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To: Still Thinking
That means the price is below the market clearing price and they're giving away profit.

Actually what it means is that shelf space is expensive. A $50 MP3 player has around a 30% profit margin. You can stock 500 MP3 players in the space that one computer system takes up. A computer system has razor thin margins. It's not profitable to stock them on the shelf at your local Wally's.

Note that they still sell them on-line. Well, when they aren't sold out.

37 posted on 03/11/2008 8:17:36 AM PDT by Knitebane (Happily Microsoft free since 1999.)
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To: Knitebane

That’s essentially what I said. If they can’t keep them on the shelf, the price is lower than it could be without affecting unit sales, so they should raise the price a little and see if demand slows down to meet supply.

When they raise the price, they will get a better margin on the item in question. If the process goes so far that margin/ft shelf is better for the item than the one next to it, adjust the shelf allocation a little.

Your comment takes into account the reality of computer sales, I was just pointing out some general rules that apply to anything which they were apparently failing to follow.


38 posted on 03/11/2008 8:30:06 AM PDT by Still Thinking (Quis custodiet ipsos custodes?)
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