1. Commercial Excellence
How to make it stick?
Workshop summary for distribution
Onno Oldeman
Juriaan Deumer
Amsterdam, January 30, 2014
Amsterdam Office
Barbara Strozzilaan 380
1083 HN Amsterdam, The Netherlands
Tel: +31 (0)20 753 1253, Fax: +31 (0)20 753 1277
e-mail: onno.oldeman@simon-kucher.com
Internet: www.simon-kucher.com

2. Simon-Kucher & Partners' profile
World market leader in pricing
No. 1 in "Marketing and Sales"*
Competence ranking
"Marketing and Sales"
1
Simon-Kucher & Partners
2
"world leader in giving
advice to companies on how
to price their products"
"…the world's leading
pricing consultancy…"
Boston Consulting Group
3
Peter Drucker
"pricing strategy
specialists"
McKinsey & Company
Global presence
27 offices worldwide
"... in pricing you offer something nobody else does."
> 2,000 projects in the last three years
Employees: 700
Marketing
Boston Amsterdam
New
Bonn
York
Brussels
San
Cologne
Francisco Miami
Copenhagen
Frankfurt
Istanbul
São Paulo
London
Luxembourg
Santiago de Chile
Madrid
Milan
Munich
Paris
Vienna
Warsaw
Zurich
Beijing
Tokyo
Dubai
Strategy
Smart
Profit
Growth
Sales
Singapore
Pricing
Sydney
* Source: Manager Magazin Aug. 2007-2011/IMB (Institute for Management & Consulting); survey among 400-500 top managers
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3. Commercial Excellence at Simon-Kucher: Smart Profit Growth
Commercial strategy
Marketing
Market strategy
Brand portfolio management
Brand and assortment strategy
Assortment optimization
Channel strategy
Innovation management
Pricing strategy
Restore value programs
Marketing
Competitive strategy
Marketing efficiency
…
…
Strategy
Smart
Profit
Growth
Sales
& CRM
Pricing
Value-based price setting
Sales
Pricing
Category management
Trade terms & discounting
Key account management
Pricing process and organization
Management of distributors
New revenue models/ (un)bundling
Sales transformation
Promotion management
Value selling and monitoring
…
…
Source: Simon-Kucher
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4. Clients: Industry leaders and hidden champions
Automotive
Audi
Continental
Daimler
Consumer
Maserati
MercedesBenz
Porsche
Renault
Toyota
Energy
BP/Aral
Conergy
E.ON
Financial Services
EnBW
RWE
Shell
Sunways
Tank & Rast
Yello
Industrial Goods & Services
Bosch
Carl Zeiss
Caterpillar
Ad van Geloven Dr. Oetker
Nikon
Beiersdorf
FrieslandCampina Nestlé
Danone
Nike
PepsiCo
Demag
MTU
Schaeffler
Siemens
Stork
ThyssenKrupp
Allianz
ABN AMRO
AXA
Barclays
BNP Paribas
DB
Express
Generali
Western Union
Media & Entertainment
Frankfurter
John Wiley
Pearson
Reed Elsevier
Sanoma Media
Scholastic
Pharma & Life Sciences
Private equity
24 of the top 25 pharma companies
3i
Credit Suisse
CVC
Retail
The Economist
WMG
Wolters Kluwer
Software & Technology
Bol.com
Castorama
Delhaize
Ebay
Mediamarkt
METRO
MIGROS
OTTO
Rewe
Telecommunication
1&1
DTAG
E-Plus
LinkedIn
PayPal
Qtel
Citrix
Google
Intel
Capiton
Goldman Sachs
Gilde
Microsoft
Novell
Panasonic
Halder
Lion capital
KKR
SAP
Semikron
SunGard
Transport, Logistics & Travel
Skype
Vodafone
Xbox Live
Accor
DB Schenker
DHL
Germanwings
KLM/Air France
Lufthansa
Thomas Cook
TNT
TUI
Source: Selected references from Simon-Kucher project experience; confidentiality agreements prevent us from naming many other major partners
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5. Simon-Kucher thought leadership
Books (selection)
Articles (selection)
USA
Brazil
France
USA
Spain
UK
USA
NL
Hungary
Japan
Korea
Germany
China
NL
Germany
Source: Simon-Kucher
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6. Setting the scene: Necessity for Commercial excellence from daily practice
"I never walk away at negotiations,
no is not an option since we have to
defend market share in a declining
market."
“We sell to much on price; we
should be much more explicit on
the value we deliver"
“We have to monetize our
services more explicitly, we
give away to much for free”
“Our price & discounting
approach is mainly historically
grown, cost-plus and complex "
"We are in the middle of a storm:
it’s a price war out there"
“Our product has become a
commodity, we have to
position our added value
more strongly”
“Our commercial targets change
with the season, in March it is
margin and in October it is volume"
“We systematically manage our
sales funnel, to actively hunt for the
potential in our priority growth
segments"
“We should differentiate our
commercial approach more
strongly, based on the segments
we serve”
Source: Simon-Kucher & Partners project database
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7. Commercial excellence is all about obtaining pricing power
"The single most important decision in
evaluating a business is pricing power."
