden als ebook, de meesten onder de ‘magische’ tien dollargrens. Veel mensen verbaasden zich over deze lage prijzen, vooral in vergelijking met de hardcover versies, die vaak meer dan het dubbele kosten. Het waren echter niet de uitgevers die deze lage ebookprijzen entameerden, maar Amazon, die als wholesaler de ebooks inkocht van uitgeverijen en die tegen een zelf vast te stellen verkoopprijs ging aanbieden.

Dat zette echter kwaad bloed bij Amerikaanse uitgeverijen, die hun eigen prijsbeleid willen hanteren, prijs is immers een integraal onderdeel van de marketingmix. Onder druk van een paar van de grootste uitgevers die dreigden hun ebooks terug te trekken besloot Amazon daarom over te stappen op het agency model, waarbij de uitgever de verkoopprijs van de ebooks kan vaststellen.

Amazon-baas Jeff Bezos heeft er echter alle belang bij de ebooks niet te duur aan te bieden, om zoveel mogelijk consumenten ertoe te bewegen te kiezen voor het Kindle platform. Daarom heeft Amazon een slimme list bedacht, om het gros van de ebooks toch onder de tien dollar te kunnen blijven aanbieden: vanaf vandaag keert de retailer namelijk 70% royalty’s uit over de door hen verkochte ebooks, in plaats van de 30% die eerst van toepassing was. Maar om in aanmerking te komen voor dit verhoogde royaltypercentage moet de verkoopprijs van het ebook wel onder de $10 liggen. Voor ebooks met een hogere verkoopprijs geldt nog steeds het oude 30% tarief. Dit is niet de enige voorwaarde die de internetreus oplegt; zo moeten uitgevers de ebooks beschikbaar maken in alle regio’s waar ze de rechten voor hebben en de verkoopprijs van het ebook moet minstens 20% lager zijn dan de laagste prijs die voor het fysieke boek wordt gevraagd. Naast nog enkele andere voorwaarden worden ook nog de digitale verzendkosten afgetrokken van de opbrengst (15 dollarcent per MB).

Enerzijds is het goed om te zien dat er mechanismen in het leven worden geroepen die uitgevers nog eens goed laten nadenken over hun prijsstrategie voor digitale boeken, aan de andere kant is het uiterst merkwaardig dat een retailer op deze wijze zoveel marktmacht kan afdwingen.

Sommige boeken – of ze nu op papier of digitaal worden uitgegeven – vragen nu eenmaal meer tijd en onderzoek, om over redactie en vertalen nog niet te spreken, dan andere boeken. Dat moet zich kunnen vertalen in een hogere verkoopprijs, maar dat wordt nu bestraft door een marktpartij die alle (soorten) ebooks op één lijn zet – chicklit naast literaire meesterwerken, scripties naast gedegen wetenschappelijke onderzoeken. En dat is uiterst kwalijk. Het is dus wachten op een nieuwe revolte, of op partijen die Amazon met gunstiger voorwaarden de loef gaan afsteken.

Source: Eburon Academic Publishers

Champagne war between supermarkets

There seems no end between the price war for cheap champagnes.

Never seen. The battle for the cheapest champagne is going on for a while. Carrefour started in November to put the price of three champagnes just under ten euro. Delhaize followed quickly, as Colruyt, which today claimed promotion with a champagne for 8.75 euro in the leaflets, which was announced as the cheapest champagne available on the Belgian market.

Colruyt confirms that it remains loyal to their "red pricing system" and will adjust their prices as of Thursday. The chain goes even a step further than Carrefour and offers the house champagne 'Marquis Marmontel' for only 8.45 euro.

Are these the final prices or should we wait until New Year's Eve to get our bubbles from the supermarket? "For us this is the lowest price," says Carrefour. They won't say how much margin the supermarket chain exactly gain on their champagne. Except "Not taking a lot of margin, but they don't sell at a loss." General rule is that for every bottle of champagne there are 1.3 kilogram grapes needed. Champagne grapes cost around 5 euro per kilogram. There are still additional costs like for example: the bottle, cork, label, transport and distribution of the champagne. How far can a supermarket really go?

"It's all about negotiating with the champagne farmers in Reims," said Eric De Busscher, champagne importer for Colruyt. "Because we now have to adjust our prices, we will re-negotiate with our suppliers."

Champagne farmers need cash, is well known. "Last fall was particularly bad for champagne sales," says De Busscher. "This year fewer traders bought champagne, because they first wanted to lose their own stock. French exports sputtered and stocks began to accumulate. Therefore, more and more champagne farmers are willing to sell at lower prices."

Not only the crisis is the culprit for champagne. The cheaper cava and prosecco champagne's playing also important factors. This year in Belgium there has been sold 15 million bottles of Spanish cava, against 10 million bottles of champagne. And the Italian Prosecco is sold for the first time over 1 million of bottles.

BRUSSEL - Aan de prijzenoorlog tussen de goedkope champagnes lijkt maar geen einde te komen.

Nooit gezien. Champagne ‘De Richeville Réserve Brut', een ‘premier prix' of instapchampagne gemaakt door een coöperatie in Reims, voor 8,49 euro. ‘Om klanten te lokken net voor eindejaar', zegt Julie Stordiau, de woordvoerster van Carrefour.

De slag om de goedkoopste champagne is al een tijdje aan de gang. Carrefour stak in november het vuur aan de lont met drie champagnes net onder de tien euro. Delhaize volgde al snel, net als Colruyt, dat tot vandaag promotie voerde met een champagne voor 8,75 euro die in de folders aangekondigd werd als ‘de goedkoopste champagne verkrijgbaar op de Belgische markt'.

Colruyt bevestigt dat het trouw blijft aan zijn ‘rodeprijzensysteem' en vanaf donderdag zijn prijzen aanpast. De keten gaat zelfs nog een stapje verder dan Carrefour en biedt zijn huischampagne Marquis Marmontel aan tegen 8,45 euro.

Zijn dit de definitieve prijzen of moeten we nog wachten tot oudejaarsavond zelf om onze bubbels in te slaan? ‘Wat ons betreft is dit de laagste prijs', zegt Julie Stordiau. Hoeveel marge de supermarktketen nog heeft op de champagne, wil de woordvoerster niet kwijt. ‘Niet veel meer, maar we verkopen niet met verlies.' Algemene regel is dat je voor één fles champagne 1,3 kilogram druiven nodig hebt. Champagnedruiven kosten ongeveer 5 euro per kilogram. Daar komen nog de kosten voor de fles, de kurk, het etiket, het transport en de distributie bij. Hoe ver kan een supermarkt daarin gaan?

‘Het draait allemaal rond onderhandelen met de champagneboeren in Reims', zegt Eric De Busscher, champagne-inkoper bij Colruyt. ‘Omdat wij onze prijzen nu moeten aanpassen, zullen wij opnieuw onderhandelen met onze leveranciers.'

En dat de champagneboeren cash geld nodig hebben, is intussen genoegzaam bekend. ‘Vorig najaar was bijzonder slecht voor de champagneverkoop', zegt De Busscher. ‘Daardoor kochten handelaars dit jaar minder champagne in, omdat ze eerst hun eigen stock kwijt wilden. De Franse export sputterde en de stocks begonnen zich op te stapelen. Daarom zijn steeds meer wijnboeren bereid hun champagne te verkopen tegen lage prijzen.'

Niet alleen de crisis is de boosdoener voor champagne. Ook de goedkopere cava's en prosecco's spelen de champagne parten. Dit jaar zullen in ons land om en bij de 15 miljoen flessen Spaanse cava over de toonbank gaan, tegenover 10 miljoen flessen champagne. En ook de Italiaanse prosecco komt voor het eerst boven de 1 miljoen verkochte flessen uit.

Wednesday 23 December 2009 Auteur: (abl, ems)

Pricing for museums

What happens when people don’t choose ‘free culture’? Well, lower ticket prices don’t necessarily lead to more public and at higher prices the public doesn’t spontaneously stay away.

A little knowledge of market mechanisms can do wonders, especially in the business of culture of our regions. A surprising note: money doesn’t matter. For over twenty years, researchers of audience research conclude that the professional status and the income barely play a significant role. Only for the more expensive work, like buying a piano or art, the factor money starts playing a role. For the rest, the influence of the income on cultural participation is not significant – education and cultural input from parents is.

Museums

Cultural economists keep coming back to the same conclusion that culture is a price elastic good. This means that fluctuations in ticket prices have a limited effect on the number of spectators. ^

Overall, the whole cultural world is inelastic. The researchers ascribe the limited effect of prices to the addictive effect of culture. Someone who learned how to enjoy culture, wants to repeat the experience. However, within the cultural field there are differences per artistic disciplines. René Goudriaan (of consultancy Ape) portrayed this in The Netherlands. His findings are consistent with international research.

