More importantly than "working at Little Ceasars" or "Working at Toys R Us," though, is that I've taken college level Econ classes.

This stuff is basic econ: you could take it in high school, frankly. Promotions of this sort are largely the burden of the beneficiary. The primary beneficiary is Sony; this is called "marginal benefit" in economic terms. If you want to think that Wal Mart, Samsung, Philips and other companies are spending millions of dollars to help Sony out, because, in your words: "they are rich, they can afford it," be my guest.

a few things
BR player - PS3 connection. Sony is heavily identified with the BR format and brand. PS3 is, by FAR, the best selling BR player. So, saying that this is a Sony- Walmart push is perfectly reasonable.

I think it might be a rebate from Sony/BR consortium members that Walmart takes care of. It might not be the full $100, but even $80 rebate will allow the remaining $20 be easily covered by the margins on the other products (as the GC can only be used at walmart)

With Sony pulling all the 80GB units and these promotions, I'm getting the feeling that a new SKU might be coming out in Q3 (possible E3 announcements?)

Little Caesars

bought 90 cents per can sold at 1.00

2 liter bought at above 1 dollar per bottle sold at 2.19 I can tell you that with most certainty

That was for Pepsi and we switched from Coke cause Coke was more expensive.

also 40% food and paper - cheese 22% alone and raising with gas prices.

27% labor cost

5 dollar pizzas

Then you can do the numbers as such:

With Promo
Pizza Revenue: $20
Less:
Cost of Pizza: $10
Cost of 2L Pop: $1.99
Gross Margin: 8.01

Without Promo, gross margin is $10.
So in this example, the promo reduces the margin but doesn't lose the company money. Hopefully the total revenue increases (bec of the promo) so that the TOTAL gross margin increases, even though the percentage falls.

obviously you can work with the actual costs and revenue if you have the correct numbers.

this is a much different scenario going back to the PS3- because the margins are very tight.

oops. sorry I Perdict. I didn't see the other numbers. You must have edited your post?
i will redo..

I Perdict, tell me if this is correct:

Pizza - $5.00
Less:
Food & Paper (40%) - 2.00
Cheese (22%) - 1.10
Labor (27%) - 1.35

Gross Margin = $0.55 cents

IF THIS IS CORRECT, (a) the pizza industry is terrible :)

In this case, it won't make sense to obviously offer a free pop with just 1 pizza. But maybe if they Buy 2 or 3 pizza, your margin goes from $1.10 or $1.65. In this case, you will have enough gross margin to maybe give them a FREE POP.

LOL @ many.

Raise your hand if you think the word "SALE" must mean that the retailer is losing money overall, or someone paid them to do it!

Raise your hand if you think "SALE" is about the discounted item(s)!

Raise your hand if you think Sony/MS/Nintendo make more money off hardware than software!

Raise your hand if you think games are a low-margin item at the retail level!


...if you raised your hand, or even are remotely unclear on those items, I think you should seriously consider not posting to the sales board, because you are... really misinformed.

The very idea that Sony had any part in this Wal-mart giftcard deal is... ludicrous. I find myself (as usual, on many of these topics), doubting how many of you understand anything about retail, Wal-mart (go look for some books... try: Author, Sam Walton, in the local bookstore, or library, for starts), or occasionally even basic mathematics.

I apologize if anyone is insulted by this post... but some of you are *really* off base, and I figure someone needs to tell you, before you... I dunno, get hit by a bus, in the financial sense... like get an ARM loan for a new home or something.

@ Mifely
The purpose of this post is to analyze. Therefore, if you understand the retail industry then please explain to us with numbers (or assumption of numbers). In this example of just the PS3 - let us assume you only sell PS3 in your Blu Ray department.

If PS3 sells for $399. You buy PS3 for (??)
Your Gift Card Costs $94 ($100 gift card).

What is your business reason to offer the $100 gift card promo?

Please elaborate. I hope you can answer with numbers and not just generalizations.

The discount was most likely paid for by Sony/the Blu-Ray association, as they have the most to benefit from the discount. Sony will gain not only in terms of things like more short-term sales, but also, to throw a bone to walmart, so that Blu-ray players will actually be featured more PROMINANTLY, versus having just one or two in stock, or having the players in the back available only when you ask a clerk to go hunt one down for you.

So, now we have five or six BD players on the shelves at any one time, and at the walmarts that I have been to around town, 3x's the number of BD movies on the shelves ( oh well, basically 3 shelves vs just 1 lol), but it's still a whopping increase and they'll no doubt add another shelf of BD soon.

@ Dallas
Yes, that was the original point of the post. We were just analyzing some numbers and based on "common" knowledge (but obviously not exact numbers), we were discussing with Bodhesatva and I Perdict what possible reasons (business wise) would there be for Walmart would have to offer $100 gift card free - when our analysis shows that the numbers does not make sense.

And the MOST PROBABLE reason is that Blu Ray Manufacturers (such as Sony) must have some incentive, otherwise the retailer suffers a terrible loss.

And like Bod pointed out, Walmart MOST LIKELY doesn't eat losses like that - because that doesn't make any sense.