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To Charge, or Not to Charge

It seems that people are making mistakes — sometimes wittingly.

That’s if the author of a recent McKinsey Quarterly article “Pricing New Products” is on the money. The article reports that 80-90 percent of the prices companies charge for their new products are too low. Charging too little is far more dangerous, it says, because the company not only forgoes significant revenues and profits, but also fixes the product’s market position at a low level. And as companies have found time and again, once prices hit the market, it’s difficult — sometimes impossible — to raise them.

That doesn’t seem to concern executives of apparel maker Levi Strauss & Co., which has created a lower-cost brand of jeans to target a dream market — people who shop at Wal-Mart. Levi overhauled its entire operation from design to production and pricing to distribution, when it began to sell to the world’s largest retailer last year.

That reminds me of the article The Wal-Mart You Don’t Know. Alas, Levi is yet another example of how the almighty retail giant Wal-Mart is transforming the way businesses… do business.

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