Remarkable about inelastic artistic disciplines is that the public barely stops coming. Over twenty years the admission prices of museum tickets rose with 4,1 percent per year (after index correction), but the number of visitors remained almost the same.

An organisation that increases its price, can therefore realise higher entrance yields. They do have to consider the pricing of alternatives in the leisure environment, where the public also holds an interest for. If the prices of the alternatives rise, then the visits to culture houses rise to. And vice versa.

Surplus

‘There is a surplus that cultural organisations don’t take’, says Filip Vermeulen. ‘ People can try to take that potential by increasing the price. I strongly believe in the technique of price differentiation. Some audiences are prepared to pay more, so give them better seats, nicer places and organise something extra for them.’

Vermeylen doesn’t favour the free-story of cultural visits. “Even ‘for free’- access doesn’t lead to a substantial change of the audience profile. The Britisch museums have experimented a lot with that without the desired result. The ‘for free-actions’ benefit people who already participate. Actually, such actions are socially unjust., because the less wealthy pay taxes to give the pretty well paid culture lover an advantage.”

‘Only for the youth I would make an exception? This is a target group that is price sensitive, because their budget is limited. As customers of the future, it is useful to invest in them.’

Pricing voor musea

Wat gebeurt er als men niet voor 'gratis cultuur' kiest ? Wel, lagere ticketprijzen leiden niet per se tot meer publiek en bij hogere prijzen blijft het publiek niet spontaan weg….

Bruce Springsteen kondigde vorig najaar een reeks concerten aan in New Jersey. Spontaan begonnen de organisatoren te likkebaarden. Ze berekenden dat ze tien stadions konden doen vollopen. Dat zag de Boss niet zitten: hij was niet in de stemming voor grote winst. Liever speelde hij twee concerten in een intiemere setting, en met ticketprijzen rond de 45 euro.

Toen de tickets op de markt kwamen, waren ze in geen tijd uitverkocht. Het duurde echter niet lang voor ze een tweede leven begonnen op het internet. Daar ontstond een handeltje, waarbij prijzen tot 200 euro geen uitzondering waren.

Mooi geprobeerd dus van Springsteen, maar hij bereikte het tegendeel van wat hij voor ogen had. In plaats van een lage instapdrempel voor iedereen, creëerde hij een barrière waar alleen de meestvermogenden (of de onvoorwaardelijkste fans) overheen geraakten.

Een beetje kennis van marktmechanismen kan dus wonderen doen. En dan vooral in de cultuurbedrijfsvoering van onze regio's, waar het prijsbeleid redelijk vanuit de buik wordt gevoerd. Een verrassende vaststelling: geld doet er niet toe. Al twintig jaar komen onderzoekers bij publieksonderzoek tot de conclusie dat de beroepsstatus en het inkomen amper een rol van betekenis spelen. Alleen voor het duurdere werk, zoals het aankopen van een piano of van beeldende kunst, begint de factor geld te spelen. Voor de rest is de invloed van het inkomen op cultuurdeelname niet significant - wel opleiding en culturele input vanwege de ouders.

Natuurlijk is dat maar de helft van het verhaal. Publieksonderzoek bekijkt alleen wie er al in de zalen zit, naar de musea gaat, en wie boeken en muziek koopt. Dat is de zichtbare kant van de ijsberg. Interessant wordt het om informatie te hebben over wie nog niet meedoet of met mondjesmaat. Kent een cultuurorganisatie zijn/haar beweegredenen, dan kan ze haar (prijs)beleid daarop afstemmen.

Musea

Cultuurhuizen bepalen hun prijzen slechts zeer gedeeltelijk op de reële kostenstructuur. Dat kan ook amper. Het Rotterdamse museum Boijmans-Van Beuningen nam de proef eens op de som. Als het al zijn kosten doorrekende naar de bezoeker, zou die een ticket van 95 euro moeten betalen. Nu kost een entreekaartje tien tot twaalf euro.

'Rond tien euro is een psychologische drempel', zegt Filip Vermeylen, een Belgische cultuureconoom aan de Erasmus Universiteit Rotterdam. 'Ticketprijzen worden bepaald op basis van de willingness to pay van het publiek. Die kopersbereidheid is relatief. Velen vinden vijftien euro voor een cultuurbeleving te veel, maar betalen met de glimlach vijftig euro voor een dinertje met vrienden. De bereidheid hangt sterk af van de alternatieven: een filmticket zit rond dezelfde prijs. Voorts weet de bezoeker dat zowat alle cultuur bij ons rechtstreeks gesubsidieerd is. Dus wil hij er ook weer niet té veel voor betalen.'

Cultuureconomen komen bij hun onderzoek steeds terug tot de vaststelling dat cultuur een prijsinelastisch goed is. Dat wil zeggen dat de schommelingen in ticketprijzen een beperkt effect hebben op het toeschouwersaantal. Een ander inelastisch product is benzine. Dat ondervonden we recentelijk toen de energieprijzen gingen pieken, en het grootste deel van de automobilisten duchtig verder met de wagen bleef rijden. Elastisch daarentegen, zijn vliegtuigtickets. Stijgen hun prijzen, dan haken consumenten af, of ze nemen hun toevlucht tot alternatieven, zoals een verplaatsing met de wagen.

Globaal genomen is heel de cultuurwereld inelastisch. Dat prijzen een beperkt effect hebben, schrijven onderzoekers toe aan het verslavende effect van cultuur. Wie van cultuur heeft leren genieten, wil die beleving herhalen en heeft daar iets voor over. Nochtans zijn er binnen dat cultuurveld verschillen per kunsttak. Dat heeft René Goudriaan (van het adviesbureau Ape) netjes in beeld gebracht in Nederland. Zijn bevindingen stroken met internationaal onderzoek, zodat ze allicht ook een betrouwbare indicatie opleveren voor ons land.

Bij bezoekers van musea blijkt de ticketprijs er het minst toe te doen (zie tabel 1). De prijselasticiteit bedraagt er amper 0,18. Anders gezegd, als de ticketprijs met 1 procent verhoogt, daalt het museumbezoek met 0,18 procent. Bij theater, dans, orkestconcerten en film ligt dat iets hoger, en bovendien in dezelfde grootteorde. Prijssetting heeft de meeste impact bij opera, waar zich een publieksuitstap van 0,9 procent voordoet.

Opmerkelijk aan inelastische kunsttakken is dat publiek amper afhaakt bij prijsstijging. In de loop van twintig jaar stegen de toegangsprijzen van museumtickets met 4,1 procent per jaar (na indexcorrectie), maar het aantal bezoekers bleef nagenoeg constant (zie tabel 2).

An organisation that increases its price, can therefore realise higher entrance yields. They do have to consider the pricing of alternatives in the leisure environment, where the public also holds an interest for. If the prices of the alternatives rise, then the visits to culture houses rise to. And vice versa.

Goudriaan besluit in zijn rapport: 'Het publiek haakt niet af. Een organisatie die haar prijs verhoogt, kan bijgevolg hogere entreeopbrengsten realiseren. Ze moet wel rekening houden met de prijssetting van alternatieven in de vrijetijdssfeer, waar haar publiek ook interesse voor heeft. Stijgen de prijzen van de alternatieven, dan stijgt het bezoek aan cultuurhuizen. Laten de alternatieven hun prijzen zakken, dan zien de culturele instellingen hun bezoekers dalen.'

Surplus

Culturele organisaties zouden dus meer kunnen vragen voor hun activiteiten, zonder dat het publiek daardoor terugvalt. Even een fictieve rekensom. Stel dat een rockband met faam 45 euro zou vragen voor een ticket, en daarmee vierduizend man bereikt, dan levert dat 180.000 euro op aan entree. Als hij 55 euro zou vragen, dan liep het publiek misschien lichtjes terug (tot 3.500 man, laten we zeggen), maar dan lag de winst wel hoger (192.500 euro). Zelfs al is er minder publiek, toch ligt de recette hoger.

'Er is een surplus dat culturele organisaties laten liggen', zegt Filip Vermeylen. 'Men kan dat potentieel proberen mee te nemen door de prijs te verhogen. Zelf geloof ik sterk in de techniek van prijsdifferentiatie. Sommige publieksgroepen zijn bereid meer te betalen, geef hen dus betere zetels, mooiere plaatsen en organiseer iets extra's voor hen. In de opera past men al vaak met succes zo'n palet van prijsrangen toe.'

