The document outlines a case study on Ardex Americas' transformation to value-based pricing, led by CEO Stephan Liozu, focusing on strategic pricing changes over several years. It details the company's journey from a cost-plus pricing approach to implementing value-based pricing strategies while emphasizing the importance of internal training and organizational alignment. Key success factors such as strong communication and technological support are highlighted as essential for monetizing differential value and managing pricing complexities.

1. Organizational Transformation to Value-Based Pricing:
The Case Study of a Mid-Size Industrial Company
with Stephan Liozu, Ardex Americas
Monthly Webinar Series - March 2012
Copyright © 2012 by LeveragePoint Innovations Inc.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means —
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This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.
COMPANY CONFIDENTIAL

2. Sponsored by LeveragePoint
the Software Solution for Value-based Pricing
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3. Today’s Presenter
Stephan Li
St h Liozu is President and CEO of Ardex Americas, a subsidiary
of the German-based Ardex Group, where he serves on the Global
Management Committee and is in charge of worldwide information
technology,
technology strategic innovation and international specifications selling
programs. Ardex Americas produces high performance specialty building
materials and has been serving customers in North, Central and South
America for more than 30 years.
Currently, Stephan chairs the German-American Business Circle of
Pittsburgh and serves on the Board of Directors of the World Affairs Council
of Pittsburgh. He has also been a visiting professor at universities in
Pittsburgh
Toulouse, France, and previously held leadership roles at Freudenberg &
Company, the Saint-Gobain Group, and Owens Corning.
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4. Pricing Orientation & Most
Commonly Used Pricing Strategies
 Perceived –value pricing
Pricing
Pi i Cus-
Cus  Performance-based pricing
Strategies tomer  Willingness-to-pay-based
pricing (WTP)
Profit
Pricing Com- Pricing
Cost petition
Strategies Strategies
 Cost-plus method  Penetration pricing
 Target ROI/ROS  Price skimming
 Breakeven-based analysis  Price follower behaviors
 Target CM pricing  Price according to average market price
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5. Click to add sub title 01
Pricing Orientations are Not
Mutually Exclusive!
y
Value-based
V l b d
Competitive Add text in Product Advantage
Pricing
here
Intensity
• Economic Value Analysis
• EVE®
Cost-
• “Dollarization” Process Competition-
based based Pricing
Pricing
• Dynamic cost-plus • Competitive Analysis
• CVP Analysis • Benchmarking
Degree of
g • Competiti e Intelligence
Competitive
• Activity-based Costing
Adoption
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6. The 5 Organization C’s of Pricing
Transformation
CHAMPIONS
CENTER-LED CHANGE
ORGANIZATIONAL
TRANSFORMATION
CONFIDENCE CAPABILITIES
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7. Organizational Mobilization for Pricing
Champions at the top leading the internalization of pricing practices
Organizational Change capacity requiring organizational mobilization
Formal and informal organizational Capabilities
Organizational Confidence acting as the fuel for superior pricing
Center-led management through specialized experts supporting
divisional decision making process
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8. Progressive & Pragmatic Internalization
of Value based Pricing
Value-based
Increased Adoptio
Pilot Programs
Full Adoption
Mo
So
odification
Stimuli
S
olutions
t
DNA
s
on
Search Behavior Success Stories Transformation
Experiential Leaning Transformative Learning
► Knowledge foundation in pricing ► Change mindset/frame of ref.
► Experiments & Pilot Studies ► Learn a new language (value)
►Trial & Error approach ► Importance of mentoring/coaching
► Celebration of success & stories ► Enduring and irreversibility of
► Analysis of failures/breakdowns change to change the firm culture
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9. The Story of a Transformational Journey
Pricing Capability Grid™
Price Setting
2014
Value-based
Pricing
2011
Competition-
C titi
based Pricing
2010
2008
Cost-based
Pricing
Weak Medium Strong Price Realization
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10. How Pricing Was Set in 2008
• Cost-Plus Approach with strong influence of target margins.
pp g g g
• Prices were set by the CEO and the CFO in small committee.
• Strong influence from international and legacy pricing.
• Pricing structure was very simple: list price + distributor discount.
Rare deviations were allowed from that structure.
• No pricing authority was given to sales and marketing staff. No
latitude for price negotiation.
• Pricing was not reviewed formally. Heavy focus on margins
formally margins.
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11. Step 1: Increased Focus on Pricing
(
(2008-2009))
• Focused one person in the finance team to track pricing for the CEO
• Started building a foundational pricing knowledge base:
• Introduced a pricing review during the monthly management meeting
to review pricing actions, variations and discuss competitive
situation.
