Value &
Pricing
Solutions

Value & Raising price by
1%…
…increases
profit by 12%
Pricing are the
101 9
largest Profit 8
levers… Operating
26
profit
100
• COGS
66
• Sales • Fixed
costs

How do clients
choose your brand
in the time of
Hyperchoice ?

Brand/
Price/
Image
Promotion
Product/ Visibility/ Placement/
experience Convenience Trade

Second phase of Marketing:
Then we started talking to
someone called ‘Consumer’

How do you Stand out ?

Is it your Brand ?

Product
Quality?

Visibility /
Accessability ?

Word of Mouth /
Experience ?
FUTURELAB

Design / Packaging?

\"We can't compete on price. We also can't
compete on quality, features or service.
That leaves fraud, which I'd like you to call
marketing.\"
Dilbert’s Boss
cc 3.0, Megaqwerty
FUTURELAB

Value Proposition
What are your
product ratings vs
competition?
Product Quality
Product / Convenience /
Experience Visibility
Perceived
Value
Brand/Image
What drives
Consumers’ Value
Perception?

Houston, we have a problem
Less than 20% of
businesses attempt to
measure what creates
Value for customers
60% of large companies
do not even have a
Pricing Manager

WORLD CLASS PRICING
PROCESS MATURITY L
E Excellence <1% of
WORLD
CLASS
MATURE
PROCESS
V
E
L 5 in
Execution
companies
L Optimization
4
E
Optimization V Processes <10% of
Tools E companies
L In Place
L
Price/Value E Value
Analysis V
E
L 3 Processes
In Place
20% of companies
L
PROCESS
Internal
Gain E
Control
V
E
L 2 Process
In Place
40% of companies
MATURITY
LEVELS
L Baseline
E
V Process is 30% of companies
E
L Ineffective

“Price is what you
pay, Value is
what you get”
Warren Buffet

Visibility
Experience
Quality
Brand
Value /
Price
Pricing Solutions
can help you
Find the right Balance

Value & Pricing strategy
Consumer Actions Results
Attitudes / Value Drivers Pricing & Value levers Sales growth
Segment share
Convenience
Experience
Quality
Brand
Value Proposition
Consumption funnel
Marketing Spend
Profitability / ROI
Price
% Product quality
% %
% repeat Promotion
trial use
awareness

Value & Pricing strategy
• Conducting Value & Pricing Research
•Developing Targeted Value Propositions
•Setting appropriate Price Points
•Testing & Generalizing best practices
•Measuring Impact & KPIs

Take a closer look…

Who buys your products ?
What Value
Proposition?

PRICING Research Methodologies
√ Choice Based Conjoint • Van Westendorp x Direct Questioning
√ Financial Value (Price Sensitivity Meter) x Brand Price Tradeoff
Measurement • Price Laddering Analysis (BPTO)
√ In-Market Tests • Traditional Conjoint
Multivariate Regression Analysis
Analysis
Monadic Testing
Defection Analysis
(Won/Lost Analysis)

give your
customers ‘a
damn good
listening to’

testing analyzing
vs.

Evaluating Value Drivers

Measuring Value Drivers
Performance versus importance of key aspects of service
5
UNDER DELIVERING - LOW PERFORMANCE MEETING CONSUMER NEEDS
R e lia bility
ON HIGH IMPOR TANCE FACTORS ON HIGH PRIORITY ELEMENTS
V a lue for mone y
T e c hnic a l S upport
Trus tw orthine s s
Lo w c os t / D ea ls
S pe e d
C ustome r S e rvic e
C hoic e
4
Amount of dow nloa d da ta
Highly ra te d by othe rs
B undle d P a c ka ge s
FACTORS WHICH ARE OF LOW IMPORTANCE OVER DELIVERING - HIGH PERFORMANCE
ON WHICH PERFORMANCE IS LOW ON LOW IMPORTANCE FACTORS
3
February 13, 2007

Experience / Brand Advocacy
Pinot
Noir ?
Merlot ?

Value Based Pricing
customer
value
price

Psychological Pricing
Price Points

Feel you’re not getting
enough return on your
marketing investment?…

Less than 25 % of Majors Brands measure the profitability of promotions
… when they do, Over 60 % have negative or marginal long term profit impact

•Establish KPIs
•Measure ROI of Marketing programs
•Pragmatically prioritize Value / Pricing initiatives
•To customers’ perceived Value
•To ‘readyness to pay’
•To Client acquisition & lifetime value
•Don’t take no for an answer

Pricing Excellence

Bottom Line Impact
Atlantic Hills sold 43
900 cases of Riesling at
€9.30 per bottle.
Pricing research showed that
9.95 volume would not drop if they
were to charge €9.95 per bottle
9.30
Indeed, it did not and that
65€cents difference translated
into
€342 420 in extra profit
43,900

Pricing Management
•Developing Value & Pricing Intelligence
•Defining Targeted Value Propositions
•Setting & Optimizing Price Lists
•Supporting & Monitoring Field Implementation
•Managing Client Conditions
•Measuring Impact & KPIs

Good ideas are not adopted automatically. They must
be driven into practice with courageous patience.
Admiral Rickover
World Class Pricing .. It’s a journey

Pricing
Audit
“However beautiful the strategy,
you should occasionally look at the results.”
- Churchill

Value / Pricing Objectives
Profit Maximization
Revenue Maximization
Share Maximization
Value Leadership
Price / Value Fencing

Pricing Tools
Value Discrete
Price based Choice
Waterfall Design Research
Value Value
Curve Price Discount
Segmentation
Corridors Toolbox

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

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
Management
• Deplyment & management of ‘Test Platforms’
• Product/Service Full Cost Analysis
• Pricing Process deployment
Pricing
• Pricing & Competitive Intelligence & Benchmarking
• …..
• Development / Reinforcement of Pricing Capabilities
• Redéployment of Pricing Processes
Process
• Management & optimization of ‘client conditions ’
• Multi-Channel Pricing / Pricing Corridors
• Change Management
• Value Propositions / Design to Price
• Pricing Software implementation
• …..