Van het gratis-verhaal voor cultuurbezoek is Vermeylen geen voorstander. 'Zelfs gratis toegang leidt niet tot een wezenlijke verandering van de publiekssamenstelling. Daar heeft men in de Britse musea erg mee geëxperimenteerd en het had niet het gewenste effect. De gratis-acties komen meestal mensen ten goede die al participeren. Eigenlijk zijn zo'n acties sociaal onrechtvaardig, want de mindergegoede betaalt mee belastingen om de behoorlijk betaalde cultuurliefhebber een voordeel te geven.'

'Alleen voor jongeren zou ik een uitzondering maken. Zij zijn wel een doelgroep die prijsgevoelig is, omdat hun budget beperkt is. Als klanten van de toekomst is het zinvol in hen te investeren.'

Large price differences between EU banks

Brussels, Sept. 24th. In Italy you pay 253 euro’s per year to ‘costs’ for an ordinary bank account. In France is that 154 euro’s, in The Netherlands 46 and in Bulgaria 27. Research done by the European Commission von 224 banks in the European Union shows this. The Commission calls these differences “unacceptable”.

The researchers also conclude that the banks are being vague about the costs. According to the European law, banks must be transparent on the costs of standard services like depreciation and money withdrawals. But in 66 percent of the cases, the researchers had to call the banks because websites gave unclear or incomplete information. With one in ten banks there was even nothing on it. And also by telephone the researchers didn’t receive some data. Some banks only gave oral information about rates and refused to put them on paper. The banks that were investigated represent 81 percent of the market.

The researchers also looked at the rates for specialised services like closing a personal loan. Banks in Italy and Spain are by far the most expensive, followed by France and Austria. The cheapest countries are Bulgaria, The Netherlands, Belgium and Portugal. In the cheapest countries, the banks seemed less vague about the costs.

The report shows that 9 percent of the customers changed banks over the last two years. According to European Consumer Organisation BEUC this number would be higher if there were clearer price lists. The BEUC receives many complaints about unclear pricing and calls it “exploitation”. The Commission wants national banking supervisors to ensure that existing consumer rights are better respected.

Brussel, 24 sept. In Italië betaal je 253 euro per jaar aan ‘kosten’ voor een doodgewone bankrekening. In Frankrijk is dat 154 euro, in Nederland 46 en in Bulgarije 27. Dat blijkt uit onderzoek dat de Europese Commissie heeft laten doen onder 224 banken in de Europese Unie. De Commissie noemt de verschillen „onaanvaardbaar”.

W De onderzoekers concluderen ook dat banken vaag doen over de kosten. Volgens de Europese wetgeving moeten banken transparant zijn over de kosten van standaarddienstverlening als afschrijvingen en geldopnames. Maar in 66 procent van de gevallen moesten de onderzoekers banken bellen omdat websites onduidelijke of onvolledige informatie gaven. Bij één op de tien banken stond er zelfs niets op. En ook telefonisch kregen de onderzoekers bepaalde gegevens niet. Sommige banken gaven alleen mondeling informatie over tarieven en weigerden die op papier te zetten. De onderzochte banken vertegenwoordigen 81 procent van de markt.

De onderzoekers bekeken ook tarieven voor gespecialiseerder diensten als het afsluiten van een persoonlijke lening. Banken in Italië en Spanje zijn verreweg het duurst, gevolgd door Frankrijk en Oostenrijk. De goedkoopste landen zijn Bulgarije, Nederland, België en Portugal. In goedkopere landen bleken banken minder vaag over de kosten.

Uit het rapport blijkt dat 9 procent van de klanten de afgelopen twee jaar van bank wisselde. Volgens de Europese consumentenorganisatie BEUC zou dit aantal hoger zijn als er heldere prijslijsten waren. De BEUC krijgt veel klachten over onduidelijke prijsbeleid, en noemt het „uitbuiting”. De Commissie wil nationale banktoezichthouders vragen er op te letten dat bestaande consumentenrechten beter worden nageleefd.

Starbucks’ New Pricing Strategy: The Beginning of the End?

Starbucks recently announced a revamped pricing structure. Prices for many of its popular (read: lower-end) products such as brewed coffees and lattes are headed downwards. A spokesperson claims that this is the first time in Starbucks’ history that prices have been reduced. According to an article written by Claire Cain Miller in the New York Times, the coffee purveyor is also redesigning its menu to feature lower priced brewed coffees, as well as offering promotions on iced drinks. This strategy makes sense: the struggling economy dictates discounts and McDonald’s brewed coffees and lattes are stealing price sensitive customers.

Paradoxically, Starbucks is also increasing the prices of its higher-end more complex drinks including Frappuccinos and caramel macchiatos, of which there is less competition from rivals. In some cases, prices are rising by 30 cents (8%). There is some justification for this price increase. In Starbucks recent quarterly earnings release (third quarter ending June 28), same store sales in the U.S. were down by 6%. Broken down, 4% of this decline was due to fewer transactions (customers defecting to McDonald’s, for instance) and the remaining 2% from a decrease in average value per transaction. Thus, for the most part, customers who continued to patronize Starbucks spent the same amount on each visit.

So why raise prices right now when demand is waning? Some speculate that Starbucks is trying to make the most profit from its devoted customers who are hooked on its products. In other words, its specialty drinks are in the cash cow phase of the Boston Consulting Group’s Growth Share Matrix. For products in this cash cow phase, the general recommendation is to reduce investments and simply harvest profits from current demand. All successful products have their heyday of strong growth and then eventually reach a point where demand remains constant or decreases. After all, remember when CB radios and radar detectors were the rage? When a product reaches the cash cow stage of its lifecycle, the general strategy is to take the money and run. What are the chances that macchiatos will experience a growth surge in the future?

With rivals (including McDonald’s and Dunkin Donuts) stealing share from Starbucks’ lower-end products and concerns about the growth of its highly differentiated premium coffee drinks, what’s the growth driver that justifies Starbucks’ current price to earnings ratio of 59? This high p/e ratio indicates that investors feel the company has higher potential growth opportunities than the average company (in contrast, GE’s p/e ratio is 10.5 and Wal-Mart’s is 15).

A company’s pricing strategy can be a good indicator of its future growth potential

Bulmers pays price for being marketed as a premium brand

PRICE DEFLATION is taking its toll on some brands that, not so long ago, charged premium prices with little consumer resistance, writes SIOBHÁN O'CONNELL from the Irish times. Now the game has changed, with consumers demanding better value. According to the Central Statistics Office (CSO), the consumer price index plunged by 4.7 per cent in the year to May, though not everyone has been cutting prices. p> The average price of a soft drink is 2 per cent less than a year ago, but the price of beer is 4.5 per cent higher, while in the CSO’s wine and cider category prices are 2.6 per cent higher. Some of this is down to tax increases but it is also the case that drinks companies and publicans have become used to regularly jacking up their prices. Drinkers are fed up with the bilking, so much so that the latest data shows that sales volumes in bars have plummeted by 9.4 per cent in the past year.

The first big brand to respond to this alarming trend is Bulmers cider, which recently announced a 10 per cent reduction in the price of its pint bottle product sold in pubs. The price cut marks a shift in strategy by the owner of Bulmers, CC Group, which is under new management. A few years ago, Bulmers was the poster story for how a cheap and cheerful brand could be transformed by nice packaging and a lot of advertising. Under Maurice Pratt, CC secured a premium price for Bulmers, sank some of the enormous profits into television advertising and delivered a huge surplus for shareholders. But over the past year, sales of bottled drinks have fallen by 5 per cent and, in that category, Bulmers has been losing market share.

The marketing challenge for CC is to square the circle of promoting a price cut for a premium brand while still trying to maintain the premium values of the brand. Michael Merrins, commercial managing director at Bulmers, says moving away from the premium pricing strategy “was a very big decision”.

“During the height of the Celtic Tiger, most people didn’t even look at their receipts,” he says. “Now there is a greater awareness of price and, in a lot of pubs, a pint bottle of Bulmers costs more than a fiver. In all our research over the last five years about what’s good and bad about our product, price was never an issue. But it is now, as it is for everybody. There is a demand from consumers to cut prices. The negativity around price is very apparent.” He adds: “We would like to think this price reduction will bring the cost of the pint bottle below a fiver. We will still only be in line with other premium brands but not as expensive as we were.”

Though Bulmers has cut its wholesale price to publicans by 10 per cent, there is no guarantee that pub owners will pass on all the savings to drinkers. Part of the aim of the advertising announcing the price cut is to ensure pub customers know about it. CC has also been rolling out Bulmers Pear, which is eating up most of the advertising budget at the expense of the cider product. Merrins admits Bulmers cider drinkers have been migrating to the pear beverage, but says sales of the latter are exceeding expectations.

