EconAir

  You need to know three things about management:   80/20 Rule Opportunity Cost Compound Growth   80/20 Rule (Also called Pareto’s Law)   This idea says that a relatively small percent of actions account for a relatively large percent of outcomes. Find and concentrate your efforts on the important influences on your business.   Some hypothetical examples.   20% of your customers account for 80% of your sales.   20% of your product line accounts for 80% of your sales and profits.   Often, companies with a large product line with many variations find that 50% of their products account for over 90% of sales. An even smaller percent usually accounts for most of the profits.   20% of your SKUs account for 80% of your stockouts (and lost sales).   20% of your programmers account for 80% of the bugs in new programs.   The percentages aren’t always 80/20. Some examples:   McDonald’s accidentally learned that 10% of its customers accoun...

  CONTENTIONS Pricing is a strategy, not something a company accepts or beyond its control. Price discrimination is one pricing  strategy. Price discrimination can be practice by individual companies or all companies in an industry. The relative effectiveness of competing companies' price discrimination depends partly on the proprietary (private to the company) information each company has. Price discrimination, in combination with loyalty programs or product line extension, can increase market share. The more proprietary information a company has, the more effective is price discrimination. The more information about individual buying behavior, the more effective is personalized price discrimination.     INTRODUCTION – COMPANIES WITH “MARKET POWER”   The focus of this essay is on corporations that sell products or services to final consumers. A common strategy is price discrimination.   Retailing is somewhat different than most market transactions. Retaile...