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Pricing

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  • What is the price of a product or a service? Is it the digits appearing on the invoice of the customer or the cash register facing the consumer? Or is there more to it? How do you optimize the pricing structure and enable a negotiation based on terms that are directly linked to your cost structure and the realized value for the customer or consumer? How do I manage the consumer pricing in a complex business environment with multiple routes-to-markets? Finding the right balance between conditional, on- vs off invoice reductions, limiting exposure, hedging currency and timing risks when quoting,… All of these questions and challenges we tackle at The House of Marketing within the Pricing expert group. We don’t believe there exists a ‘one-fits-all’ model, neither do we ignore the interdependence with many other aspects of the business. Nonetheless we do believe the importance of pricing as monetizing the value of the product and service you deliver and therefore see it as our duty to stay up-to-date with the latest theories so we can work on a customized approach for your challenge

Pricing Pricing Presentation Transcript

  • Pricing
  • Pricing Pricing cannot be built on a ‘one-fits-all’ model. Pricing is a result of many different aspects within the business. It should therefore be based on your cost structure and the realized value for customers and consumers. It’s more than just setting up the price, it’s finding the right balance between • conditional • on- vs off invoice reductions • limiting exposure • hedging currency • timing risks when quoting It needs a customized approach depending on the business and product you are selling. It is important to take pricing as monetizing the value of the product and service you deliver while taking into account the true value chain from customer & company perspectivesPresentation1 2
  • There are many pitfalls when setting up the right pricing • Segmenting and capturing the wrong target group • Choosing the wrong pricing strategy • Determining the value creation • Failure to sustain and drive differential value • Price leakages • Uncontrolled discounts, allowances and other deductions due to price leaks •Poor visibility into pricing transactions leaving managers “blind” to true price performance •Conflicting performance metrics that make pricing a political game between sales, finance, and marketing •Poorly designed pricing policies that fail to align transaction-level pricing with the broader pricing strategyPresentation1 3
  • Each organization should ask itself following questions; 1.Does your organization truly understand the economic impact of its products and services and how/why it varies by customer? 2.Does the current price structure reflect the differences in value to different customer segments? Is pricing metric appropriate? 3.Is there unnecessary discounting and missed price realization across customer base? 4.Are pricing strategies aligned with targeting the right segments and gaining optimal market share? 5.Does the price structure force customers to acknowledge the value of company’s differentiation? 6.Does the pricing process control customers attempts for negotiating aggressively?Presentation1
  • Determining the right pricingPresentation1 5
  • Pricing is one of the main Marketing drivers, and should not be looked at independently Value proposition Value creation Value capturing Environmental and Competitive Scan Marketing Strategy Marketing Drivers Customer Equity Marketing Value Products / Technology Segmentation & Intention BehaviourBusiness Objectives Targeting Services Business Results Acquisition Awareness Purchase Process & Engine Business Paradigms Experience Price Premium Perception & Retention Communication Reputation Commitment Market Share Relationship Recommen- Positioning Preference Building dation Channel Management Scope Price Positioning Deep Channel & Customer Insights Tangible Action PlansPresentation1 6
  • THoM promotes strategic or value based pricing and provides tailored consulting solutions in different areas We will use a combination of content, tools and examples to support better choices with regards to marketing, pricing and selling How do we establish prices that reflect value and drive the optimal mix of volume and margin? Capture profit/ growth How do we increase price realization and Convince thru profitability through transaction/contract design? consistent How can we improve negotiation? policies How do we influence perceptions of value and Communicate value willingness to pay through communication? and frame price How do we create offerings, value propositions Create offering choices and related pricing that maximizes our profitability? How can we create value among Comprehend what drives value different customer segments? What are the critical customer behaviors required Target Behaviors, Customer Segments, Leverage Points to drive growth? How are they best activated especially given competitive dynamics? CHANGE CAMPAIGN 7Presentation1
