Webcast: Pricing For A More Profitable Product Portfolio with Mark Stiving, PhD
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Capture More Value from Your Products and Capabilities: Pricing for a More Profitable Product Portfolio You've developed a competitive advantage, now how do you profit from it? Do you create one product or three? Do you price high or price low? Do you target mass market or specific customers? The better understanding you have on how your customers use price to make their decisions, the better you will be able to make these decisions. Pricing is the most powerful yet least understood of the marketing mix variables. However, it's especially critical for product managers who want to capture more of the value of the products they manage. Mark Stiving (San Jose, CA) is a pricing expert with a Ph.D. in Marketing (Pricing) from U.C. Berkeley and more than 15 years of experience helping companies increase profits with value based pricing strategies. Although employed full time as Director of Pricing at Maxim Integrated, Stiving's avocation is evangelizing the power and beauty of pricing. A speaker, coach, and consultant, Stiving has worked with esteemed companies such as National Semiconductor, Cisco, Procter and Gamble, Grimes Aerospace, Rogers Corporation, as well as many small businesses and entrepreneurial ventures. He is the author of "Impact Pricing: Your Blueprint for Driving Profits" blog: http://www.PragmaticPricing.com site: http://www.markstiving.com Upcoming Training: March 30, 2013 Pricing for Entrepreneurs and Product Managers use code "startupprod" for $250 off full day training http://markstiving.com/pricing-for-entrepreneurs/ Join the Startup Product movement for product excellence! @startupproduct #startupproduct http://startupproduct.com http://www.meetup.com/StartupProductTalks/ http://www.meetup.com/StartupProduct/
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Webcast: Pricing For A More Profitable Product Portfolio with Mark Stiving, PhD
- 1. AIPMM Webinar Series http://www.aipmm.com © AIPMM 2013 @AIPMM www.aipmm.com
- 2. © AIPMM 2013 @AIPMM http://www.aipmm.com www.aipmm.com
- 3. Founded 1998 Largest Product Management professional group Provides professional development and certification • Certified Product Manager • Certified Product Marketing Manager • Agile Certified Product Manager • Certified Innovation Leader © AIPMM 2013 @AIPMM www.aipmm.com
- 4. Today’s Speakers Moderator: Cindy F. Solomon, CPM, CPMM Founder, Global Product Management Talk Startup Product http://startupproduct.com @cindyfsolomon @ProdMgmtTalk @startupproduct Presenter: Mark Stiving, Ph.D. blog: http://www.PragmaticPricing.com site: http://www.markstiving.com © AIPMM 2013 @AIPMM #prodmgmt @AIPMM http://www.aipmm.com www.aipmm.com
- 5. Win! Participants who use the Questions box will be entered into a drawing to win a FREE COPY of Mark’s book: Pricing for Entrepreneurs & Product Managers Sat, March 30 9-5: Plug and Play - 440 N. Wolfe Road Sunnyvale, CA 94085 http://bit.ly/12ZYL2C Special offer at the end of the webinar © AIPMM 2013 @AIPMM www.aipmm.com
- 6. FEATURED PRESENTATION © AIPMM 2013 @AIPMM www.aipmm.com
- 7. Capture More Value from Your Products and Capabilities
- 8. Mark Stiving • Director of Pricing at Maxim Integrated • Ph.D. in pricing from UC Berkeley • 1996-2000 Professor of Marketing at Ohio State – Pricing, market research, marketing models • Currently teach pricing with UC Irvine • “Impact Pricing: Your Blueprint for Driving Profits” • Blogger at PragmaticPricing.com • Frequent speaker and coach on pricing 8
- 10. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 11. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 12. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 13. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 14. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 15. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 16. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 17. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 18. Pricing is … Dependent Grading Complex Customizable Secret Powerful Information Instantaneous Psychological Dynamic Important Emotional A process Quantitative Fun Risky Qualitative Never perfect Common Specific
- 21. Key Takeaway #1 Know your Value – Charge what your customers are Willing To Pay
- 22. Value Will I? Which one?
- 23. Will I?
- 24. Will I?
- 25. Customers making the “Will I?” decision are not price sensitive
- 26. Which One?
- 27. Price has a powerful impact when customers choose “Which one?”
- 29. Differentiation
- 31. Perceptions
- 32. VALUE IS PERCEIVED DIFFERENTIATION Create it Find it Communicate it
- 33. Key Takeaway #1 Know your Value – Charge what your customers are Willing To Pay
- 34. Segmentation Different willingness to pay
- 35. Is it fair?
- 36. Key Takeaway #2 Segment Your Pricing – Charge more to customers who are willing to pay more.
- 40. Segmentation Customer Characteristics Transaction info Product
- 41. Behaviors
- 43. Products
- 44. Key Takeaway #2 Segment Your Pricing – Charge more to customers who are willing to pay more.
- 46. Anchoring
- 47. Complements Which one? Will I?
- 48. Complements?
