Christoph Petzoldt, Partner and Managing Director Oceania, Simon-Kucher & Partners

1. www.simon-kucher.com
How to Nail Your Pricing Strategy
Sydney, September 2019
Chris Petzoldt
Partner, Managing Director Oceania
Sydney office
L4 146 Arthur Street, North Sydney
NSW 2060, Australia
Tel. +61 2 91121301
chris.petzoldt@simon-kucher.com

2. The old days
Content Revenue streams
Information / content oligopoly Ads and paper subscription
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Offer to readership Pricing
Few choices, engaged loyal,
readers, information is king More art than science
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3. The new world
Content
Oversupply of (free) and
user generated content Huge shift to online
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Offer to readership Pricing
Time poor, price aware,
entertainment is king More science than art
Revenue streams
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What is the impact?
News Corp Australia revenues fall as
advertising drops and subscriptions
stay flat
Australia's TV ad revenue dips, BVOD
growth offers silver lining
‘Challenging market conditions’
blamed for declining commercial
radio ad revenue in June quarter
Morgan Stanley has declared an
advertising recession in Australia.
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Can you turn this into an opportunity?
Content
Offer to readership Pricing
Revenue streams
? ?
? ?
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6. Mumbrella 2019 Simon Kucher
Offering value
Addresses pain
points faced by a
specific segment
Articulates
differentiated
solution vs.
alternatives
Provides
evidence to
substantiate
claims
No
evidence
No
target
Sweet spot
No
different
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Developing new revenue streams
Core
streams:
Ads
Subs
Related streams
Streaming
Exclusive
offers
User
content
Loyalty
scheme
New streams
Data
E-Commerce
Product
testing
Merchandise
White
label
Examples from other industries
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Understand how readers make decisions
More rational drivers More emotional drivers
Price-value relation
Promotional sensitivity
…
Limit number of decisions
Use anchors
Not consider all alternatives
Stay on the safe side
…
Price thresholds
Individual willingness-to-pay
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A little test
$8985$2999$799$199
Is this BBQ
expensive?
Or is this BBQ
expensive?
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10. Source: Global Trend Radar February 2019 (n = 6,375); Q2 In general, how important are customer ratings for you when making a purchase, compared to other factors?
A new factor
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
Expert reviews
Brand
Consumer ratings
Price
Product/ service
features
Ranked 1 Ranked 2 Ranked 3
Ranking of most important factors when making a purchase (global)
% of respondents
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11. Automotive
Banking &
financial services
Construction
Consumer
electronics
Insurance
Media &
entertainment
Software
Travel &
hospitality
Source: Global Trend Radar February 2019 (n = 6,375); Q14 Which of the following statements are true when purchasing in the XXX industry (for example a YYY)?
Good Ratings can drive 20% additional volume
and 15% higher price acceptance
On average…
… A fifth of the surveyed
consumers state they
would buy more if a
product/service had
good ratings
… 15% of the surveyed
consumers state they
could buy more
expensive items based
on good ratings
… 19% of the surveyed
consumers state they
would pay more for a
product or service if it
had good ratings.
Change in behavior due to ratings (global view)
% of respondents
19%
15%
20%
10% 15% 20% 25% 30%
Overall
§ I would purchase more items
§ I would purchase more expensive items
§ I would pay more for higher-rated
products
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Challenges with designing the offer portfolio
Not enough choices No real differentiation Too many choices
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Designing the winning offer portfolio: Simon-Kucher framework
Price&Offerstrategy
Pricemodel/metric
Value proposition
Target segment
Target segment
Target segment
Communication
Relevant
features
$$$
Contentsofpackages
Relevant
features
$$
Relevant
features
$
Number of packages
Package prices & discounts
Value-added
extras
$
$
$
%
%
Differentiation between packages
Sales
support
Region 1
Region 2
…
%
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14. Example how to package a feature bundle
§ Start with customer needs
§ Keep it simple
§ Choose the right product components
§ Communicate the value right
§ Minimise cannibalisation and complexity in
a product portfolio
§ Consider behavioural economics
Simon-Kucher feature evaluation matrixMain success factors:
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15. Co-operate where you can't offer the best solution
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16. Capture the value you create
§ Subscription
§ Freemium
§ Dynamic pricing
(improved revenue
management)
§ Pay-per-use
§ Individualised
pricing/
personalisation
§ Multi-dimensional
pricing
(Amazon Prime)
§ New price metrics
§ Interactive pricing
(auctions, name your
own price)
…
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17. Examples new revenue models
Consequences:
§ Opportunity to create
new revenue streams
§ Opportunity to
monetise new value
drivers
§ Challenge as no
existing references /
data
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Price setting
Value basedHistorically driven Value based
Cost based Competition oriented
The way to go!
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Pricing should be the mirror to value
So all we need to work out is the value of a product and we are spot on ‒ easy???
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Example value based pricing
Braking system with carbon-fibre reinforced ceramic brake discs
Porsche price: approx. $12,000
Cost: $3,500
Imagine:
§ 10% of Porsche vehicles have
this feature (19k a year)
§ What would have happened at
a cost-plus 100% pricing?
Cost +100%
would have
reduced profit by
$100m p.a..!
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How to measure value and willingness-to-pay
In-depth data analyses Primary customer pricing & packaging research
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22. Mumbrella 2019 Simon Kucher
Can you turn this into an opportunity?
