Vlerick Informeel “Pricing in times of economic downturn” Powered by:

‘ Price’ isn’t just one of the four P’s Pricing is the only component of the marketing mix that generates profit for the company, generally called turnover. All the other components are the costs incurred during the production and promotion of the product

The result of a complex equilibrium… Price External factors Competition Raw materials Positioning

… but always under pressure PRICE … especially in times of economic downturn

Achieving top line and profitable growth are among top five priorities of European CEO’s Source: The Conference Board, “CEO Challenges 2007”, October 2007

Pricing can deliver huge profit impact to the business Total Revenue = 100 Variable Cost = 25 Fixed Cost = 65 Profit =10 Profit Impact * Note: Assuming Average Fortune 500 Company Profit + 13% Reduce Variable Costs by 5% Improved price realization of 5% generates 50% profit improvement* Profit + 50% Increase price by 5%

At the same time, executives are facing high pressure to get more from pricing Cost pressures Competitive pressures Customer pressures Internal pressures increases in raw materials costs and production costs the decline in customers willingness to pay competitors defending their market share Sustaining top line growth & getting profit growth

increases in raw materials costs and production costs

the decline in customers willingness to pay

competitors defending their market share

Sustaining top line growth & getting profit growth

The Pricing experts: François Delvaux The House of Marketing Pricing in times of economic downturn Prof Dr Deva Rangarajan Vlerick Leuven Gent Management School Pricing: strategy & tactics Kurt Boons Belgian Post International Pricing Case