14 DAY TRIAL // I guess when you are the world's largest retailer and also the world's largest corporation (according to CNN) you do have some power when it comes to sales, and the prices you practice. I've been around the block a couple of times to know just how big companies deal with promotions and promotional prices. And one big promotion coming your way, with regards from Wal-Mart, is a HD-DVD player, for less than $300.
When it comes to big companies and promotions/promotional prices, it's a simple case of reading between the lines. When you see a product that you know is great and has a very small price, you start to wonder; some actually go to the extent as to saying "the company is selling the products below the market price so that they would attract customers". True, it may, just may be the case for some companies, but these cases are so rare, you have more chances of seeing Bill Gates admit Windows sucks than actually finding such a bargain.
No, it's usually the case of making the customer believe that they are getting a bargain, but believe me, they make a profit out of anything, anything you can think of. If you have a batch of products being sold at a very small price, that means that the purchase price was indeed smaller than the one they are selling the products for, and their profit comes from selling as many products as they can, hopefully all of them. When it comes to food, promotional prices appear as soon as the food (which has a limited life span) draws close to its expiration date. You might say the products still look good, but the health department might think otherwise.
Such is the case with Wal-Mart, they making a, let's call it, request for 2 million HD-DVD players from the Taiwanese company Forworld. This way they can ask for a very small price-per-product; they are, nevertheless, buying 2 million HD-DVD players and they will most likely heavily promote the players through their stores, so that a minimum of 1.8 million players are being sold. Why 1.8 million? Well, let's put it this way: would you like to get stuck with more than 200.000 HD-DVD players when they all cost around $300 or less? I didn't think so, that's why I gave them a 10 percent margin, but I'm sure their numbers say otherwise.
This is also a part of what makes great companies, well, great companies, it's their bargaining power: the more they buy, the lesser price they buy it for. Now for all of you who are surprised by the thought of a $300 HD-DVD player, being used to the $500 plus prices on the market right now, let me mesmerize you a little bit more with the idea that Wal-Mart may be paying as much as $150-$180 for a HD-DVD player, taxes and shipment included. Now how does that sound?