Bron: Irishtimes.com

Is the great eMusic pricing experiment over?

EMusic pioneered the music-by-subscription model nine years ago, and it's been refining it ever since. The latest iteration debuted Monday, when the service announced that it had finally struck a licensing deal with a major record company, Sony Music. Specifically, Sony will be mixing some of its back catalog (releases at least two years old) into eMusic's library of more than 5.5 million tracks. It's looks like an important step forward for eMusic's catalog, which to this point has been dominated by independent labels and acts. But it's yet another move away from the steep discounts and high-volume purchasing that have differentiated the company from the likes of Apple's iTunes Store.

Unlike Napster (the legit version, not the song-swapping network), Rhapsody and the handful of other services that tried to sell access to music for a monthly fee, eMusic has always offered subscribers ownership in the form of DRM-free MP3 downloads. The store updates the industry's old music-club model -- persuading people to buy music every month by offering discounts for bulk purchasing -- in two important ways: It sells music by the track, not the album, and it makes the discounts deeper. Or at least it used to -- as part of the Sony deal, the company has raised its price from $10 a month to $12, and lowered the allotment of tracks from 30 per month to 24. In other words, the price per track jumped from 30 cents to 50 cents. (Worse, it did so before adding Sony's offerings, which will be folded in later this year.)

Compared with iTunes, which sells individual songs for 69 cents to $1.29, eMusic remains a bargain. But it doesn't have iTunes' catalog -- it has a large selection of indie labels and some high-profile independent artists, including Radiohead and Paul McCartney, but few of the top hits. And its new pricing scheme isn't better on a per-track basis than the latest iteration of the major labels' music club, which offers mainly older ("catalog") CDs for $7 each.

In that sense, eMusic doesn't seem like the brave experiment in price elasticity that it used to be. The company offered labels less money per track than conventional music retailers did -- about 33 cents per track instead of 60 to 70 cents, judging by one band's royalties -- but promised to make up the difference by selling more tracks. In other words, it was the kind of lower-margin, higher-volume business that the Web promotes (e.g., Amazon.com). EMusic's value proposition was designed to induce fans to spend more on music over the course of a year than they would have otherwise, which would be a good thing for the industry regardless of the per-track results. But from an individual label's perspective, the question has always been whether eMusic's sales were incremental or cannibalistic -- in other words, whether eMusic was bringing in new customers or just offering discounts to people who would have otherwise purchased the label's CDs.

A few labels have tried to avoid the cannibalization problem by holding back their highest-profile releases from eMusic for several weeks. Some also pressed eMusic to increase its royalty payments by reducing subscribers' monthly track allotment. When the company launched the subscription service in 2000, it offered unlimited downloads for $10 a month -- an offer so aggressive, eMusic had trouble attracting labels and, consequently, customers. After Dimensional Associates bought eMusic in 2003, it wasted little time ending the unlimited-download plan, offering 40 downloads for $10 a month instead. That was good enough to attract more indie labels, which in turn drew more subscribers. Four years later, the offer dropped to 30 downloads for $10 a month. Now it's at 24 for $12.

The new pricing scheme may attract more labels, but the risk is that the service is now too expensive to draw in casual consumers. EMusic has been stuck in the aficionado ghetto -- its appeal has been limited to heavy consumers of music. By the time former Chief Executive David Pakman (a persistent and articulate advocate of the low-margin, high-volume model) left last fall, eMusic had about 400,000 subscribers -- not a whopping total by any means, and only half of what Rhapsody has drawn. The same problem afflicts Rhapsody and Napster, whose subscriber numbers have grown slowly in the last year, if at all. That's why Napster recently went the opposite direction with its pricing, introducing an all-streaming service for $5 a month, or one-third the price of its previous offer. Going from $10 to $12 a month doesn't seem like a sure-fire way to broaden eMusic's base, but there's no question that adding older Sony titles (including works by The Clash, Bruce Springsteen and OutKast) will increase its appeal. After all, the problem for eMusic and other subscription services might not be the price point. It may simply be that music fans don't like to commit to spending any amount on tunes month in and month out.

Source : Los Angeles Times Blog

Don't sell at any price !

Don't sell at any price:

Panic is a bad advisor. The need to get the order book full can tempt some salesmen to use smaller margins. Five tips to prevent:

1. Dare to say ‘no’. By exhorting salesmen to keep on selling, you encourage them indirectly to monitor the solvability of the (potential) customer less closely. The manager should estimate the risks before approving orders.

2. Stay special. Your products can’t become basic products that are only distinguished by their price. You will not lose respect by sticking to your price.

3. Talk about value, not about price. Your customers want more sales, productivity or profit margin, and less worries. If you can help in one of these areas, the price plays a smaller role.

4. Be flexible with the payment conditions. You can allow the customer to pay the price installments. With those facilities you create a partnership and strengthen the relationship.

5. Don’t give something for free. Let your customer know that the best price is a price that allows the product or the service to continue to exist. If your competition does it for less, he has no margin to invest.

Verkoop niet tot elke prijs:

Paniek is een slechte raadgever. De noodzaak om het orderboekje vol te krijgen kan sommige verkopers verleiden tot kleinere marges. Vijf tips om dat te voorkomen.

1. Durf neen te zeggen. Door de verkopers aan te sporen om te blijven verkopen, moedigt u hen indirect aan om minder nauwlettend de solvabiliteit van de (potentiële) klant in de gaten te houden. De manager moet de risico's goed inschatten alvorens de bestellingen goed te keuren.

2. Blijf speciaal. Uw producten mogen geen doordeweekse artikelen worden die zich alleen onderscheiden door hun prijs. U verliest geen respect door vast te houden aan uw prijs.

3. Spreek over waarde, niet over prijs. Uw klanten willen een hogere verkoop, productiviteit of winstmarge, en minder zorgen. Als u op een van deze vlakken kunt helpen, speelt de prijs een minder grote rol.

4. Wees soepel met de betalingsvoorwaarden. U kunt de klant toestaan dat hij de prijs in schijven betaalt, of bij de levering. Met zulke faciliteiten creëert u een partnerschap en versterkt u de relatie.

5. Geef niks gratis. Laat uw klant weten dat de beste prijs een prijs is die toelaat dat het product of de dienst blijft bestaan. Als uw concurrent het voor minder doet, houdt hij geen marge over om te kunnen investeren.

Bron: L'Entreprise

Belgacom eist 20% extra leverancierskorting

De boodschap van Belgacom is duidelijk: prijzen verlagen of geen zaken meer.

BRUSSEL - Belgacom zet met zijn forse kortingeis zijn leveranciers het mes op de keel. De crisis zet bedrijven er steeds meer toe aan het hard te spelen en zelfs contractbreuk te plegen.

Volgens Erik Kuik, het nieuwe hoofd aankoop bij Belgacom, past het initiatief in een plan van kostenreductie dat Belgacom eind 2008 op gang heeft getrokken. De groep gaat na waar bespaard kan worden en external resources (zeg maar aankoop) is een van de betrokken domeinen, legt Kuik in een brief aan zijn leveranciers uit. Belgacom gaat voor een dubbele strategie: inkrimping van het aantal leveranciers (sourcing optimization) en een ambitieuze prijskorting (price optimization).

Het inkrimpen van het aantal leveranciers is al op een aantal technische domeinen toegepast en de resultaten tonen substantiële mogelijkheden tot kostenreductie, heet het. De prijskorting moet de aankopen meer afstemmen op de geldende marktprijzen en volgens Belgacom is uit interne en externe prijs-benchmarking gebleken dat dit niet altijd het geval is.

De eis om de prijzen met minimaal 20procent te drukken is door Belgacom niet neutraal geformuleerd. Belgacom zal bij zijn beslissing over het optimaliseren van het aantal leveranciers rekening houden met de reactie van de betrokken leveranciers. Een niet mis te verstaan dreigement. De leveranciers moesten tegen eind deze maand hun voorstellen e-mailen naar contractors@belgacom.be en de korting moet op 1 juli ingaan.

Belgacom is volgens specialisten absoluut niet het enige bedrijf dat druk uitoefent op zijn leveranciers om de eigen kosten te drukken en het effect van de economische crisis te temperen. De diepte van de crisis zet veel bedrijven ertoe aan naar harde middelen te grijpen. Woord- en contractbreuk worden daarbij niet geschuwd. Bedrijven met een sterke marktpositie kunnen gemakkelijker hun wil opleggen maar dansen daarbij op een slappe koord. 'Als we zulke gevallen horen, vragen we systematisch aan de dienst voor mededinging om met een informeel onderzoek naar mogelijk machtsmisbruik van start te gaan', zei minister van Ondernemen Vincent van Quickenborne (Open VLD) gisteren. 'Ook hier zal ik een onderzoek vragen.'