  • Thom performs a 360° audit , using different tools 1. Understanding customer behavior and segments 6. Capture value: Economic modeling – 2. Mapping Comprehending influence & Tools: customer value competitive • Price banding dynamics • Price Waterfall • Pricing decisions & process mapping • Price/Value alignments • Price realization opportunities 3. Creating 5. Improve price offerings that policies and align with value: processes price setting 4. Communicate value and frame pricesPresentation1 8
  • It is important to take three inputs into account when setting up the strategic pricing Philosophy: Philosophy: Financial prudence and ensures Market demands requires that pricing of that each unit of sale achieves a products and services reflects what target return over its full cost customers willing to pay (Finance & Accounting) (Marketing & sales) Costs Customers Competition Philosophy: Price to maintain or grow market share, short term focus, or “me too” pricing (Sales, Management)Presentation1 9
  • THoM’s Pricing service offerings can be bundled in 5 areas • 360° Pricing Audit 360° Pricing Audit • Quick hits that identify immediate improvements to pricing strategy and profit potential Pricing • Review processes & Implement process improvements Processes • Link with CPM methodologies New Product • Price setting (conjoint analysis) Pricing • Pricing along PLC • Price menu development (Structured Trade Terms) Offer Structuring • Bundling • Pricing link with segmentation & communication • Measure price data points per Sales rep Sales Execution • Develop sales guidelines • Coach Sales to sell on value (trade-offs / price concessions)Presentation1
  • Why the House of MarketingPresentation1 11
  • In a business context where turbulence is the new norm, The House of Marketing provides marketing excellence at the right moment, exceeding clients expectations by delivering higher return on investment and by making the organization more agile. We achieve this by recruiting passionate marketers for whom we create an inspiring and nurturing environment.Presentation1 12
  • What is the current business context?Presentation1 13
  • Business context: Turbulence Turbulence is a combination of (1) vulnerability and (2) opportunity. It is from now on the normal condition of markets and companies. It is un-avoidable, but companies can choose how they will face it. P. Kotler, Chaotics, 2009Presentation1 14
  • Marketers need to proof themselves ... (again) They are perceived as being prone to dispersion and inertia Their relevance is questioned They are blamed for lacking business sensePresentation1 15
  • How we make this vulnerable situation an opportunity?Presentation1 16
  • We introduce a strong vision on marketing … Marketing is a mindset throughout the whole company, and only happens through uncompromising and ruthless focus on the total process of customer engagement. Marketing is a key contributor to achieve business objectives and to optimize shareholder value.Presentation1 17
  • … applying ‘FACTS’ as guiding principles. • Simplicity • Strategic consistency • Leadership continuity • Prioritize & making choices • Consistent brand across all channels • Seek leadership in specific category • Customer centricity • Focused team • Detect trends & act • Early warning systems & processes • Agile & up to date organization • Built around customer engagement • Innovative company culture • Willingness to change • Diversity of profiles • Flexibility & Speed • Idea generation process • Idea valuation • Porosity & open-mindedness • KPI’s & dashboards • Scenario analysis & ROMI • Connect with marketing intelligence • Analytical culture & skills • People: yours & every stakeholder • Planet: ACT on innovation, packaging, promotion... • Profit: business-minded marketersPresentation1
  • We are convinced that the key to long-term profitable marketing agility lays in organizational flexibility ... Resource Demand Chart FTE (hours per month) Project 1 5,000 Project 2 Project 3 Project 4 4,000 Capacity 3,000 2,000 1,000 0 1/95 4/9 7/9 10/9 1/9 4/9Presentation1
  • …. and bridging competence gaps Data cruncher Packaging E-commerce ……… Online specialist CPM specialist Performance management Project Management Shopper marketer CRM specialist Mobile marketer SocialMedia Strategist ……… Web masterPresentation1 20
  • How do we work?Presentation1 21
  • We deliver tangible value by bridging the knowing doing gap Strategic excellence Operational pragmatismPresentation1 22
  • We offer a unique combination of strategic excellence and operational pragmatism Strategic excellence Operational pragmatism • Proven track record in strategic • Track record in making things happen marketing advice within international and complex • Creating relevant insights in the companies business • Applying practical knowledge of • Identifying the true leverages for successful corporate sales and significant improvements marketing organizations • Turning opportunities into structured • Turning initiatives into tangible actions and prioritized business initiatives • Helping you to successfully implement strategic recommendations We help you in realizing more from your marketing strategies and building the marketing capabilities for systematic resultsPresentation1 23
