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“Today Shapes Tomorrow

 Published Every Monday    Volume  136 Special Edition August 3, 2009














































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Chapter 10 – Fight the “Price War” with your Strategic Sword in week-8

Last week we discussed details of the seventh week.  It appears that you are in a price war.  Your competition dropped the price again from $0.75 per cup to $0.50 per cup and it affected your sales for week-8.  So let us discuss how and what did you do this week-8?

SALES – You sold 50 lemonades this week even though your competition “Jack & Jill Lemonade” down the street dropped the price to $0.50 a cup.  Not bad! You are also hearing that “Jack & Jill Lemonade” would not be able to keep up with you for too long if the price stays around $0.50 per cup.

CUSTOMERS – You continue to see a loyal customer base come to you.  However, you do see a decline in your sales.  Customers that are price sensitive, in other words, who care more about the price are going to “Jack & Jill Lemonade” for a cheaper lemonade.  Therefore, your sales dropped from healthy 70 cups a week to 50 cups this week.

PRODUCT AND SERVICES – You are keeping the quality of lemonade good.  Your service is courteous and taste is just perfect!

PRICE – You are in a price war with “Jack & Jill Lemonade”.  You are losing sales to them due to cheaper lemonade.  For the next week you have to decide – 

  • Should you follow the “Jack & Jill Lemonade” price and drop your price also from $0.75 per cup to $0.50 per cup or

  • Keep the price same at $0.75 per cup and risk the loss of more customers, or

  • Drop the price below $0.50 per cup. 

You know that you have the cost competitive advantage over “Jack & Jill Lemonade”; however, you must analyze how the price drop will affect your profit before making any rash decision? 

So far well into week-8, you are doing a fantastic job like a seasoned business person.  Keep up the good work!  This is how your week-8 numbers look –

 


Learn more about…

What is Credit History?  Why is it important to have a good credit history? Volume 12.    

What is Economy, Business, Workers, Goods,  Services,  Stock, DOW, S&P500, and NASDAQ in Volume 16. 

Does it pay to study hard? Volume 17.    

What is Currency and Foreign Currency Exchange rate? Volume 14What is stronger or weaker currency? Volume 20. What does the dollar slide mean? Volume 32.


How does money grow in a bank? Volume 21. 

What is Fed Funds rate and Discount rate? Volume 22

What does the interest rate cut mean for you? What is APR? Volume 23. 

How to read stock information? Volume 25. 

What is “Black Monday”…Crash of 87”? Volume 31.

Who are CEO, CFO, Shareholders, and the Board of Directors? What is SOX? Volume 33


What does “$4.95 + Tax” means?  Volume 47.


What is a Recession?  What is a Depression? Volume 48.


What is Mergers & Acquisition (M&A)?  What is a Merger?  Volume 49.


What is ADR?  Volume 62.


What does buying back of shares means?  Volume 63.

Why is consumer confidence so important?  Volume 64.


 

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