Gold Mine Pesentation

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Information about Gold Mine Pesentation

Published on April 17, 2008

Author: Pumbaa


Slide1:  W. FRANK DELL II, CMC DELLMART & COMPANY THE GOLD MINE IN RETAIL PRICING AGENDA:  AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT Objectives:  Objectives Identify pricing improvement opportunities Describe approach to achieve results Present new research Scope:  Scope Retail Food Excluding perishable commodities Mass Merchant - Basics Excludes fashion & seasonal Observation:  Observation Much of retail pricing seems to be follow the leader Not unlike a dog chasing its tail Theme:  Theme Price for the consumer Consider competition Price for Net Profit Not Gross Margin AGENDA:  AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT #1 Slow Seller:  #1 Slow Seller Why is an item a slow seller? Small consumer market Inadequate retail space Priced wrong 25,000 SKU’s In Typical Store:  25,000 SKU’s In Typical Store 1,000 sell more than 1 case/week 4,000 sell between .5 and 1 case/week 20,000 sell less than .5 case/week Slow Seller SKU Universe:  SKU Universe Estimate 4 to 5 million Average store stocks .0056% Many unique items and opportunities Slow Seller Approach:  Slow Seller Approach Case Study - Grey Poupon:  Case Study - Grey Poupon Selling 4 units/week Prices $1.79 Increased price to $2.79 Sold 4 units/week Increased sales $4.00 per store Increased profit $4.00 per store Slow Seller #2 Private Label:  #2 Private Label If product quality is equal to National Brand Why is the price 25% plus lower? Low Retail Not The Answer:  Low Retail Not The Answer Private Label Approach:  Approach Private Label Note: Quality must be equal or superior Value Concept:  Value Concept Private Label PRICE QUALITY VALUE = AGENDA:  AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT Why Promote?:  Why Promote? Create merchandising excitement Attract customers Present savings Show value Reward loyal customers Promotions Are Difficult:  Promotions Are Difficult Promotion Factors:  Promotion Factors Breakeven on 11% Deal:  Breakeven on 11% Deal Low Private Label Share:  Low Private Label Share Moderate Private Label Share:  Moderate Private Label Share Promotional Index:  Promotional Index Promotion Conclusion:  Promotion Conclusion Low Private Label share Moderate Private Label share Private Label Private Label Natl. Brand Natl. Brand AGENDA:  AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT Activity Based Costing:  Activity Based Costing ABC is a cost allocation or assignment methodology Cost assigned based on the activities and drivers Activities are tasks within a process Drivers are factors creating costs GM Vs ABC:  GM Vs ABC Gross Margin Relationship between cost and selling price Not a predictor of profit Percentage ineffective during deflation times Profit Contribution Sales - Cost of Goods Sold = Gross Margin + Direct Revenue - Inbound Costs - Outbound Costs = Profit Contribution Primary Processes:  Primary Processes Costs Follow Product Flow:  Costs Follow Product Flow Greatest Cost Is DSF:  Greatest Cost Is DSF Proposed Pricing Process:  Proposed Pricing Process Collect Competitive Data:  Collect Competitive Data Trigger Pricing:  Trigger Pricing Pricing Candidates:  Pricing Candidates Determine Price:  Determine Price Price Table:  Price Table Department Category Category Sub Category Sub Category Sub Category Sub Category Image Item VELOCITY PHILOSOPHY:  VELOCITY PHILOSOPHY Faster sellers priced lower than slower sellers Reinforces low price image Basis for power curve SIZE PHILOSOPHY:  SIZE PHILOSOPHY Larger sizes priced lower than smaller sizes Promotes selling larger sizes Increase volume Lower transaction cost Supported by vendor pricing Lower bracket cost Lower transaction cost FLAVOR/PATTERN PHILOSOPHY:  FLAVOR/PATTERN PHILOSOPHY Create sub-group Price all items the same Even if cost differs Consumers perceive all items as equal Cherry Raspberry Orange Grape Price Controls:  Price Controls Iterative Process:  Iterative Process Implement Price:  Implement Price Pricing Filters:  Pricing Filters Unlock The Gold:  Unlock The Gold Understand your competition Price for net profit Consider all factors Competition Movement Cost Justify implementation Test item sensitivity Slide47:  W. Frank Dell II, CMC President DELLMART & Company 125 Hardesty Road Stamford, CT 06903 USA Tel: 203-968-8609 Fax: 203-968-8613 e-mail

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