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• Pricing Strategies That Appease Customers and Stock Investors Simultaneously (Part 1) - 16 February 2008

How do you justify a Gross Margin loss? Some elements of expense are beyond management control. A US product that uses semiconductors made in Europe has to cost more in 2008 than during the previous year. Who should bell the depreciated dollar cat? Unilever is a prominent example of a major corporation which has opened 2008 by confessing that sales have grown faster than profits. We have published an article earlier entitled “Price Competition is the Principal Stock Value Destroyer”. This piece is a sort of counter-point. We want to examine cases in which stock investor interests are best met through selling price increases.

• Pricing Strategies That Appease Customers and Stock Investors Simultaneously (Part 2) - 16 February 2008

Pricing Strategies That Appease Customers and Stock Investors Simultaneously (Part 1)

Price Points Protect Stocks from Market Losses

Pricing gets more involved the deeper you delve! There is no getting away from the process however, whether you buy and sell stocks, run a corporation, or work in a mom-and-pop store. Pricing affects all of us, whether customers, and makers of things, or providers of services. Incomplete information is a major stumbling block in pricing, regardless of where you may stand. Customers are never going to say that they would love price increases! The demand elasticity of price (market share loss to a price increase) is a subjective matter for the best executives.

• Price Competition is the Principal Stock Value Destroyer (Part 1) - 12 February 2008

Even rapid business growth has its downsides. Small stock investors are the most affected stakeholders of this aspect of financial planning, because employees, suppliers, bankers, regulators, and private equity can abandon ship well in time. Plateaus of growth and cyclical downturns are ubiquitous to business. Many elements of cost mount inexorably out of management control, but stock investors may feel nothing until it is too late! It is a convention to present voluntary retirement schemes, reductions in head-count, and consolidation moves in cost-saving light, but why allow such structures to develop in the first place? It is glamorous at some junctures to expand market share at the cost of gross operating margins, but they are almost never in the interests of loyal stock investors.

• Price Competition is the Principal Stock Value Destroyer (Part 2) - 12 February 2008
Price Competition is the Principal Stock Value Destroyer (Part 1)

EVA and Risk Perspectives of Operational Pricing Effects on Stocks

A professional manager who is committed to supporting a positive stock price trend has to consider economic value addition (EVA) and the significant risks of a business, when he or she takes diligent decisions regarding pricing decisions for products and services. Outcomes of such thinking may be entirely different from ones which are short-term or poorly-informed about the lasting impacts of direct and indirect price reductions. The telecommunications sector in emerging countries serves as an illustrative example of how stock investors can be affected by pricing decisions at the tactical level.

• Pricing Decisions and Stock Value (Part 1) - 7 February 2008

Nothing in the directly controllable domain of a professional manager can match pricing discretion, when it comes to immediate and dramatic effects on stock price. Operating margins will show effects within the quarter following a pricing decision, especially when management accounts segregate revenue trends due to volume changes from those because of unit price changes.

• Pricing Decisions and Stock Value (Part 2) - 7 February 2008

Pricing Decisions and Stock Value (Part 1)

Though pricing affects stock value so strongly, it is not easy to assess the quality of management processes in this respect. Even if a customer is willing to stay with a brand in spite of a pricing change, he or she is certain to deny voluntary acceptance when asked. You will surely be back at a gasoline station no matter what the Sheikhs decide to do to the crude price per barrel, but will protest as strongly as possible nevertheless!