Warren Buffett
Pricing power is the ability of a
company to get the price it deserves
for the value it delivers
Source: Bloomberg.com, 2011
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8. Do you have pricing power?
Ø33% of companies claim to have pricing power
Chemical products
Commodity products
Construction materials
Consumer goods
Electronic goods & computers
Energy and utilities
Industrial goods
Machinery
Pharmaceuticals & biotech
Banking & financial services
Industrial services
Insurance
Media and entertainment
Retail
Transport and logistics
Travel and hospitality
36%
18%
34%
34%
27%
35%
40%
42%
45%
26%
30%
24%
30%
29%
27%
31%
Overall = 33%
Source: Simon-Kucher & Partners Global Pricing Study 2012
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9. (Reported) reasons for low pricing power
1. "We are a commodity"
2. "Our competitors are stupid"
3. “Our training is not tailored"
Source: Global Pricing Survey 2012
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10. Real reasons for lack of pricing power
1. Strategy and leadership deficits
2. No systematic commercial
approach
3. Insufficient commercial knowhow (methods, people, "real"
value pricing)
Source: Simon-Kucher
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11. Power pricing and profits jump when leadership takes active role
High Pricing Power
Companies with
C-level
involvement in
pricing
135
Ø EBITDA of last 3 years
35%
Companies with
high pricing
power
100
100 26%
Companies with
high pricing
power
136
55%
-25%
35%
All others
15%
Expected EBITDA coming 3 years
All others
75
11%
36%
All others
100 41%
C-level involvement in Commercial Excellence significantly increases pricing power, and
companies with high pricing power make clearly higher profits.
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12. Different leaders, different strategies
"We have a policy of keeping
prices stable to protect our
brand. When demand goes down
we reduce production but don’t
lower our prices."
Wendelin Wiedeking, CEO Porsche
1992-2009
Operating margin %*
20%
15%
10%
5%
Year
0%
"Fixed costs are extremely high
in our industry. We realized that
in a crisis we
are better off with lowering
prices than reducing volume."
'00
'01
'02
'03
'04
'05
'06
'07
'08
-5%
-10%
-15%
Richard Wagoner, CEO GM
2000-2009
* for Porsche partly estimated
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13. What is Commercial Excellence? Typical questions we encounter
TYPICAL COMMERCIAL EXCELLENCE QUESTIONS
Where are my biggest sales opportunities in the market,
and how do I direct my team to go after them?
How do I organize my sales force to maximize sales,
and increase efficiency?
How do I develop an effective key account program,
to put my resources where they matter most?
How do we set prices and discounts to maximize
profits and customer loyalty?
What type of templates and tool support can help me to
bring more structure, grip and focus on my sales work?
Which KPI would steer the right kind of behavior?
What training curriculum and development paths do I
need to develop the well-rounded sales person I look for?
Source: Simon-Kucher & Partners project database
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14. Commercial Excellence is all about boosting fundamental capabilities
Share
vision &
targets
Commercial
excellence
ambition
Provide
direction
Commercial strategy
and competitive positioning
Commercial targets
Commercial vision
Commercial leadership
Growth:
Market
development
Develop
capabilities
Manage
change
Efficiency:
Commercial
organization
Profitability:
Margin
management
Channel management
Customer and key
account management
Funnel management
…
Commercial structure
Commercial process
Commercial capabilities
…
Price list management
Discount & bonus
optimization
Project pricing
…
People &
talent development
Systems, tools &
templates
Market segmentation
Competitive positioning
Portfolio and route-to-market strategy
Mindset:
Value
selling
Value selling argumentum
Systematic peer pricing
Price defenses & nego
…
Performance
management
Source: Simon-Kucher & Partners
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15. Our view on success factors for a Commercial Excellence transformation
Experience from >300 Commercial Excellence projects in the last 3 years
Make Commercial Excellence a leadership priority, part of the MD agenda
‘We want countries to learn from each other and have one shared approach towards
Commercial Excellence. It should not be a one-off, but results that stick’
Co-create solutions, methods and know-how with Commercial Excellence champions
‘We want to develop Commercial Excellence based on co-creation with the organization. We
suggest to select a combination of countries with the highest potential and Commercial
Excellence champions, to ensure we leverage best standards and ensure buy-in’
Ensure early success stories, deliver quick wins
‘There are many initiatives in our organization at the moment, we need to
work on early successes as a vehicle to propagate Commercial Excellence’
Source: Simon-Kucher & Partners
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16. Summary
Starting point for improvement
Setting commercial
ambition
Establishing common
commercial language
Defining commercial
improvement priorities
to make it stick
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17. Thank you!
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