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1. www.simon-kucher.com
How to smartly increase profits?
Achieving Pricing Excellence
Amsterdam, February 4, 2016
Onno Oldeman
Juriaan Deumer
Amsterdam office
Barbara Strozzilaan 380
1083 HN Amsterdam
The Netherlands
Tel. +31 20 75312 53
onno.oldeman@simon-kucher.com
Presentation summary

2. Source: Simon-Kucher & Partners
Simon-Kucher & Partners:
Worldwide marketing, pricing and sales experts
Strategy
> 400
Sales
> 500
Marketing
> 500
Pricing
> 1,000
Growth and competitive
strategies
Product portfolio
(re-)design
Pricing excellence
Customer value management
Sales channel and sales force
optimization
Global presence
Best consultancy in marketing and sales
>1,000 projects in the last 3 years
Amsterdam
Barcelona
Bonn
Brussels
Cologne
Copenhagen
Frankfurt
Istanbul
London
Luxembourg
Madrid
Milan
Munich
Paris
Warsaw
Vienna
Zurich
Toronto
Boston
New YorkSan Francisco
São Paulo
Santiago
Dubai
Beijing
Tokyo
Singapore
Sydney
29 offices worldwide, 800 employees
Atlanta
World leader in giving
advice to companies on how
to price their products
The pricing strategy
specialists
The world’s leading
pricing consultancy
The influence of
Simon-Kucher on the
prices we pay for just about
everything is staggering
BusinessWeek The Economist
William PoundstoneThe Wall Street Journal
World leader in pricing
1 Simon-Kucher & Partners
2 Boston Consulting Group
3 McKinsey & Company
manager magazine
TopLine
Power®
14NL4005_Flevum_Achieving Pricing Excellence_Summary 2

3. Source: Simon-Kucher & Partners
We serve renowned market leaders…
and hidden champions
Consumer & RetailAutomotive
Audi
Continental
Daimler
Maserati
Mercedes-
Benz
Porsche
Renault
Toyota
Volvo
VW
Würth
Beiersdorf
Coca-Cola
Danone
Ferrero
Henkel
Nestlé
Nikon
Nutricia
Swarovski
Photos:www.colourbox.de
Media & EntertainmentTransport, Logistics & Travel
AirFranceKLM
DB Schenker
DHL
EuroDisney
Germanwings
Lufthansa
Thomas Cook
TNT
TUI
Bertelsmann
Eur. Directories
Harcourt
Scholastic
The Economist Gr.
WMG
Pearson
Persgroep
Reed Elsevier
TelecommunicationIndustrial Goods & Services
Aalberts Ind.
Bosch
Caterpillar
CRH
Geberit
Schaeffler
Siemens
SPG
Thyssen Krupp
1&1
DTAG
KPN
Orange
Ooredoo
Skype
Swisscom
Telefónica
Vodafone
Software & TechnologyFinancial Services
Citrix
Google
Intel
Microsoft
Novell
Panasonic
SAP
Semikron
SunGard
ABNAMRO
Allianz
Am -Express
DB
Generali
Western Union
AXA
Barclays
BNP Paribas
Pharma & Life SciencesChemicals & Ingredients
AkzoNobel
BASF
Bayer
CSM
Danisco
DSM
FrieslandCampina
Merck
Cabot
GSK
HRA Pharma
Novartis
Nutricia
Sandoz
Solvay
PGT Healthcare
Johnson&Johnson
Dr. W. Schwabe
14NL4005_Flevum_Achieving Pricing Excellence_Summary 3

4. Source: Simon-Kucher & Partners
Pricing for profit: The formula is simple
Profit
Often not yet
optimized
Price
Limited
possibilities
Volume
Largely
exhausted
Cost
-x=
14NL4005_Flevum_Achieving Pricing Excellence_Summary 4

5. 1) Global Pricing Study; 1,615 companies across the world; 39% C-level executives
Source: Simon-Kucher & Partners
Insights from our Global Pricing Survey
report increasing price pressure83%
are in price war59%
price implementation rate –
lowest number ever measured37%
14NL4005_Flevum_Achieving Pricing Excellence_Summary 5

6. Source: Simon-Kucher & Partners
What often lacks is pricing power
Pricing power is the ability
of a company to get the
price it deserves for the
value it delivers.
14NL4005_Flevum_Achieving Pricing Excellence_Summary 6