AB InBev kreeg met zo'n onderzoek te maken toen het besliste de betalingstermijn voor leveranciers van 30 dagen op 120 dagen te brengen, maar dat bleef zonder gevolg. Bedrijven proberen niet alleen betere inkoopvoorwaarden te krijgen, ze pogen ook systematisch hun facturen zo laat mogelijk te betalen en zelf zo snel mogelijk te innen.

Belgacom-dochter Proximus kreeg eerder deze week van de Raad voor de Mededinging een recordboete opgelegd voor het toepassen van wurgprijzen.

Van Quickenborne werkt ook aan een wetgevend initiatief om de betalingstermijnen voor bedrijven te regelen. In Frankrijk legt de wet betaling binnen de 60 dagen op. Jan Margot, woordvoerder van Belgacom, zegt dat niet alle leveranciers zo'n brief hebben gekregen. 'Wij doen niets abnormaals, onze leveranciers vragen ons zelf onze prijzen te laten zakken.' Volgens Margot gaat het om een besparingsplan, maar speelt het bedrijf ook in op een trend. 'De marktprijzen dalen. In plaats van nieuwe offertes uit te schrijven of met andere leveranciers te werken, willen we onze trouwe leveranciers de kans geven hun prijzen aan te passen.'

Burger King Plans Value Ad Push In June

May 28, 2009: 02:05 PM ET

NEW YORK -(Dow Jones)- Burger King Holdings Corp. (BKC) is turning up the heat in the burger wars.

The "Home of the Whopper" plans to focus more of its advertising message on value items starting in June, several months earlier than expected as the chain tries to recover from disappointing sales amid an onslaught of discounts and coupons from other fast-food chains.

"The current marketplace is demanding value and the company is being responsive to that consumer-driven demand," Russ Klein, Burger King's president of global marketing strategy and innovation, said in an email.

With ad rates coming down, Burger King hopes to make a big impression with its value message, though it may be coming to the game a bit late. Some analysts think the chain has lost ground to competitors in communicating lower prices. McDonald's Corp. (MCD) has its popular Dollar Menu, and Wendy's, of Wendy's/ Arby's Group Inc. (WEN), has its "3conomics" campaign offering three sandwiches at 99 cents each.

Burger King instead has focused on premium products, historically spending about two-thirds of its advertising budget on items like the "Angry Whopper," a spicy take on its traditional sandwich, with the rest devoted to value products, Barclays Capital analyst Jeffrey Bernstein said in a recent note after meeting with company management. He said that Burger King plans to flip the ratio to lower-priced products like its newly launched miniature hamburgers called BK Shots and its $1 Whopper Jr., with competitive pressure forcing the chain to make the shift two months earlier than planned.

"While we have historically viewed Burger King as being on the offensive in terms of leadership around new products and promotions, it appears management is forced to play defense in order to protect market share," Bernstein wrote. Burger King is also cooking up items like ribs and an extra-thick burger on a new batch broiler, planning a big advertising push behind such premium products next year. The sour economy could temper expectations for the impact those products could have in helping the chain stand out, Bernstein said.

With the economy reeling, highlighting premium products has proven difficult as consumers keep a closer eye on their budgets. Some fast-food chains have sought to position their higher-priced items as equal in quality but lower in price to those of sit-down restaurants, which have in turn cut their prices to narrow the gap. Increased couponing and discounting from other fast-food chains have also magnified the disadvantage from lack of a strong value campaign. Fast-food chains do risk sacrificing their margins and sales if they resort to steep discounts, though falling food prices can make it more tempting for chains to offer such deals.

Still, some have resisted going down that path, saying that it trains customers to buy only discounted products. CKE Restaurants Inc. (CKR), the operator of Carl's Jr. and Hardee's restaurants, on Wednesday said that it will continue

Pricing strategies can have unintended consequences

BY GLEN J. KATLEIN June 01, 2009

Is pricing strategy an art or science? It is some of both. The business owner / CEO know the art of appealing to the company’s customers. The CFO must ensure the science of pricing provides the critical foundation to execute the strategy profitably.

A strategy of ‘simple pricing’ may capture the attention of customers who shy away from confusing pricing options. However, as I learned from a peer company, unintended consequences can be a loss of profitable sales in excess of profits from new sales. Tiered pricing usually evolves to provide consistent profit margins for varying product/service options with varying costs. Converting to ‘simple pricing’ may be effective if the mix of sales of the varying options can be maintained, or profits from new sales exceed lost sales. In order to maintain overall profit margins, ‘simple pricing’ usually requires some customers accepting a higher price while others enjoy a lower price than previously available.

The peer company I observed discovered that many customers realized the ‘simple price’ was higher for them and they were willing and able to pursue competitor products. The tough question is how many customers are truly in a captive sales channel and will accept the higher price to avoid the effort to change? At the other end of the spectrum, will new customers reflect a mix of the previous tier options in order to provide a similar overall profit margin? Or, will new customers consist primarily of those who will realize the simple price is lower for their respective service/product option, and therefore provide lower profit margins from new sales? Again, the peer company I observed saw a predominance of new sales with customers who realized the ‘simple price’ was now more favorable for them and they changed from existing relationships.

A strategy of a ‘loss leader’ may also gain customer interest. However, as I observed happened to a company before being introduced to me, unintended consequences can be significant cash losses. This company experienced sales shifting from 15 percent to 85 percent for the ‘loss leader’ product. And the company was locked in to the price for a period of time as a supplier. An acceptable overall profit margin may be achieved if product / service sales mix can be controlled, or if additional profitable product /service sales are generated in conjunction with selling the ‘loss leader’.

Whether considering a ‘simple pricing’ strategy or ‘loss leader’ pricing strategy, the CFO must effectively communicate with the business owner or CEO to assess potential consequences. Then, the CFO must develop effective scenario analyses to identify acceptable versus unacceptable combinations of the change in product / service sales mix and overall sales volume. Scenario assessment and analysis modeling can also be applied to compare ‘value pricing’ and ‘low cost pricing’ strategy options.

Coppell resident Glen J. Katlein is a partner in B2B CFO, a chief financial officer firm that provides service to emerging and mid-market companies. Katlein is currently serving as part-time CFO for five Dallas-Fort Worth companies. He previously spent 30 years in financial management positions with firms such as Bank of America, Citigroup and Premier Trailer Leasing. Contact Katlein at gkatlein@b2bcfo.com

Intel to pay record $1.45bn antitrust fine

Chipmaker found guilty of offering illegal rebates to oust competitor AMD from the European market Leading component manufacturer Intel has been fined $1.45bn by the European Commission as punishment for ‘illegal rebates and practices’ used to prevent AMD from rivalling its position in the market. Intel paid PC manufacturers to postpone or cancel plans to launch AMD-equipped hardware. The fine is the biggest ever imposed on an individual company, dwarfing the €497m fine suffered by Microsoft in 2004. The firm has been ordered to cease the illegal practices immediately, though it will be permitted to carry on offering legal rebates. “Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise,” EU Competition Commissioner Neelie Kroes stated, according to Reuters. Intel has already stated its intention to appeal the decision, with CEO Paul Otellini claiming: “Intel takes exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor market.”

Source : PCR - Ben Parfitt

Football clubs should witdraw price increase...

ARNHEM - Vitesse is withdrawing the previously announced price increase of the season back for the year 2009/2010. That announces the Arnhemse football team on its site. Also indexation of prices - bringing increased costs - in accordance with the club will not be implemented. Vitesse got previously a storm of criticism when it emerged that season tickets for some of the visitors greatly increased. The criticism focused on CEO Paul van der Kraan, who returned on his steps after great pressure from the supporters .

In January he would publish the new prices, but did so Friday's on his own site.

Vitesse provides no reason for the custom policy. But the club says this time "in consultation" having acted with the supporters and the supporters association board.


Ajax also recently announced a price increase of seasonal card, also here arose a storm of protest.
Now they speak more about an index adjustment.

