Price and Value Management Final

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Presentation given at PROS Pricing Summit, Chicago, IL, July, 2010

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Price and Value Management Final

  1. 1. Price & Value Management<br />Why Not Take Both Paths to Profit?<br />
  2. 2. Discussion Flow<br />Are we price managers or value merchants?<br />Packing the essential tools<br />Choosing the right path<br />Reaching the summit<br />Wrap-up<br />
  3. 3. Creating measurable, differential value for the value chain<br />Maximizing the profit captured by the enterprise<br />What is value management?<br />1<br />2<br />
  4. 4. Pricing and transaction management are components…<br />Pricing Strategy <br />Process Excellence<br />Tools & Software<br />Leadership & Learning<br />Value in Market<br />Value in Innovation<br />4<br />The value merchant’s role<br />Transaction Management<br />
  5. 5. Value vs. Price spectrum<br />What?<br />When?<br />How?<br /><ul><li>Customer Engagement Process
  6. 6. Segmentation & Targeting
  7. 7. Offer
  8. 8. Brand
  9. 9. Value Proposition
  10. 10. Differential Value
  11. 11. Commercial Roadmap
  12. 12. Price/Value
  13. 13. Volume
  14. 14. Channels
  15. 15. Geographic markets</li></ul>Who?<br />Why?<br />Where?<br />How much?<br />Value Management<br />T<br />R<br />A<br />N<br />S<br />A<br />C<br />T<br />
  16. 16. Discussion Flow<br />Are we price managers or value merchants?<br />Packing the essential tools<br />Choosing the right path<br />Reaching the summit<br />Wrap-up<br />
  17. 17. Four basic tools to guide any journey<br />Value Management<br />Economic Value Estimation<br />Pocket Waterfall<br />Value Map<br />Price Band<br />Price Management<br />
  18. 18. How is value measured?<br />Two Schools of Thought<br />“Value is Relative”- -<br />Perceived Value<br />“Value is Quantifiable”- -<br />Economic Value<br />Decision to use oneor both dependingon the uniquesituation<br />Value maps<br />Price vs. performance<br />Relative market position<br />Waterfall charts<br />Economic Value Estimate<br />Return on investment<br />Tools<br />Alignment of Price and Value<br />
  19. 19. The Value Map shows the position of each competitor in terms of the overall cost versus the overall benefit. <br />Higher Cost<br />Relative Price<br />Lower Cost<br />Worse Value<br /> Premium<br />Average<br />Better Value<br />Economy<br />Fair Value Line<br />Relative Perceived Value<br />School #1: Perceived Value<br />Inferior Superior<br />
  20. 20. A Value Waterfall is used for estimating the economic value-in-use of solutions.  This tool is most effective when your business has a clear economic advantage over a specific competitor and when it is logical that the customer would monetize the relative benefits of your offer.<br />$ Variance Benefit vs. CurrentSolution<br />Savings<br />Break Even<br />Current Solution<br />School #2: Economic Value<br />
  21. 21. Discussion Flow<br />Are we price managers or value merchants?<br />Packing the essential tools<br />Choosing the right path<br />Reaching the summit<br />Wrap-up<br />
  22. 22. The conventional route to the summit<br />12<br />Strategy Development and Planning<br />Execution<br />Performance Tracking and Evaluation<br />
  23. 23. Consider all of the available routes<br />13<br />Order <br />Fulfillment<br />Customers<br />Suppliers<br />Product Life Cycle Management<br />Enabling Systems & Capabilities<br />Leadership & Learning<br />InformationSystems<br />Customer Engagement<br />Customers<br />
  24. 24. Why not start with the customer engagement process?<br />14<br />segmentation<br />value quantification<br />Plan<br />Plan Engagement<br />Sense<br />Measure<br />Assess Needs & Value<br />Assess Results<br />•Issues •Tactics •Negotiations <br />value analysis<br />Refine Offer & Value Proposition<br />Present & Deploy Solution<br />Manage<br />Convey<br />value communication<br />offer management<br />
  25. 25. What role can we play in the new product development process?<br />15<br />value hypothesis<br />transaction model<br />price and positioning<br />demand & revenue management<br />
  26. 26. Start small. Get some wins.<br />16<br />Determine if a process exists…Help define the process<br />Pick one or two stages of the process to improve<br />Customize the tool kit<br />Test the approach<br />Train the organization<br />Replicate and scale up<br />
  27. 27. Discussion Flow<br />Are we price managers or value merchants?<br />Packing the essential tools<br />Choosing the right path<br />Reaching the summit<br />Wrap-up<br />
  28. 28. Reaching the summit. Navigating the crevasses.<br />Which trailhead?<br />Price Orientation<br />Value Orientation<br />Value Share<br />Communication Gap<br />Segmentation Gap<br />Negotiation Gap<br />Transaction<br />Gap<br />Theoretical Value<br />Commercial Value<br />Conveyed Value<br />Accepted Value<br />Transacted Value<br />Captured Value<br />
  29. 29. Take multiple routes<br />
  30. 30. Contact Information<br />brian.sharp@kalypso.com<br />Brian Sharp<br />919.428.4495<br />

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