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Bombardier CSeries: How will Boeing/Airbus Duopoly Respond?

February 2013 Pricing 9 Comments

The much-anticipated Bombardier CSeries commercial airplane line provides a uniquely positioned offering, boasting 20% fewer CO2 emissions, 20% fuel savings, and 15% less cash operating expenses than comparable alternatives.  With expected fulfillment of initial CSeries orders occurring in mid-to-late 2013, Bombardier poses a significant threat to the once dominated duopoly market of passenger fleet 100 […]

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Hawk-Dove Pricing: Avoiding a Price War

December 2012 Pricing

The ever-so-dreaded prisoner’s dilemma outcome achieved in most pricing wars can be avoided in some instances by applying games of coexistence. In particular, the Hawk-Dove game offers a unique result that fosters mutual benefit and healthy market competition. The value contributed by the Hawk-Dove model involves understanding the cost of waging a price war, the potential strategy-dependent profit realized, and the managerial security expressed.

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Promotional Pricing…click click boom

November 2012 Pricing

After engaging in a brief conversation on “promotional pricing” with a business operations executive at a global manufacturer in consumer goods industry, I was inspired to address some misconceptions discussed and provide further insight on how firms in the B2B space implement profit-enhancing promotional pricing tactics.  First of all, promotional pricing should be viewed as a means to price segment according to consumers’ willingness to pay, not as a pure promotional strategy.  Case in point, consider Remington Arm’s Promotion of Nitro-Steel Load.

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Avoiding Price Wars

September 2012 Pricing

The negative impact on industry profit due to price compression from firms engaging in price wars can possibly be avoided by a better understanding of strategic games. Observing competing firm's historical behavior and current price announcements offers valuable indications of future actions. Modeling such strategies in a game theoretical scope allows for more informed pricing decisions and possible profit saving maneuvers.

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Setting the Price in the Face of Competitive Substitutes – An Economics Approach

August 2012 Pricing

Economic consumer theory represents how a demander allocates consumption behavior between two goods to maximize utility under constraints such as prices, time, and income. Consumer theory rests on the simple foundation that individuals are utility maximizing entities with the driven purpose to make tradeoffs depending on preferences and constraints. In this article, Curry Hilton examines price behavior for two substitutable goods.

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Going Once, Going Twice, Sold! The QuiBids Marketplace

April 2012 Pricing

Sitting atop an old bushel basket, the aroma of aged tobacco wafting through the air, and the loud jumbled racket of an auctioneer rattling off lot prices, was the recollection of my first auction experience. Reminiscing over nostalgic memories of accompanying my grandfather to the American Tobacco Company sale in Reidsville, NC, at the ripe age of 6 years old will be forever engrained in my mind. Not until a graduate school game theory class evoked my long lost love of auctions, did I start thinking about the efficacy of auction marketplaces allocating resources among consumers.

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The Foundation of Firm Existence

January 2012 Corporate

Appreciating Adam Smith’s “Invisible Hand” contributions to market coordination based on supply, demand, and price, and understanding his argument of allowing markets to allocate goods and resources based on individual incentives, I pose the question, “How much value is created by managerial competency and organized business entities?”  In other words, why do firms exist?

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Effective Price Segmentation Techniques

December 2011 Pricing

In order to fully capture potential profit contributions, a firm must be able to successfully execute price segmentation tactics on a consistent basis. Faced by a dynamic market, firms require regular price maintenance to ensure segmentation hedges remain effective. Efficient price discrimination techniques that involve limited cost to identify market segments and mitigate the existence of a secondary market, truly contribute to a firm’s bottom line. Understanding the theoretical concepts of price discrimination discussed in a standard economics textbook only scratches the surface of the knowledge needed to implement a profit generating pricing strategy. This article will attempt to provide the connection between pricing theory and where the rubber meets the road.

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About the author

Curry W. Hilton is a senior pricing analyst at Wiglaf Pricing and economics lecturer at Elon University. His primary research interest focuses on price segmentation, negotiations, and firm strategy.

Curry W. Hilton
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