- 49. 510 Acres
- 50. 25,000 Acres
- 51. Portfolio Google - $1.70 per Android device Apple - $576.30 per iOS device Source: CNN Money – Asymco: Google makes only $1.70 a year per Android device
- 52. Getting Paid for Free • Free samples • Free trials • Free information (like now) • Pay as you wish • Free network membership • Ad supported (sponsors) • Freemium
- 53. Key Takeaway #3 Build a Product Portfolio! Versions Complements
- 54. Key Takeaways 1. Know your value – Charge for it 2. Segment your pricing 3. Build a product portfolio
- 56. Pricing for Entrepreneurs & Product Managers! • How Customers Think About Price And Value • Value Based Pricing vs. Cost Based Pricing • Pricing Strategy vs. Product Strategy vs. Corporate Strategy • Price Segmentation vs. Market Segmentation We have arranged a 25% discount. Use code “AIPMM” at registration. Sat, March 30 9-5 Plug and Play - 440 N. Wolfe Road Sunnyvale, CA 94085 http://bit.ly/12ZYL2C © AIPMM 2013 @AIPMM www.aipmm.com
- 57. Please Join Us Again! AIPMM Webinar Series: Friday March 1 Product Management Leadership http://aipmm.com/aipmm_webinars/ Global Product Management Talk: Monday Feb 25 Lean Product Development Methodologies with Poornima Vijayashanker, Founder Of BizeeBee And Femgineer http://www.blogtalkradio.com/prodmgmttalk Stay Informed! Newsletter: http://www.aipmm.com/subscribe LinkedIn: http://www.linkedin.com/company/aipmm Membership: http://www.aipmm.com/join.php Certification: http://aipmm.com/html/certification/ © AIPMM 2013 @AIPMM www.aipmm.com
Editor's Notes
- The Certified Innovation Leader body of knowledge and credential is aligned with The Association of International Product Marketing and Management. AIPMM was founded in 1998. It provides professional development, training, and certification to those involved in product management, such as product managers and developers, marketing managers, brand managers, project managers, and many more. The certified innovation leader credential is one of four certifications provided by AIPMM. The others include: certified product manager, certified product marketing manager, and agile certified product manager.
- What is pricing? There is not an easy answer to this question. My family doesn’t really know what I do. I tell them I’m a pricing expert and they think that mean I’m really good at The Price is Right. And my mom is thrilled about that.
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Complex – Many moving partsPowerful – The marketing mix variable with the biggest impact on profitImportant – to CEO, CFO, Marketing, sales, product lines, everyoneFun – Need I say more?Psychological – 99 centsQuantitative – Soft marketing variables and attach a number to itQualitative – Requires creative thought, and being in touch with your customersNever perfect – There is always room for improvementSpecific - to Industry/Market/CompanyCustomizable – Segmentation is importantDependent – on competitors products and other product in your own portfolioEmotional – Good deals and gougingFuture oriented – Changing the futureSecret – Companies don’t shareSecond to last step – Captures everything else. Last step is customers’ choice.Instantaneous – Very fast changesGrading – Chance for marketers to say how much value they createdCommon – Every product or service has one.Dynamic – Markets changeA Process – Create processes
- Everything your company does either creates or destroys value. Pricing captures the net value.
- This is obvious. We are all pricing people. Do your product managers know this? Do your prices change over time? Your customers WTP certainly does.Do you price on a volume curve? Do you think when a customer buys the 10,000th unit they are willing to pay less?As pricing people we know this to be true, but how well do we educate our companies and spread the message? How do we effect change on the People, processes, systems and data to come closer to this goal?
- We all have R&D creating “Will I?” products. How are we valuing these? We only get our monopolistic position for a short while. It is not about a target margin, it’s about WTP.
- My brother is a luddite.
- I’ve talked to Product Managers who create high value products, release them at high prices, and then say they can’t hold their value when competition enters. Of course not. Once the competitors enter you have no choice but to price relative to the competition. That doesn’t mean match their prices as we will see in the next section. But we can’t maintain monopoly level pricing. Here’s what’s funny. From what I can tell most Semiconductor manufacturers spend all of their pricing efforts on the new released products, on the Will I? decision where price has much less impact. And they spend very little time on the Which one? Pricing, the price maintenance.
- This may be the most important slide in the presentation. Do your product managers, your marketers, your company understand this? If you are different you do not have to match your competitors prices.
- This is obvious. We are all pricing people. Do your product managers know this? Do your prices change over time? Your customers WTP certainly does.Do you price on a volume curve? Do you think when a customer buys the 10,000th unit they are willing to pay less?As pricing people we know this to be true, but how well do we educate our companies and spread the message? How do we effect change on the People, processes, systems and data to come closer to this goal?
- Video gameBriefcaseHaircut
- As pricing people, this deserves a big DUH. Of COURSE.
- Video gamePair of shoesCell phoneHaircut
- RegionSpendSizeGrowth
- VolumeLead timeCompetitor PNPurchasing agent# times quoted in channelBought this part before
- Versioning
- Quarter end purchasing
- Brilliant strategy, horrible execution. For almost all price segmentation, charge high prices and offer a discount when it’s deserved. IMPORTANT POINT – Always start with a high price and offer discounts. Photo creative commons by TheChristianAlert.org:http://www.flickr.com/photos/7712070@N04/2689674271/
- Space level parts.
- As pricing people, this deserves a big DUH. Of COURSE.
- Jasmine story