  • We work on temporary assignments…. Mostly function based Broad FMCG experience B2B and B2C environments Coordination activities of Marketing plan, go-to-market specialists in production, sales, strategy & implementation, Brand advertising, promotion, R&D, … Marketing people management, Churn analysis, churn Managers business intelligence Managers Coordination of Marketing reduction Product placement activities optimization Strong analytical and Market & competitor negotiation skills analysis Market assessment & Channel & Enhancing retail partnerships Business by increasing category sales quantification Category Analysts Clustering of customers and aiding in fact Managers based/strategic selling E-strategy definition & roll- Extended experience in SME out and large matrix organizations E-Marketers Coordination, design & Alignment of organization & Social implementation of e- Process towards similar goals marketing actions Media Website management, Managers Clear roles & responsibilities definition, organizational Specialists email marketing, social design media, mobilePresentation1 24
  • … and on strategic marketing challenges Mostly project based Client challenges THoM expertise & solutions • Attract new customers • Customer intelligence: translate data into relevant insights Volume • Increase customer spending • Segmentation driven • Reduce customer churn • Business and marketing planning • Increase Innovation success rate • Innovation Management Program • Restore customer trust • Customer intelligence: translate data into relevant insights • Capture more customer value Margin • Category assessment • Margin management driven • Marketing performance management • Doing more with less resources (ROMI, CLTV, dashboards) • Tracking of ROI • Marketing audit • Define or redefine positioning • Consumer intelligence: translate data into • Changing customer experience from relevant insights product push to relational (customer- Positioning centric) • Customer (store) experience • Positioning on the sustainability dimension • Sustainability • Positioning towards current and potential • Employer branding employees Consumer analytics and insights are crucial for each of the three challengesPresentation1 25
  • To guarantee the excellence, we split marketing into four expertise areas and develop our people in all four of them • Market Intelligence • Business & Marketing Planning I. Strategic • Segmentation • Employer Branding Marketing • Branding & Positioning • Sustainability • Pricing • Social Media II. Go-to- • Product/ Brand/ Category • Shopper Marketing Management Market • Customer Relationship • Communication (offline & Management online) • Customer Process Management • Marketing Audit III. Organization & Change • • Marketing Coaching & Training Organization Management capabilities • Customer Experience IV. • Marketing Dashboards Performance • Marketing Performance Management Management • Customer Lifetime Value & ROMIPresentation1 26
  • You are always hiring a whole team of marketing specialists Hiring a THoM consultant isn’t just hiring a person, it’s acquiring expertise: •THoM consultant: your day to day contact Visible • Counselor, Client Manager and Mentor: first help, coaching and stretched goals for Invisible the THoM consultant • All THoM consultants with their specific skills, expertise and experience: the second resort for the THoM consultant • THoM knowledge base (training, career development plan, books, papers, former projects, experience of previous THoMers)Presentation1 27
  • To make agility also part of your company DNA, it demands the right talent at the right place with a continuous evolution The House of Marketing can help you attract, develop and keep the right talents. Talent attraction and on the job guidance: a one company or multi company Marketing Talent program program, more details available as from October 2012 Relevant Marketing training, from general to very specific & tailor made - product management Training - project management - communication (online, offline) - social media - email marketing -…… Personal coaching focused on marketing Coaching related skills and technical skillsPresentation1 28
  • For whom do we do this?Presentation1 29
  • We have clients from many different sectors (1) ICT & Media Utilities & Resources Financial & Other Services Healthcare & Public Sector Transport & LogisticsPresentation1 30
  • We have clients from many different sectors (2) Consumer Goods & Retail Durables & Industrial GoodsPresentation1 31
  • … talking about the tangible value delivered by The House of Marketing “THoM’s pragmatic approach is to me a key differentiator, as they are able to talk the language of actual executors and to predict or foresee many operational issues we need to tackle.” “We appreciated that the THoM team supported us in (Ronald Hannet, BU Manager) the bottom up approach involving customers, prospects, sales, specialists.” (Danny Vandevyver, Head of Marketing Com Belux) “THoM succeeded in creating change thanks to their straightforward and efficient solutions and approach.” “The added value of THoM is that they do not only deliver strategic advice, but their recommendations (Michael De Koster, Segment Manager) are tangible and can be implemented.” (Luc Deflem, CEO)Presentation1 32
  • So, what can we do for you?Presentation1 33
  • Your personal point of contact Davy Verhulst Mobile: +32 (0) 475 83 99 98 E-Mail: Davy.Verhulst@thom.eu The House of Marketing Kardinaal Mercierplein, 2 B-2800 Mechelen Belgium Fax +32 (0)15 444 044 www.thehouseofmarketing.be Join us on LinkedIn Follow us on TwitterPresentation1 34