Planes, Boats & Planograms Howard Bergman

The Power of the Customer There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else. Sam Walton

Planes

Cost of a Flight $58,050 Fixed - $46,050 –Jets –Airport facilities –Customer service –Mechanics –Pilots –Flight attendants –Baggage handlers Variable - $12,000 –Fuel –Food

Total Cost = $58,050 Variable Cost = $12,000 Total Revenue = $12,800 Ave Cost/passenger (16) = $3628 Loss/Profit = $45,250 $800/seat 4 $3,200/row = $12,800 $460/seat 11 $2760/row = $30,360 Total Cost = $58,050 Variable Cost = $12,000 Total Revenue = $27,800 Ave Cost/passenger (46) = $1261 Loss/Profit = $30,250 Total Cost = $58,050 Variable Cost = $12,000 Total Revenue = $58,160 Ave Cost/passenger (112) = $518 Loss/Profit = $110 $320/seat 10 = $19,800 Total Cost = $58,050 Variable Cost = $12,000 Total Revenue = $77,960 Ave Cost/passenger (172) = $337 Loss/Profit = $19,910 $500/seat 5 $3,000/row = $15,000

$300/seat 15 $1,800/row = $27,000 Total Cost = $48,000 Variable Cost = $12,000 Total Revenue = $27,000 Ave Cost/passenger (90) = $555 Loss/Profit = $21,000 Low Cost Airlines

$175/seat 15 = $15,750 $800/seat 4 $3,200/row = $12,800 $500/seat 5 $3,000/row = $15,000 $460/seat 6 $2760/row = $16,560 Total Cost = $58,050 Variable Cost = $12,000 Total Revenue = $44,360 Ave Cost/passenger (82) = $708 Loss/Profit = $13,690 Total Cost = $58,050 Variable Cost = $12,000 Total Revenue = $60,110 Ave Cost/passenger (172) = $337 Loss/Profit = $2,060

BOATS

= Our engines Cost = $80 Price = $100 Total Profit = $100 $20

= Our engines Cost = $80 Price = $95 Total Profit = $75 $15 Total Profit = $90 $15

PLANOGRAMS

Maximize Economic Profit What does a Retailer Need? Increase Margins Increase Turns Increase other sources of income Decrease cost of capital employed Decrease cost of operations

Store Layout Yard FoodPharmacyHouseware Clothing

Planogram Assortment: What to carry Pricing: What retail price Promotion: How to display it Placement: Where to put it Supply: How much, how often

Assortment: Variety vs Duplication Are these items worth keeping? How many items ? How many sizes ? Will the consumer switch to another brand ?

$2.00$3.00 $ $3.00 = $0.15 $2.20 -$2.00 = $0.20 $0.15 X 100/month = $15.00/month $0.20 X 50 month = $10.00/month $25.00/month

$0.15 X 150/month = $22.50/month $0.20 X 25 month = $5.00/month $27.50/month

Maximize Economic Profit What does a Retailer Need? Increase Margins Increase Turns Increase other sources of income Decrease cost of capital employed Decrease cost of operations

Yard Food PharmacyHouseware Clothing

The Power of the Customer There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else. Sam Walton

The End Thank You

$3628 $1261 $518 $ $800 $500 $460 $350

MPLS Las Vegas 6:00 pm 7:00 pm 8:00 am 11:00 am 8:00 pm 11:00 pm 6:00 am7 am 2 Full Flights Profit = $42,000 2 Additional Flights 1/2 full Variable Cost = $24,000 Revenue = $44,360 Loss/Profit = $20,300 Total Profit = $62,300