ARNHEM - Vitesse draait de eerder aangekondigde prijsverhoging van seizoenkaarten terug voor de jaargang 2009/2010. Dat maakt de Arnhemse voetbalclub bekend op haar site. Ook indexering van de prijzen - aanpassing aan gestegen kosten - wordt volgens de club niet gedaan. De nieuwe stadion-indeling gaat wel door. Op de noord- en zuidtribune wordt vaaf volgend seizoen nog maar één prijs gehanteerd: 160 euro. Op de lange zijden, oost en west, nog twee. Seizoenkaarthouders krijgen medio april een mail waarin wordt gevraagd of zij hun eigen plaats volgend seizoen willen behouden. Vitesse kreeg eerder een storm aan kritiek te verwerken toen bleek dat seizoenkaarten voor een deel van de bezoekers enorm zouden stijgen. De kritiek richtte zich op algemeen directeur Paul van der Kraan, die na grote druk van de supporters beloofde op zijn besluit terug te komen. Hij zou in januari de nieuwe prijzen bekend maken, maar deed dat vrijdagmiddag op de eigen site. Vitesse geeft geen reden voor het aangepaste beleid. Wel zegt de club ditmaal 'in goed overleg' te hebben gehandeld met de supportersvereniging en de supportersraad. Ook Ajax kondigde recent een prijsverhoging van de seizoenskaart aan, ook hier rees een storm van protest. Nu spreekt men maar meer van een indexaanpassing.

HYPERLINK "http://www.gelderlander.nl/sport/vitesse/4731542/Vitesse-naar-Valkenhuizen.ece"

BCC: Pricing for success - an interview with Pol Vanaerde, President of ePP

Quoting a well-known study ‘The Price Advantage’, a 1% enhancement in the pricing management translates into an 11% profit growth. Hence, the potential for improvements is immense. Pol Vanaerde, President of European Pricing Platform, talks about the concept and main goals of ePP and how to improve the pricing policy. What was the idea behind the birth of the European Pricing Platform? The idea of sharing best pricing practices started from a group of pricing managers who attended my training session on strategic pricing. The group asked me whether I could facilitate somehow their networking and experience sharing. After some informal workshop meetings, the idea emerged to set up the European Pricing Platform, offering a more complete range of workshops, training events and interactive discussions. This first group of pricing mangers decided to fund the initiative with a ‘participation fee’, which made it possible to invest in a portal site www.pricingplatform.eu to share the contents and tools.

What are the main goals of ePP? The European Pricing Platform (ePP) is the first open European network focusing on supporting the pricing decision makers in a wide variety of industries and sectors. The ePP supports all qualitative ‘pricing’ initiatives and shares the knowledge with its participants. The mission of the ePP is to be the on- and offline meeting place for European pricing decision makers and pricing academics. The ePP helps pricing decision makers to put pricing on the CEO agenda and creates a platform to extend the network of pricing professionals where they can find and share pricing knowledge, search and post jobs, and build relations. The ePP supports pricing decision makers with knowledge development, sharing sources of knowledge, tools and technologies in the complex environment of strategic pricing by means of trainings, workshops, seminars, congresses and publications.

How does ePP works? The ePP provides cross-business answers to the latest pricing challenges. By combining on- and offline media (workshops, seminars, training events, in-companies, webinars, round tables, portal site, etc.). Companies gain inside knowledge and cross industry insights needed in order to benchmark their pricing strategies, they maintain critical competitive advantages and ensure maximum value capturing. Participants enhance their pricing know-how through interactive trainings and workshops, in which they get state-of-the-art pricing knowledge. Our most popular training events at the moment include: Strategic Pricing, Euro Pricing, The Pricing Toolbox, FMCG Pricing, Value Based Pricing, Pricing in more difficult times, B2B Value Selling, etc. Of course, the ePP also offers pricing decision makers an opportunity for peer-to-peer contacts with European pricing decision makers to share the best cross-industry practices. To assure high quality and practical relevance of the initiatives, in each country the ePP is empowered by a strong reference board of pricing professionals. Reference boards guarantee excellent performance of the platform in each country and monitor the delivery of top quality activities. In 2009, the ePP launches “The PricingFuel Days” which will be held twice a year (starting in Germany, Belgium and the Netherlands). In 2008 we cooperated with Pros Pricing, a leading provider of pricing and revenue optimization software products, on the organisation of “The European Pricing Forum – 2008” held in Frankfurt. It was the year’s most comprehensive event dedicated to pricing and revenue optimization excellence. We also organize a yearly European Pricing Thesis Award sponsored by Vodafone, KLM and TNT Express. The idea behind this award is to promote pricing with graduates and young professionals. After all, the need for pricing expertise will increase significantly in the coming years. Knowledge development of pricing strategies, software, tools and tactics are key elements for organizations aiming at sustainable growth and value capturing. Only few organizations have pricing managers today. As the need for more talent will seriously increase, students who focus on the pricing subject might be one step ahead of others at the moment they enter the career market. We herewith stimulate a new generation of professionals starting their careers with fundamental and applied knowledge in the pricing area which is the driver behind the European Best Pricing Master Thesis Award.

Who are the participants and experts of ePP? Our participants are high level executives, CxO’s and managers interested in learning more about pricing. At the moment we have over one hundred top companies who joined our Pricing platform. Our academics are lecturers and professors at European universities, linking academic knowledge to managerially-relevant pricing knowledge and solutions We have partners in different businesses which can be classified under different titles: pricing experts, pricing research experts, and pricing technology experts.

What benefits can ePP participants expect? EPP participants get discounts on state-of-the-art interactive workshops and seminars. They also enjoy a discount of 10% on all ePP trainings, and a 15% discount on the Pricing Conferences partnering with – and endorsed by - the ePP around Europe. Participants can also download all the ePP workshop presentations free of charge and have free access to the list of “need to read” articles. Besides this, participants are getting a promotional rate on the Journal of Revenue and Pricing Management. Furthermore, as a participant you have access to a focused network of pricing professionals, which is more specific than most open business networks. As a participant of the ePP, you can always rely on the support of the ePP office team when having Pricing enquiries. On the ‘Pricing Blog’ ePP participants have access to the latest pricing news. Finally, the ePP offers its participants several on- and offline possibilities to share experience and knowledge, connections and networking.

What would be the first step for a company that wishes to improve their pricing? Companies without pricing strategies often have a lack of control over the pricing process and price setting. These companies frequently have ineffective basic price processes, lack of procedures or poor control over the procedures and no clearly defined pricing RACI-models. They usually use cost-plus or break even pricing and are faced with day-to-day price fire-fighting. For these companies, to gain control and working towards a descent pricing strategy is the first step. Starting with a pricing audit is the best way. Price leakages can be fixed, procedures for price setting and pricing discipline are put in place. Often, a minimum price reporting is installed, and a competitor price watch and lost/won client analysis is in place. Once these elements are under control, it is time to install a pricing team, appoint one or more price managers and define their roles. Periodic pricing reviews are conducted, and these companies start using more complex techniques such as price segmentation, use of value based pricing, price guidance/segment, etc. This doesn’t mean the end of the journey. There still remains the need to implement price KPI’s and a price control dashboard. It’s also the time to integrate the bonus systems to align everyone around the pricing strategy.

How can the software tools help in improving pricing? Software tools can help to take control over data, delivering fact-based information which is often the first hurdle to take starting with pricing. Software tools can also be necessary to define behavioural price segmentation, install price guidance per segment, support sales with pricing tools and start yield management.

What kind of tools are these? Although Excel can help a lot at the start, in a further step to pricing excellence you will need other software if you have to deal with large-scale data gathering, typical for industries with thousands of ‘price points’ (energy, telecom, travel, banking, etc.). Most often, extra software is needed as a layer ‘above SAP’ to extract relevant pricing intelligence.

What kind of investments a company needs to improve pricing? We often see that companies are best helped when they start with a pricing audit to understand the actual challenges and opportunities in pricing. The investment for an audit has to be estimated. Implementation of the advice is typical project management but if the company has pricing managers to support the implementation, investment expenditures at this stage can be kept low.

How fast can you get return on the investment? Based on my experience, I could say that the margins can raise from 3% to 7% in 6 to 12 months, which makes it an extremely worthwhile investment.

What is the role of pricing policy now in the time of recession? As the European Pricing platform we advise companies to analyse the changing buying patterns and market dynamics first. Fear and aggression are very effective profit killers. Nowadays the reasonable pricing strategy is even more important than in the time of prosperity. Why not come to our next training: ‘Pricing Management in more difficult times’. We share concrete practices helping to increase margins without increasing prices.

Interviewed by Mirosława Huk, BCC

Pol Vanaerde has a successful marketing strategy track-record. He was responsible for the European launch of Alpro Soyfoods. Elected as product marketer of the year in Belgium. Later joined MC. Bride PLC (private label detergents & Cosmetics) as European Marketing Manager and Conoco-Philips as New Business Manager. Pricing was always one of the key responsibilities. Founder of Vanaerde Consulting, Truemarketeers and TruePricingexperts. Guest speaker at Vlerick Leuven/Gent Management School, University of Brussels, VNO/NCW the Netherlands, and in a wide portfolio of in-companies, seminars and conferences in different industries all over Europe. He is the initiator and president of the European Pricing Platform.