• Introduced concepts of value proposition, customer value
perceptions,
perceptions and perceived benefits versus product attributes in the
selling process.
• Identified the value and pricing champions in the group i.e. marketing
and account managers who were engaged in the pricing process
and understood the concept of value-selling.
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12. Step 2: Formalized Pricing Process
(
(2009-2010))
• Created the position of Pricing & Revenue Optimization
Manager reporting to CFO:
• Develop monthly pricing cockpit:KPI‘s, value maps, & price waterfall analysis.
• Work with marketing function to define optimum pricing levels for new products based on
margin targets and delivered customer value.
• Introduce a formalized Special Pricing Program with authority levels and dollarization of every
deal versus competition.
• Reinforced participation in Pricing Society and enrollment in CPP:
• 8 people passed CPP + 8 more enrolled.
• Created the Pricing Council
• Monthly meetings with key managers to review pricing actions, variations and discuss
competitive situation.
• Formalization of the dollarization process as part of Council discussions.
• Introduce value-based pricing process for one product: case study number 1.
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13. Formalization of the Dollarization Process
• Increased the focus on the use of dollarization process and tools to
p
capture and communicate the Ardex value proposition (product and
service performance).
• Run new products through the manual dollarization process in 2010
as pilots.
• Create and post dollarization models for key products on the intranet
p yp
for field use.
• Align marketing communication, technical training and product
development to consistently promote our dollarized advantages
advantages.
• Educate distributors and contractors in all technical training classes.
• Design web-based tools & marketing brochures
web based brochures.
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14. Step 3: Implement Fundamentals of
Value-based Pricing (2011)
• Creation of a Pricing Team reporting into Marketing
• Addition of a sales and marketing analyst for pricing reporting.
• Pricing Manager becomes part of the New Product Innovation Team.
• Creation of all tools and templates for systematic customer value evaluation.
• Introduce Pricing early in the Stage Gate process and test value-drivers in the
market at the concept evaluatiom stage with help from sales organization.
• Expand the Pricing training program:
• 28 people in the CPP program with PPS. 20 CPP as of February 2012.
• All Account Managers, Regional Sales Managers, Divisional Sales Manager in CPP!
• Created Pricing Module for Sales Reps as part of a 24-month 6-module training program.
• Implement strategic projects:
• Training program for distributors and contractors on the dollarization process.
• Conduct internal brainstorming session to quantify the value of our services and other
intangibles part of our offering.
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15. The 5 C Model Applied to ARDEX Americas
CEO
Specialized Experts
Diffusion of Expertise CHAMPIONS
Support Price Setting
Incremental
Small Steps
Team-Wide
CENTER-LED CHANGE
ARDEX PRICING
TRANSFORMATION
Training
Experience
Tools
Communication CONFIDENCE CAPABILITIES
Coaching
Championing
Training
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16. Step 4: What is Next? (2012-2014)
• Additional focus on training of trade partners.
• Intense cultural training for sales force.
g
• Implementation of LeveragePoint Value-based Pricing to:
• Support all new product and segment launches.
• Handle mutilple stakeholders & complex job sites.
• Document all critical existing products with standard value models.
• Run value-based pricing analytics for Pricing Council
Council.
• Track ROI more formally.
• Train, train...and communicate value.
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17. The Complexity of Value-based Pricing
Architects,
Engineers &
p
Specifiers
General
Contractor
Distributor Building Owner
Contractor &
Installer
Savings/Productivity Gains/Warranty
Life-time Value/Warranty
Transactional Relationship
Marketing Relationship
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18. Key Success Factors - Ardex Value Selling
Capabilities to monetize differential value of our benefits & to manage complexity
Strong organizational alignment (Sales, marketing, R&D, technical support, etc)
Strong technological and scientific backbone (ERP, LPI, special apps, webinars)
Customized and targeted communication campaign to support sales force
Advanced internal and external training across the board
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19. Our Next Webinar – April 18th
Jim Geisman
Ji G i
Software Pricing Partners
Founder & Principal
What You Need to Know to Negotiate Better Software Deals
NOTE the time! 1:00pm Eastern
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20. Thanks for watching!
www ardex com
www.ardex.com
Stephan Liozu, CPP
/ / p
linkedin.com/in/stephanliozu
@StephanLiozu
www.leveragepoint.com
Jay Manson
y
jmanson@leveragepoint.com
(781) 727 – 5977
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