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    According To Exhibit 10: Adapting The Price

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    Kavya Gopakumar
    DHL used a sophisticated software package called PRISM to analyze pricing strategies, including measuring demand curves through statistical analysis and surveys. PRISM helped DHL set prices for different customer segments and identify unprofitable accounts. While not all DHL offices used PRISM, it generally set prices based on product, weight, origin and destination. DHL also offered frequency discounts and had flexibility to negotiate prices up to 35% depending on costs and profits.

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    According To Exhibit 10: Adapting The Price

    Uploaded by

    Kavya Gopakumar
    25 views2 pages
    DHL used a sophisticated software package called PRISM to analyze pricing strategies, including measuring demand curves through statistical analysis and surveys. PRISM helped DHL set prices for different customer segments and identify unprofitable accounts. While not all DHL offices used PRISM, it generally set prices based on product, weight, origin and destination. DHL also offered frequency discounts and had flexibility to negotiate prices up to 35% depending on costs and profits.

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    DHL used a sophisticated software package called PRISM to analyze pricing strategies, including measuring demand curves through statistical analysis and surveys. PRISM helped DHL set prices for different customer segments and identify unprofitable accounts. While not all DHL offices used PRISM, it generally set prices based on product, weight, origin and destination. DHL also offered frequency discounts and had flexibility to negotiate prices up to 35% depending on costs and profits.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views2 pages

    According To Exhibit 10: Adapting The Price

    Uploaded by

    Kavya Gopakumar
    DHL used a sophisticated software package called PRISM to analyze pricing strategies, including measuring demand curves through statistical analysis and surveys. PRISM helped DHL set prices for different customer segments and identify unprofitable accounts. While not all DHL offices used PRISM, it generally set prices based on product, weight, origin and destination. DHL also offered frequency discounts and had flexibility to negotiate prices up to 35% depending on costs and profits.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    According to Exhibit 10

    DHL make some attempt to measure their demand curves using statistical analysis by a
    software package called PRISM (pricing implementation strategy model) which is really
    sophisticated.

    PRISM was used for the following purposes:


     Analyzing the profit impact of possible tariff adjustment, taking into account the
    competitive intensity of the route.
     Identifying low or negative margin customers whose yields should be managed
    upwards.
     Setting price strategy for different customers segments.

    PRISM was not used extensively by All DHL offices sometimes DHL Estimating demand
    curves by survey and statistical analysis for simple pricing structure. DHL’s base prices were
    calculated according to the product (service), weight, origin and destination.

    In all country markets served, DHL followed one of three pricing approaches: monthly
    handling fee, frequency discount, and loaded half-kilo.

    A frequency discount structure under which a discount was provided based on number of
    units shipped. The more often a customer used DHL during a given month, the cheaper the
    unit shipment cost.

    DHL sales reps could negotiate discounts from book price up to 35% after calculated fixed
    and variable costs, net profits by geographic lane and product line, and overall contribution
    margins.

    DHL have pricing flexibility. They can customize the table to the customer’s needs, because
    this customization is really helps negotiations.

    Adapting the price:

    Companies usually do not set a single price, but rather a pricing structure that reflects
    variations in geographical demand and costs, market—segment requirements, purchase
    timing, order levels, delivery frequency, guaranties, service contracts, and other factor. As a
    result of discounts, allowances, and promotional support, a company rarely realized the same
    profit from each unit of a product that it sells. In this Analysis, we want to know how far
    DHL implemented the concept of the price adaptations.

    1. Geographical pricing
    In geographical pricing the company decides how to price its product to different customers
    in different customers in different locations and countries. As DHL expanded service into
    new countries, it developed many different pricing strategies and structure.

    DHL country managers had almost total control of pricing, they typically set prices based on
    four factors: what the market could bear, price charged by competition (which was often
    initially the national post office), DHL initial entry pricing in other countries, and DHL’s then
    current pricing around the world. From this strategy, we know that the pricing policy is
    different in each country, which appropriate with the condition and situation of the country.

    2. Price discount and allowances

    Most companies will adjust their list price and give discounts and allowance for early
    payments, volume purchases, and off-season buying. Companies must do this carefully or
    find that their profits are much less than planned. DHL do this concept with pricing structures
    such as monthly handling fee, frequency discount, and loaded half-kilo.
    For the allowance concept, DHL also have the other strategy, like negotiations price that
    make possible to get flexibility price. The strategy which customize the table to the
    customer’s needs, and this strategy really help the negotiations.

    3. Promotional Pricing

    Promotional pricing strategies are often a zero-sum game. If they work, competitors copy
    them and they lose their effectiveness. If they do not work. They waste the money that could
    have been put into other marketing tools. In this case, DHL did not make a promotional
    pricing, but to hold out their customer they make a strategy pricing structures.

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