Marcin Gałczyński, Sales and Distribution Team Leader, BCC: Pricing in SAP The insight into buying habits of our customers is based on the sales data analyzed in terms of the volume of sales to particular customers, their size, location or industry. Thanks to the use of Business Intelligence tools we can prepare segmentation of our customers from the point of view of similar buying behaviors. This is the first step in employing an IT system to support the company’s price management and sales processes. For a company which uses a SAP ERP system, SAP BI will be a natural choice. It seems worthwhile to invest in the development of pricing tools which will help to define prices for particular customer segments in a transparent way and to implement SAP Workflow tools supporting price changing and approval of the sales offers and orders. The defined prices, supplemented with additional pricing thresholds calculated on the basis of SAP BI analyses (minimum price, last purchase, estimated price the customer is ready to pay, sales target) can be displayed to the sales representative at the time and place of closing the sales deal. Equipped with such comprehensive data, the sales representative will be able to prepare the optimum proposal for the customer, meeting all their expectations. The development of detailed aspects of such solutions requires extensive knowledge and experience or support of an external partner. Furthermore, implementation of dedicated pricing tools which can be integrated with SAP can also be considered. Their suppliers usually offer ready-made reference models for various industries which considerably facilitate implementation and allow for quicker return on investment. The implementation of such solutions is a project comparable in size to a small rollout of an ERP system. The examples of software worth recommending include PROS Pricing Solution Suite and SAP Price and Margin Management by Vendavo.

Source: http://www.english.bcc.com.pl/index.php?s=5&nWMact=2&nid=535

Ask customers to pay whatever they want and earn money

In October 2007 the British band Radiohead launched their latest album – In Rainbows - on the Internet. The band allowed fans to download the album freely and offer, in retribution, any amount of money they would like. If consumers were purely self-interested agents seeking to maximize the value and minimize the costs of their transactions, such a pricing strategy should have proven disastrous for the band. Actually, if that would be the way consumers behave no one should have decided to pay anything for the album. Yet, in 2008 Thom Yorke, Radiohead’s lead singer, disclosed that the download of their new album generated more profit than the accumulated downloads from all previous albums. Why did Radiohead fans decide to pay for such downloads when given the option to pay nothing? One could argue that the devotion of fans to their favorite rock artists might lead them to deviate from pure self-interest. Researchers Ju-Young Kim, Martin Natter and Martin Spann decided to explore this phenomenon and better understand how consumers react to ‘pay what you want’ (PWYW) pricing mechanisms. Social norms They found that fairness concerns and social norms seem to guide consumers and guarantee a fair payment to the seller. In particular, consumers seem to have a natural tendency to be fair or fear social disapproval if they decide to pay a low price for the product or service they purchase. However, the amount consumers decided to pay was also driven by their satisfaction with the quality of the product or service received and by economic considerations (i.e. depended on the consumers’ income and price consciousness). Variable costs Consequently, it seems that PWYW is profitable when variable costs are low (even though fixed costs might be relatively high) and when the amount consumers decide to pay is visible to others. In fact, the authors disclaim that this mechanism might be inadequate for high-priced transactions, where fairness and social concerns might be insufficient to guarantee a fair price to the seller. Still, in many daily transactions such a pricing scheme might be profitable. These results were obtained by conducting pricing experiments in three different types of transactions: (1) restaurant meals, (2) cinema tickets and (3) hot beverages in a delicatessen store. They convinced managers to specify an experimental period where they would let customers decide what price to pay. The authors then recorded the sales before and during the experimental period and information about consumers’ income, reference price and attitudes (fairness, altruism, price consciousness, and satisfaction). Higher In the restaurant and cinema, as expected, the average price paid by each customer decreased. However, such decrease was not as large as managers might have feared. In the restaurant the average prices dropped by 19.37 percent and in the cinema by 28.72 percent. In the case of the delicatessen the results were even more striking. In this case the average price paid was even 10.62 percent higher during the PWYW period. In terms of revenue the situation was even better. Probably due to its novelty, innovativeness and, eventually, sense fairness and trustworthiness, the pricing mechanism attracted a significant number of new customers which contributed to an increase in revenues in the case of the restaurant, despite the decrease in average price paid per customer. The experiment was so successful that the restaurantowner decided to keep the pricing mechanism after the experiment and started making plans to open a second restaurant using the same pricing format as a positioning strategy.

. Source door: Ju-Young Kin, Martin Natter and Martin Spann in: Journal of Marketing

The second internet bubble

During the past years, consumers become used to many things to get for free: news, stock quotes, music, e-mail to high-speed Internet sites. Today, the dotcom doesn't make the news anymore with free offers, it's focuses now on mass layoffs and the announcement that they will ask money for their services. " The above sentence is from the magazine The Economist in April 2001, but it's just as well applicable to the situation today. During the dotcom boom many companies hoped to gain market share by giving away things for free. But that was not done with the dotcom crash as a result. Other companies tried different business models and asked their customers for money, but few succeeded in that purpose. But in 2004, when Google went to the stock trade, the term Web 2.0 was introduced, a new Internet bubble was created. Buried business models rised from the grave. Money would be made through Google Ads, small contextual ads that were placed next to text and Google quickly became a near-monopoly. New Internet stars light up the firmament: MySpace, YouTube, Facebook and Twitter today. And again, there was offered a 'free lunch'. Free services were offered to a large mass, with the hope for a next stage to earn money from Google Ads, a model that so far only ... Google had worked. And just as in 2001, it brings us once again into the reality. The number of companies that live on Google Ads is much smaller than was first hoped, Silicon Valley didn't escaped to mass redundancies. Services such as MySpace and YouTube succeeded in time to find shelter in large companies (News Corporation and Google) and put the profitability problem neatly placed there. But how those services, like Twitter and Facebook, will be able to make enough money needed to continue, it still remains unclear. The free model has become a vicious circle: more and more companies find themselves increasingly required to offer free services to even slightly compete with existing services. Because Internet services are anyway cheap, more and more companies offer free services.The question how money will be earned is put further forward. The bottom line is however simple: companies that make no money cannot survive and the Google Ads are fun and nice, but not enough. Free news and other services were a charming idea. But the lesson of two Internet bubbles is that eventually someone somewhere will have to pay the price.

'De afgelopen jaren zijn consumenten gewend geraakt om allerlei zaken gratis te krijgen: nieuws, beurskoersen, muziek, e-mail, tot snelle internettoegang toe. Vandaag halen de dotcoms het nieuws niet meer met gratis aanbiedingen, wel met massa-ontslagen en met de aankondiging dat ze geld zullen vragen voor hun diensten.' Bovenstaande zin komt uit het magazine The Economist van april 2001, maar hij is net zo goed van toepassing op de situatie vandaag. Tijdens de dotcom boom hoopten vele bedrijven marktaandeel te winnen door zaken gratis weg te geven in de hoop er in een tweede fase geld aan te kunnen verdienen via advertenties. Maar dat gebeurde niet, met de dotcom crash als gevolg. Andere bedrijven probeerden andere businessmodellen uit en vroegen hun klanten om geld, maar weinigen slaagden in dat opzet. Maar in 2004, toen Google naar de beurs trok en de term Web 2.0 zijn intrede deed, werd een nieuwe internetbubbel gecreëerd. Begraven businessmodellen verrezen uit het graf. Geld zou gemaakt worden dankzij de Google Ads, kleine contextuele advertenties die naast teksten werden geplaatst en waarop Google al snel een bijna-monopolie wist te verkrijgen. Nieuwe internetsterren lichtten op aan het firmament: MySpace, YouTube, Facebook en vandaag Twitter. En ook nu was er opnieuw een ‘free lunch'. Gratis diensten werden aangeboden om een grote massa te bereiken, met de hoop om in een volgend stadium geld te verdienen aan Google Ads, een model dat tot dan toe enkel voor ... Google had gewerkt. En net als in 2001 belanden we ook nu opnieuw in de realiteit. Het aantal bedrijven dat leeft van Google Ads is veel kleiner dan eerst werd verhoopt; Silicon Valley ontsnapt opnieuw niet aan massa-ontslagen. Diensten als MySpace en YouTube slaagden er op tijd in onderdak te vinden bij grote bedrijven (News Corporation en Google) en legden het winstgevendheidprobleem netjes daar neer. Maar hoe deze diensten, net als Twitter en Facebook trouwens, er in zullen slagen om genoeg geld te maken om overeind te blijven, blijft tot vandaag onduidelijk. Het gratis model is ondertussen een vicieuze cirkel geworden: steeds meer bedrijven zien zich verplicht steeds meer diensten gratis aan te bieden om nog enigszins te kunnen concurreren met bestaande diensten. Omdat internetdiensten sowieso goedkoop zijn, bieden ook steeds meer bedrijven gratis diensten aan en wordt de vraag hoe ooit geld zal kunnen worden verdiend almaar verder vooruitgeschoven. Wie start met het idee om snel geld te gaan verdienen, komt gewoon niet aan de bak. Maar de bottom line is nochtans eenvoudig: bedrijven die geen geld verdienen kunnen niet overleven en de Google Ads zijn leuk en aardig, maar onvoldoende. Gratis nieuws en andere diensten vormden een bekoorlijk idee. Maar de les van twee internetbubbels is dat ergens iemand uiteindelijk de rekening zal moeten gaan betalen.