7. Source: Simon-Kucher
Fact: Pricing is complex to manage
Pricing complexity is a
fact of life, because in
most cases it involves:
…too many people
…too many opinions
…too many interactions
…too much data
…too little time
"I know what our
competitors
charge"
Sales
Low prices
"I know how great
our product really
is"
Product
Brand premium
"I know what our
customers say"
Value pricing
Marketing
"I know what our
costs are"
Finance
Target margins
14NL4005_Flevum_Achieving Pricing Excellence_Summary 7

8. Result: Margin leakages due to lack of pricing power
- "Our pricing is cost-plus
and historically grown"
- “Are we asking the right
premium for our products
and services?”
- "We sell too much on
price, rather than on value"
- “We lack capabilities to
sell our new solutions and
services"
- “Our products are too
commoditized"
- “We lack differentiation
in our segments"
What the customer
is willing to pay…
…and what we
actually get
Value
strategy
Value
pricing
Value
selling
Prices which are either
too high, or too low
Value not defended,
discounts on gut-feel
Product offerings do
not fit customer needs
Typical deficiencies and leakages
Source: Simon-Kucher & Partners
14NL4005_Flevum_Achieving Pricing Excellence_Summary 8

9. 1) NPD = New Product Development
Source: Simon-Kucher Global Pricing Study 2014
Four key success factors
separate the "Best" from the "Rest"
Leadership & strategy:
Clear directions, guidelines and owner-
ship from C-level executives in pricing
Organization:
Clear pricing roles/responsibilities
and dedicated pricing organization
Innovation process:
Early and permanent integration of
pricing/marketing in the NPD1) process
Technology/Know-how
Usage of tools, software solutions and
methods
68%
34%
42%
34%
39%
26%
33%
24%
Share of respondents
Best
Rest
1
2
3
4
+74%
+31%
+27%
+40%
14NL4005_Flevum_Achieving Pricing Excellence_Summary 9

10. Achieving TopLine Power calls for action
on three core disciplines
Source: Simon-Kucher & Partners
Value
strategy
Value
pricing
Value
selling
Pro-active sales approach
& account management
Increased cross-, up- and
deep-selling
Optimized value selling
guidelines, tools & skills
Improved KPIs, incentive
system & monitoring
Value based list price
setting
Optimized conditional
discount structure
Systematic project pricing
Monetization of
surcharges & services
Clear strategic goals &
positioning
Targeted customer &
product segmentation
Effective go-to market &
channel strategy
Portfolio & price model
optimization
9
4
5
106
117
8 12
3
1
2
14NL4005_Flevum_Achieving Pricing Excellence_Summary 10

11. Source: Simon-Kucher & Partners
Value strategy: Know the value
Take-aways
Clear leadership directions:
Ensure ownership from C-
level executives
Create insight in value
drivers per customer
segment
Develop clear strategic
goals and a differentiated
commercial approach per
segment
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12. Source: Simon-Kucher & Partners
Value pricing: Price the value
Take-aways
Use different pricing
methods in combination
Choose from different
methods to identify
willingness-to-pay and
establish optimal list prices
Example: Use PriceMaps to
uncover value in your
portfolio and define value-
based list prices
Monetize your services by
having a clear service menu
and charging for services
delivered
14NL4005_Flevum_Achieving Pricing Excellence_Summary 12

13. Source: Simon-Kucher & Partners
Value selling: Sell the value
Take-aways
Bundling offers clear
advantages for suppliers
and for customers
Smartly bundle your
offering to maximize
willingness-to-pay
Use bundling to assess
willingness-to-pay and to
communicate value
Equip your salesforce:
Develop a value selling
sales playbook to provide
structure and guidance to
the sales force
14NL4005_Flevum_Achieving Pricing Excellence_Summary 13

14. Source: Simon-Kucher & Partners
Where to start? – It depends on a company’s maturity
B2B client example
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15. Source: Simon-Kucher & Partners
Typical project approach
Phase III
Prepare
implementation
Phase II
Develop solutions
Phase I
Status quo
analysis
Value pricing awareness and capability development
Handover of sales & pricing methods, processes and tools
3-6 weeks TBD1-3 months
 Prioritized & quantified
improvement
opportunities and
solution directions
 Roadmap for solution
development and
implementation
 Development of implementation-
ready solution measures, incl.
quick wins
 Optimization of sales & pricing
strategy, processes and
organization
 Redirection of commercial
organization, support market
launch and IT alignment
 Business case and
implementation roadmap
14NL4005_Flevum_Achieving Pricing Excellence_Summary 15