Content
Readership Pricing
Revenue streams
Provide value Grow / develop new streams
Offer right choice Capture the value provided
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About Simon-Kucher
§ Growth and competitive
strategies
§ Product portfolio (re-)design
§ Pricing excellence
§ Sales strategies and sales
channel optimization
§ Customer-centric digital
approaches
§ End-to-end transformation
toward commercial excellence
§ …
Global presence >3,500 projects in the last three years
World leader in giving
advice to companies on how
to price their products
Pricing strategy
specialists
The world’s leading
pricing consultancy
In pricing, you offer
something nobody else does
BusinessWeek The Economist
Professor Peter DruckerThe Wall Street Journal
World leader in pricing
38 offices worldwide, >1,300 employees, $360m revenue in 2018
Madrid
Mexico City
Milan
Mountain View
Munich
New York
Paris
San Francisco
Santiago de Chile
São Paulo
Shanghai
Singapore
Stockholm
Sydney
Tokyo
Toronto
Vienna
Warsaw
Zurich
Amsterdam
Atlanta
Barcelona
Beijing
Bonn
Boston
Brussels
Cairo
Chicago
Cologne
Copenhagen
Dubai
Frankfurt
Geneva
Hamburg
Hong Kong
Istanbul
London
Luxembourg
Best consultancy at topline improvement
Simon-Kucher & Partners
on par with
McKinsey & Company
Simon-Kucher & Partners Simon-Kucher & Partners
on par with
Boston Consulting Group
McKinsey & Company
Capitalbrand eins/StatistaFinancial Times
Marketing, sales, pricingMarketing, sales, pricingMarketing, brand, pricing
111
Boston Consulting Group
...
Source: Capital, survey of the best consultancies in France, 2016,
2018 (conducted every two years)
Source: brand eins Thema special edition: Consulting ‒ industry report
from brand eins Wissen and Statista, online survey, 2014 - 2019
Source: Financial Times, list of the UK's Leading Management
Consultants, January 2018
Boston Consulting Group
McKinsey & Company
...
Simon-Kucher & Partners Simon-Kucher & Partners Simon-Kucher & Partners
Bilanz Magazine/WGMBMT Magazine/Erasmus UniversityForbes
Marketing and salesStrategy consultingMarketing, brand, pricing, sales
11
Source: Bilanz Magazine/WGMB: survey of the best management
consultancies in Switzerland, January 2019
Source: MT Magazine/Erasmus University: MT1000 2018, survey of
the best strategy consultancies in the Netherlands, December 2018
Source: Forbes, survey of the best management consulting firms in
the US, October 2016, 2018 (conducted every two years)
Boston Consulting Group
McKinsey & Company
...
Boston Consulting Group
McKinsey & Company
...
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24. Mumbrella 2019 Simon Kucher
Clear focus: TopLine Power®
Digitalization
§ Digital strategies
§ Business model
transformation
§ Customer-centric
digital approach
§ Digital offerings
§ Digital monetization
model and pricing
§ Go-to-market
strategies
§ Big Data analytics
Transformation
§ Effective and
sustainable strategy
implementation
§ End-to-end corporate
transformation
toward commercial
excellence
§ Transformation of
pricing and sales
organizations
§ Monitoring and KPI
systems
§ Change management
Strategy
§ Growth strategies
§ Competition strategies
§ New business models
§ Monetization strategies
§ Scenario planning
§ Market due diligence
Marketing
§ Market/customer segmentation
§ Portfolio design
§ Branding and value communication
§ Digital marketing
§ Marketing efficiency and effectiveness
§ CRM
Pricing
§ Pricing excellence programs
§ Pricing strategies for products,
business units and companies
§ Innovative price and revenue models
§ Launch and post launch pricing
§ Pricing organization and processes
Sales
§ Sales organization and efficiency
§ Omni-channel strategies
§ Sales force effectiveness
§ Key account management
§ Channel management,
discount/bonus systems
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25. Mumbrella 2019 Simon Kucher
Broad experience in the Media Space
Media
Industry
BooksellersIndustry associations Newspaper publishersBook publishers
Online gamesMagazine Publishers MusicDatabase/ spec.
information providers
Ad distributors (print,
TV, online)
TV/ radio stations Directories
(B2B, B2C)
Classifieds online
Selection
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26. Mumbrella 2019 Simon Kucher
Contact your expert
Chris Petzoldt
Partner, Managing Director Oceania
L4, 146 Arthur Street
North Sydney NSW 2060 Australia
Tel: +61 2 9112 1300
Mob: +61 421 578 499
Chris.Petzoldt@simon-kucher.com
www.simon-kucher.com
LinkedIn: https://au.linkedin.com/in/chrispetzoldt
Specialised in product and pricing strategy, sales
excellence and margin improvement
Wide pricing knowledge: more than 100 pricing-
consulting-projects for various companies across
different industries
18 years of international experience (projects in more
than 20 countries)
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27. www.simon-kucher.com
Americas
Atlanta, Boston, Mountain View,
New York, San Francisco,
Santiago de Chile, São Paulo,
Toronto
Europe/Middle East
Amsterdam, Barcelona, Bonn,
Brussels, Cologne, Copenhagen,
Dubai, Frankfurt, Geneva,
Hamburg, Istanbul, London,
Luxembourg, Madrid, Milan,
Munich, Paris, Stockholm, Vienna,
Warsaw, Zurich
Asia/Pacific
Beijing, Hong Kong, Singapore,
Sydney, Tokyo
Sydney office
L4 146 Arthur Street, North
Sydney NSW 2060, Australia
Thank you & Questions
Mumbrella 2019 Simon Kucher