Pricing can be difficult

Finding right balance can make or break business. Consider type of product; calculate your costs ''How much should I charge?'' It's one of the first questions most small business owners ask. It's not an easy one to answer. Setting a pricing strategy depends on many factors — among them, the type of product or service offered, costs to provide it, expected profit, customer's location and the ''going rate'' for your industry. Finding the right balance among these factors is more art than science. Pricing too low can cut into your profits, while overpricing can hurt your business. Large companies can afford marketing staffs that spend a great deal of time trying to get the ''right'' price. A small business doesn't have that luxury. A common error is pricing too low to attract customers. While special deals can work in some cases to get a relationship started, going low is not always the best path. Low prices can draw customers interested only in price. They are likely to abandon you the moment they find something even lower. The low-price strategy can be a fatal game. Raising prices after you have established a low base is often difficult, if not impossible. Low prices designed to attract customers can be even more precarious for service businesses. You have only so many hours to sell. Your business can't make it up in volume like a retailer, who still profits from lower prices if volume is high enough. Competing only on price is not a sustainable business model. It must be combined with other products or services to yield adequate profits. Quality and service are other distinguishing factors. Pricing is an ongoing process, so test your pricing periodically. You might need to adapt to changing conditions. Competitor prices, your own costs, customer perceptions and your profit expectations can all change. Or you might want to simply test different pricing levels to see what works best for your business. Research the norms for your industry, including price ranges across your market area. You might want to charge more or less, depending on your product or service. Make sure you use timely and accurate information to calculate your costs for labor, supplies and direct and indirect overhead for every product or service you offer. ''Guesstimates'' are not good enough and might cost you far more than the time of your research. Also take into account seasonality that might cause short-term cost or increase fluctuations.

Nespresso upto 15 times more expensive than regular coffee.

A cup of Nespresso coffee at home costs 31 cents. There exist still more expensive coffee capsules. A cup of Nespresso can be fifteen times more expensive than a cup of filter coffee. The high price is no obstacle to the commercial success of Nespresso, with an annual sales growth of 35%. Nespresso has developed a sophisticated marketing strategy, but also stresses on quality. The beans are good, the low-oxygen, aluminum capsules to ensure that the coffee will remain fresh longer. The Nespresso Devices provide a tasty cup of coffee and even the largest kluns can use it. Coffee appears in new blends and sometimes in limited editions. Every few years, a new line of devices are created. The sale of equipment and the coffee capsules are via a closed system. The capsules are through the sales of Nestlé sold and through the website. All buyers are registered, so that can be tracked how much coffee is purchased and whether regular descaler is ordered.

Thuis een kopje koffie drinken van Nespresso kost 31 eurocent. En er zijn nog duurdere koffiecapsules. Daarmee is een kopje Nespresso zo`n vijftien keer duurder dan een kopje filterkoffie. De hoge prijs is echter geen belemmering voor het commerciële succes van Nespresso, dat een jaarlijkse omzetstijging van 35% doormaakt. Nespresso heeft een uitgekiende marketingstrategie, maar legt daarnaast ook de nadruk op kwaliteit. De gebruikte bonen zijn goed, de zuurstofarme, aluminium capsules zorgen dat de koffie lang vers blijft. De Nespressoapparaten leveren een smakelijk kopje koffie en zelfs de grootste kluns kan ermee uit de voeten. Het koffiemerk bindt de klant met af en toe een aanpassing en aanvulling op het assortiment. Koffie verschijnt in nieuwe melanges en soms in limited editions. Om de paar jaar komt er een nieuwe lijn apparaten. De verkoop van de apparaten en de koffiecapsules gaat via een gesloten systeem. De capsules worden via de verkoopkanalen van Nestlé en via de website verkocht. Alle apparaatkopers staan geregistreerd, zodat ook kan worden bijgehouden hoeveel koffie wordt gekocht en of er wel regelmatig ontkalker wordt besteld.

' The Music Industry needs to make more money from online music licensing'

Digital music will grow enormous in terms of turnover by 2013, the CD sales will become old fashioned. The music will also change drastically. The old business models based on distribution, does not satisfy anymore. Music providers will need to create new business models around online music consumption, and additional revenues should be made from online music licensing, says Forrester. The research company asked more than 4200 European online consumers in France, Germany, Italy, Spain, Sweden and Great Britain. The agency believes that not the sale of CDs, but the music consumption itselfs in the new business models should be central. Forrester: "The core principles of the old music, such as the amount of revenue from album sales will be less significant in an on-demand digital world. The music in the 21st century is more complex and more developed". Music providers will allow consumers more access to free music, and should also get revenue from 'online music licensing'; people and companies will pay for the release and playing of online music. Forrester expects that by 2013, digital music counts for 57 percent purchased by sales, and that online music licensing another 1.2 billion euros will convert.

Other research results:

• The only way to combate 'free' music is offering for free. Illegal downloading remains a major problem.

• "Social music will grow in the digital landscape. Including for example MySpace.com Music, will double the public. From 32 million in 2007 to 78 million in 2014.

• 'Granted services' are the way to the mass audience. Young consumers gather around social networks for their music, the mass public will listen to music through sites whose costs are made by, for example telecommunications or consumer electronic companies. See Nokia it's 'Comes With Music '.

Digitaal aangeboden muziek zal tegen 2013 qua omzet de cd-verkoop voorbij zijn gestreefd. De Europese muziekindustrie zal hierdoor drastisch veranderen. Het oude businessmodel, gebaseerd op distributie, voldoet niet meer. Muziekaanbieders zullen nieuwe businessmodellen rond online muziekconsumptie moeten bedenken, en additionele inkomsten moeten halen uit online muzieklicenties. Aldus Forrester.Het onderzoekbureau ondervroeg ruim 4.200 Europese online consumenten in Frankrijk, Duitsland, Italië, Spanje, Zweden en Groot-Brittannië. Volgens het bureau moet niet de verkoop van cd’s, maar de muziekconsumptie zelf in de nieuwe businessmodellen centraal komen te staan. Forrester: ‘De kernprincipes van de oude muziekindustrie, zoals omzet uit de hoeveelheid verkochte albums, zullen minder van betekenis zijn in een on-demand digitale wereld. De muziekindustrie in de 21ste eeuw is complexer en meer ontwikkeld’. Muziekaanbieders zullen consumenten meer toegang tot gratis muziek moeten bieden en daarnaast ook omzet halen uit ‘online muzieklicenties’; mensen en bedrijven laten betalen voor het beschikbaar maken en afspelen van muziek online. Forrester verwacht dat in 2013 digitaal aangekochte muziek 57 procent van de omzet voor zijn rekening zal nemen, en dat online muzieklicenties nog eens 1,2 miljard euro zullen omzetten.

Andere onderzoeksresultaten: De enige manier om het gevecht met 'gratis' aan te gaan, is gratis aanbieden. Illegaal downloaden blijft een groot probleem. ‘Social music’ zal groeien in het digitale landschap. Onder andere door bijvoorbeeld MySpace.com Music zal het publiek hiervoor meer dan verdubbelen. Van 32 miljoen in 2007 tot 78 miljoen in 2014. ‘Gesubisdieerde diensten’ zijn de weg naar het massapubliek. Jonge consumenten verzamelen zich rondom social networks voor hun muziek, het massapubliek zal muziek via sites beluisteren waarvan de kosten worden gedragen door bijvoorbeeld telecommunicatie- of consumentenelektronicabedrijven. Zie Nokia met ‘Comes With Music’.

Bron : Tijdschrift voor Marketing week 4, maandag 19 januari 2009