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Marketing Update: The Importance of Pricing

Marketing Update: The Importance of Pricing. Mailers’ Technical Advisory Committee. Stephen M. Kearney Vice President Pricing & Classification October 28, 2004. The Importance of Pricing. “Pricing is the moment of truth – all of marketing comes to focus in the pricing decision.”

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Marketing Update: The Importance of Pricing

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  1. Marketing Update:The Importance of Pricing Mailers’ Technical Advisory Committee Stephen M. Kearney Vice President Pricing & Classification October 28, 2004

  2. The Importance of Pricing “Pricing is the moment of truth – all of marketing comes to focus in the pricing decision.” E. Raymond Corey, Industrial Marketing: Cases and Concepts (Englewood Cliffs N.J.: Prentice Hall, 1962)

  3. Pricing Delivers Results • Simplify • “99-Cent Menu” • Customize • “Value Meals” • Encourage Efficiency • “2 for $2.22”

  4. Pricing Delivers Results • Simplify • PCs come equipped with basic software installed • Customize • Enhance systems via downloads • Encourage Efficiency • Specific suites for home, office, business, educators, developers, and professionals

  5. USPS Pricing Strategy Simplify Customize To Grow Our Core Business Encourage Efficiency

  6. Simplify • DMM Transformation • Priority Mail Flat Rate Box • Electronic Return Receipts

  7. SimplifyDMM Transformation • Clear pathways to confident decisions • Consumer and small business versions are a hit • Commercial version coming in early 2005

  8. SimplifyPriority Mail Flat Rate Box • Focus on convenience • Two shapes (garment, shoes), one price • Boxes go anywhere in US: $7.70 • Implement November 20, 2004

  9. SimplifyElectronic Return Receipts • Electronic option to replace green card • Receive e-mail notification with signature • Bulk version too • $1.30 versus $1.75 green card • Implemented September 9, 2004

  10. Customize • Negotiated Service Agreements • Consistency in Mailing Standards • Parcel Return Services • Customized MarketMail

  11. CustomizeNegotiated Service Agreements(NSAs) • Designed to introduce customized, negotiated pricing to incent more volume • First NSA exceeding expectations • Two new equivalent agreements: Bank One and Discover • Implement Discover NSA January 1, 2005 • Much customer interest in spite of uncertainty

  12. CustomizeConsistency in Mailing Standards • Important to retain and build business • MTAC work group • P&C Communications via e-mail • New First-Class Mail and Standard Mail content language • PCSC in New York

  13. CustomizeParcel Return Services • Returns becoming a key strategy • Leverage first and last mile • Ease of use and partnership • Started October 19, 2003 as an experiment • $14 million revenue through the second week of October 2004

  14. CustomizeCustomized MarketMail • Adding excitement and creativity to direct mail • Started August 10, 2003 • 278 mailings, 3.2 million pieces mailed, $2.21 million revenue the first year

  15. Encourage Efficiency • Annual Price Changes • Periodicals Co-Palletization

  16. Encourage EfficiencyAnnual Price Changes • Predictability for customers and our planning • Lower cost of uncertainty • Same time, each year, known in advance • 2-year phasing with equal increments

  17. Encourage EfficiencyPeriodicals Co-Palletization • Testing new price incentives to increase Periodicals efficiency • Publications working with printers to combine on pallets • Started April 20, 2003 • 1.7 million sacks eliminated, 72.7 million pieces moved to pallets through September 2004 • 2-year experiment to include heavy journals implemented on October 3, 2004

  18. The Importance of Pricing Simplify Customize Encourage Efficiency To Grow Our Core Business

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