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The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
The Right Path to Pricing Maturity with George Cressman
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The Right Path to Pricing Maturity with George Cressman

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Noted pricing expert Dr. George Cressman describes how companies achieve above average profitability by proactively managing price realization or "pricing maturity." Learn which stages a company must …

Noted pricing expert Dr. George Cressman describes how companies achieve above average profitability by proactively managing price realization or "pricing maturity." Learn which stages a company must take to be on the path to price maturity, as well as the risks of taking shortcuts. George's advice is absolutely essential for every B2B manager involved in pricing today.

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  • 1. Monthly Webinar Series - January 2012 The Right Path to Pricing Maturity with George Cressman World Class Pricing, Inc. …dedicated to creating world class pricing managers… Copyright © 2012 by LeveragePoint Innovations Inc. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical, photocopying, recording, or otherwise — without the permission of LeveragePoint Innovations Inc. This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion. COMPANY CONFIDENTIAL
  • 2. the Software Solution for Value-Based Pricing Build the Value-Based Strategy Execute Value-Based Strategy2
  • 3. Today’s Presenter George C G Cressman is founder and president of World Class Pricing, a consultancy specializing in helping clients build world class pricing managers. George has nearly 30 years of experience in the chemicals industry having held business sales and marketing industry, business, sales, management positions at DuPont, Monsanto, and Union Carbide. Currently, George is a member of the advisory board for the Institute for the Study of Business Markets, has served as a Trustee for the Marketing Sciences Institute, and is a Visiting Scholar at the University of Virginia. He is an adjunct faculty professor at the University of Delaware and Drexel University He has written extensively on University. business and marketing strategy and has been quoted in The Economist and a number of trade journals.3
  • 4. Pricing Maturity Pricing Maturity is is…. The ability to actively manage price realization to Achieve above average industry profitability. Copyright 2012 World Class Pricing, Inc. 4
  • 5. Pricing Maturity In Organizations Organizations – and their managers – grow pricing capabilities in predictable patterns. Copyright 2012 World Class Pricing, Inc. 5
  • 6. Developing Maturity in Pricing Practices Manage Pricing Linkages Manage Increasing ValueProfitability Delivery Manage Pricing Process Manage Price Discrepancies Increasing Managerial Control Copyright 2012 World Class Pricing, Inc. 6
  • 7. Pricing Practices Maturity:Driven By Culture Change For most companies, developing pricing practices involves significant cultural changes that involve: • How customer targets are chosen. • How offerings are designed. • How offerings are communicated. communicated • How channel decisions are made. • How pricing decisions are made. • How negotiations with customers are conducted. These changes impact decision rights, and rights so are not always readily implemented. This change takes time and effort! Copyright 2012 World Class Pricing, Inc. 7
  • 8. Skipping StagesSkipping stages dooms the process of b k d h f becoming pricing mature:• Underlying skills are not developed.• Organizational will falters. g There are no shortcuts! Copyright 2012 World Class Pricing, Inc. 8
  • 9. Stage One: Manage Price Discrepancies Objectives: • Raise awareness of pricing challenges and opportunities. • B i “self funding” of the maturation process. Begin “ lf f di ” f th t ti Copyright 2012 World Class Pricing, Inc. 9
  • 10. Maturity Stage One: Manage Price Discrepancies A. A Identify customer accounts with unacceptable price deviations. B. Develop an understanding of causes of unacceptable price deviations. C. Implement plan to reduce/eliminate unacceptable price deviations. Important Control Plots: p • Realized Price – Volume • Customer Profit – Volume • Customer Profit – Price • Realized Price – Sales Person Copyright 2012 World Class Pricing, Inc. 10
  • 11. Stage Two: Manage Pricing Process Objectives: • Begin pricing process management. • Standardize decision making effort. • Eli i t random decision making activities. Eliminate d d ii ki ti iti Copyright 2012 World Class Pricing, Inc. 11
  • 12. Maturity Stage Two: Manage Pricing Process Bring system to the pricing process - Address: 1. How are pricing decisions made? 2. Using what criteria? 3. By whom? Develop controls for how pricing decisions are made and begin centralization of the pricing process. Copyright 2012 World Class Pricing, Inc. 12
  • 13. Stage Three: Manage Pricing Process Objectives: • Institute a value based pricing process. • Centralize control of the pricing effort. • B ild pricing capabilities broadly across the firm. Build i i biliti b dl th fi Copyright 2012 World Class Pricing, Inc. 13
  • 14. Maturity Stage Three: Manage Value Exchange Price Setting Establish Prices That Capture A Fair Portion of The Delivered Value Buyer Behavior – V l Negotiation B B h i Value N ti ti Design Negotiation Practices That Force Customers To Acknowledge and Pay for Value Value Communication Communicate The Menu’s Value Delivery To Customers In An Understandable Manner Offering Structure Create An Offering Menu That Gives Customers Valuable Options Value Assessment Understand Drivers Of Value For Customers And Determine The Offering’s Value Delivery Foundation: Customer Targeting Select C S l Customer Targets Where The Business Can Deliver Differential Value At h h i C li iff i l l Competitive Advantage Copyright 2012 World Class Pricing, Inc. 14
  • 15. Stage Four: Manage Pricing LinkagesObjectives: • Align the entire business around value delivery. • Integrate value delivery processes across the firm. • B ild customer and competitor intelligence systems. Build t d tit i t lli t Copyright 2012 World Class Pricing, Inc. 15
  • 16. Elements of Strategic Pricing StrategyProfitable Pricing Strategy is founded on three interacting components: Customers Manage the value exchange so customers are forced to acknowledge and pay for value delivery Profitable Pricing Strategy Competitors ResourcesManage industry interactions Assign resources to the for consistent profitability most profitable activities Copyright 2012 World Class Pricing, Inc. 16
  • 17. Maturity Stage Four: Managing Pricing Linkages Customer Target Selection Competitive Managing Pricing Resource Strategy Linkages Allocation Offering Portfolio Customer Communication Channel Decision What value should How do we communicate the How do we deliver we create? value? the value? Product-Service Value based mass and/or Menu communication Channels Direct Value based product Value based sales communication Intensity/Types/Activities development Copyright 2012 World Class Pricing, Inc. 17
  • 18. Maturity Stage Four: Managing Pricing LinkagesImplementation FrameI l i F Organization Structure Pricing Process Pricing Intelligence Pricing Policy Design for value Decision rules Customer/Competitor/ Price tablecreation and delivery defined Cost Discount/Rebate Cross-Functional C F ti l Decision D i i makingki Integrated data bases rules consistentlydesign and linkages centralized enforced Rigorous validation techniques Copyright 2012 World Class Pricing, Inc. 18
  • 19. Summary• Achieving pricing maturity yields dividends in marketcontrol and profitability. l d fi bili• Manage the four stages – don’t skip stages.• Allow the organization to grow to maturity.• Invest in building the appropriate skills and implementationinfrastructure – don’t skimp! Copyright 2012 World Class Pricing, Inc. 19
  • 20. Thanks for watching! www.WorldClassPricing.net George.Cressman@WorldClassPricing.net George Cressman (912) 882 – 1232 www.leveragepoint.com jmanson@leveragepoint.com Jay Manson (781) 727 – 597720

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