Pricing Audit

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    Pricing Audit - Presentation Transcript

    1. Pricing Audit “However beautiful the strategy, you should occasionally look at the results.” - Churchill
    2. The Pricing Diagnostic (TPD) focused on building a common vision and a clear path for pricing improvement. The process has been developed based on more than 20 years of pricing experience. The output of the process is a Scorecard (see on the following page), recommendations, direction and guidance for moving forward. objectives: Assess current performance of pricing versus best practices. Build a clear vision of how to increase pricing effectiveness Identify how to leverage existing transactional information Identify the highest leverage pricing opportunity issues TPD will provide guidance on include: •recommendations for improving pricing in the short, medium and long term; •a list of “quick hits” to achieve growth objectives; •identification of “leaks” in the pricing process that can be repaired to grow revenue; •evaluation of how current customer information can be used to enhance pricing effectiveness; •Identification of gaps / weaknesses in client / Pricing or competitive intelligence & ways of remedying them February 13, 2007 Page 2
    3. WORLD CLASS PRICING PROCESS MATURITY L Excellence 5 E WORLD MATURE V in <1% of companies CLASS PROCESS E L Execution L Optimization 4 E Optimization V Processes <10% of companies Tools E In Place L L Price/Value Value 3 E Analysis V Processes 20% of companies E L In Place L PROCESS Internal Gain 2 E Control V Process 40% of companies MATURITY E L In Place LEVELS L Baseline 1 E V Process is 30% of companies E L Ineffective
    4. PRICING PROCESS FLOW P1 P2 P4 P3 Develop Set Monitor Manage Pricing Customer Pricing Pricing Strategy Prices Performance • Conduct Value • Finalize Menu • Communicate • Measure Analysis Offerings Price/Value Performance • Cost, • Finalize Menu • Obtain • Review Competitive Tiers Approvals Performance Analysis • Assess • Update Master • Make • Develop Customer Data Adjustments Strategic Impact • Manage Segmentation Transactions • Develop Pricing • Manage and Strategy Control Pricing • Assess viability Process of strategy
    5. Provides a detailed audit of each key pricing process… World Class Pricing - Pricing Diagnostic World Class Pricing • Examines more than 40 dimensions of pricing Pricing Diagnostic process performance, and benchmarks them against relevant norms. Company Cost Competition Customer Policy Incremental costs Competitive intelligence proc. Research • Drills into the detail of each dimension to gain Training initiatives Margin analysis Discounting controls Price Band Analysis an accurate understanding of current Price change process Product line rationalization Long Term Perspective Value based segmentation performance Decision making process Terms and Conditions Competitive Signalling Value measurement tools Key Performance Indicators Pricing Waterfall Art of Diplomacy Price fences Roles & responsibilities Transaction level analysis Industry knowledge Buying process knowledge • Concisely summarizes major issues and Sr. Management roles Customer P&L's Bidding tools Price point optimization quantifies opportunities. Compensation & Incentives Customization strategy Simulations Fairness & equitability New product pricing Defection analysis • Presents a plan outlining where best to start Link to business strategy Price/Volume Model 1% mindest Yield management and which opportunities will yield the best Process Capability results. Not Working/Non Existent Opportunity for Improvement Performing Well
    6. … and concrete improvement action plans 2 Cost to Serve Analysis Best Approach: World Class companies have an understanding of the direct, indirect and future costs that are relevant to the pricing process Cost analysis supports management decision making Current Situation Looking at just the raw food cost Rarely considering backroom labour costs and RUA per item could even consider skill level requirements (e.g. slow roaster added $9000/store + labour) Use of food cost% driving behaviour that might discourage sales of higher dollar margin/low percent margin items (i.e. ribs). “Can’t take a percentage to the bank” Key Actions Need for a true cost model: Raw Cost + Labor on top 25 food items. Integration of accurate food costs within transactional database system (people unsure who maintains the updates)
    7. Assess the strengths & weaknesses of your Pricing Infrastructure People • Skills, experience, mgmt style • Resources and budget People • Strategic vs. operational Structure • Reporting, authority matrix • Roles Objectives Process Structure • Business objectives • Key Performance Indicators System • Tools, Rules • Data access, software Process Systems Objectives • Documentation • Workflow, automation
    8. Provides an actionable plan to gradually improve your Pricing Performance Long Term Action 6. Implement Pricing Execution software at the EMEAC level, for configuration and pricing mgmt, and uniform KPIs Short, Medium & Long Term Action Vision Medium Term Action 3 years 4. Develop a predictive tool for setting contract prices based on recent bids and competitive information 5. Harmonize processes across the EMEAC, develop global pricing policies Short Term Action 1 to 2 years 1. Roll out the recommendations of Project Mont Blanc for segmentation, and event horizon management. 2. Develop a pricing strategy by product family utilizing Value Analysis, Pricing Guidelines and Tools 3.Take a general price increase of 1$ to 3% and support with an escalation clause in contracts 0 to 1 year
    9. Pricing & Value Consultancy Created in 1993 Present in 10 countries Research, Strategy, Implementation Tought leader + state of the art tools clients include Contact: llecorre@pricingsolutions.com
    10. Pricing Solutions – Range of services • Client/Consumer Value Drivers research Research • Price change impact research • Transactional analysis/ Modélling • Client Value & Satisfaction studies • Product potential & ‘Willingness to pay’ Strategy • Client/Consumer segmentations Pricing • ….. Advisory • Value Based Pricing • Pricing Strategies & Tactics • Competitive Pricing / Price Wars Solutions • Implementing Price Increases Pricing • Channel Pricing • New Product Launch • …. • Sales Force Training / Motivation • Support/ Training of Pricing / Marketing teams Support • Decision Suppoirt Systems • Deplyment & management of ‘Test Platforms’ Management • Product/Service Full Cost Analysis • Pricing Process deployment • Pricing & Competitive Intelligence & Pricing Benchmarking • ….. • Development / Reinforcement of Pricing Capabilities Process • Redéployment of Pricing Processes • Management & optimization of ‘client conditions ’ • Multi-Channel Pricing / Pricing Corridors • Change Management • Value Propositions / Design to Price • Pricing Software implementation • …..

    + Loïc Le CorreLoïc Le Corre, 2 years ago

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