The document discusses the challenges companies face with pricing as the number of brands, channels, and customer segments have exploded. It has led to hundreds of thousands or millions of individual price points that are difficult to manage consistently. The proliferation has also driven companies to create more stock keeping units (SKUs) to try and limit conflicts between channels and reach more customer segments. However, this has made pricing more complex to manage. The document recommends companies create greater visibility into pricing performance, have a common pricing system across brands and channels, and establish a central pricing group to help integrate pricing while allowing some decentralized decision making.
Strategic Inventory Management in an Omnichannel EnvironmentManik Aryapadi
In 2016, e-commerce sales accounted for roughly 8% of total retail sales, growing from a measly 0.6% in 1999. It is estimated that by 2020, U.S. e-commerce sales will approach $500 billion dollars, growing at a 5-year
compound annual growth rate (CAGR) of 10%. Given the lower barriers to entry and execution in e-commerce, a number of
industries are being disrupted and reinvented as a result. As retailers and consumer goods companies grapple with these
changes, they are shifting their focus to growing their digital offerings, while balancing the deployment of inventory across all
their channels—wholesale, owned brick-and-mortar retail, and e-commerce. Here we will discuss how to successfully deploy
inventory in an omnichannel environment to maximize profit and improve customer service.
Promotional products distributors are beginning to leverage new technology platforms to compete more effectively in the areas of pricing, product assortment, and promotional tactics.
Connecting B2C to B2B: a Top Down Approach for Industrial DistributorsStephane Bratu
In this article, the author discusses the importance for pricers in many industries – and particularly in the distribution industry – of engaging in both business-to-business and business-to-consumer markets. This article focuses on proposing a new way to execute pricing strategies and operations for industrial distribution companies that sell both to other businesses (B2B) and directly to consumers (B2C). This industry specific example provides pricing strategies and analytic approaches that can be applied by pricers in multiple businesses and markets. Dr. Stephane Bratu is Direc- tor of Pricing and Analytics at Arrow Electronics.
Strategic Inventory Management in an Omnichannel EnvironmentManik Aryapadi
In 2016, e-commerce sales accounted for roughly 8% of total retail sales, growing from a measly 0.6% in 1999. It is estimated that by 2020, U.S. e-commerce sales will approach $500 billion dollars, growing at a 5-year
compound annual growth rate (CAGR) of 10%. Given the lower barriers to entry and execution in e-commerce, a number of
industries are being disrupted and reinvented as a result. As retailers and consumer goods companies grapple with these
changes, they are shifting their focus to growing their digital offerings, while balancing the deployment of inventory across all
their channels—wholesale, owned brick-and-mortar retail, and e-commerce. Here we will discuss how to successfully deploy
inventory in an omnichannel environment to maximize profit and improve customer service.
Promotional products distributors are beginning to leverage new technology platforms to compete more effectively in the areas of pricing, product assortment, and promotional tactics.
Connecting B2C to B2B: a Top Down Approach for Industrial DistributorsStephane Bratu
In this article, the author discusses the importance for pricers in many industries – and particularly in the distribution industry – of engaging in both business-to-business and business-to-consumer markets. This article focuses on proposing a new way to execute pricing strategies and operations for industrial distribution companies that sell both to other businesses (B2B) and directly to consumers (B2C). This industry specific example provides pricing strategies and analytic approaches that can be applied by pricers in multiple businesses and markets. Dr. Stephane Bratu is Direc- tor of Pricing and Analytics at Arrow Electronics.
After viewing this project one can understand how a FMCG company operates its finances. The ratio analysis of the firm showing how to calculate the profitability, sustainability, viability of a firm to operate its day to day business in a profitable zone.
Driving Business Value Through ProcurementAndrew Cole
Like their American neighbors, Canadian companies are beginning to transform procurement into a strategic, centralized function. They are shifting away from procurement models focused solely on cost savings and vendor management in favor of those that drive revenue and real business value.
After viewing this project one can understand how a FMCG company operates its finances. The ratio analysis of the firm showing how to calculate the profitability, sustainability, viability of a firm to operate its day to day business in a profitable zone.
Driving Business Value Through ProcurementAndrew Cole
Like their American neighbors, Canadian companies are beginning to transform procurement into a strategic, centralized function. They are shifting away from procurement models focused solely on cost savings and vendor management in favor of those that drive revenue and real business value.
This document reviews best practice in pricing processes to provide a reference against which current practices and proposals can be tested. Our objectives have been: to research the attributes of world-class pricing through publications and academic sources; to investigate how these attributes are applied in practice to products and services; to assess pricing processes in successful businesses.
In recent years a new attitude toward pricing has emerged. Deregulation and international free trade agreements have increased competition. Price promotion has eroded the power of brand loyalty. Pricing has assumed greater importance to most businesses.
As markets increasingly assume a global dimension, customers can more easily compare prices between one region or country and another, using the internet or a fax machine. They can often locate the same product, or an
acceptable substitute, from another source. Customers are more demanding and fickle, and their expectations increasingly difficult to fulfil.
Price inflation in western economies is now at its lowest for decades. Price increases are no longer accepted without protest from customers, if at all.
The Chairman of General Electric has predicted the onset of the ‘Value Decade’. Global price competition will strengthen because of: reduced product differentiation; global over-capacity for production; significantly diminished trade barriers; efficient information and distribution systems; providing customers with easy access to the prices of suppliers; a growing lack of customers’ loyalty to individual suppliers. Choice will be increasingly driven by price.
This is a challenging scenario that reinforces the need for an integrated strategy and concerted managerial action on pricing.
Pricing processes have lagged behind developments in the market place. They are often characterised by internal conflict between accountants wishing to maximise profit per unit and marketing specialists who seek to maximise
throughput. They are also affected by the potential for strained relations with good customers.
Some companies have downsized their operations to a level where diminishing returns cause them to question the benefits of continuing to focus upon reducing costs. As they switch their attention from cost cutting to adding
value, pricing naturally assumes increased weight in the marketing mix.
We have found many companies reluctant to discuss their own processes.
Some may wish to avoid betraying a lack of sophistication.
All of these questions are answered I just need you to read the an.docxnettletondevon
All of these questions are answered I just need you to read the answers, understand them and paraphrase them in your own way with keeping the same idea. Just rewrite it with the same idea but in a different phrase than these.
Essay Questions:
1. Identify and discuss reasons why firms become so infatuated with pricing. Why is pricing given a great deal of attention?
Answer/ ANS:
There is no other component of the marketing program that firms become more infatuated with than pricing. There are at least four reasons for the attention given to pricing. First, the revenue equation is pretty simple: Revenue equals the price times quantity sold. There are only two ways for a firm to grow revenue: increase prices or increase the volume of product sold. Rarely can a firm do both simultaneously. Although there are literally hundreds of ways to increase profit by controlling costs and operating expenses, the revenue side has only two variables—one being price and the other being heavily influenced by price.
A second reason that firms become enamored with pricing is that it is the easiest of all marketing variables to change. Although changing the product and its distribution or promotion can take months or even years, changes in pricing can be executed immediately in real time. Likewise, product, distribution, or promotion changes can also be quite expensive, especially if research and development (R&D) or production must be rescheduled. Conversely, changing prices is a very low-cost option.
The third reason for the importance of pricing is that firms take considerable pains to discover and anticipate the pricing strategies and tactics of other firms. Salespeople learn to read a competitor’s price sheet upside down at a buyer’s desk. Retailers send “secret shoppers” into competitors’ stores to learn what they charge for the same merchandise. In this age of e-commerce, tracking what competitors charge for their goods and services has become so daunting that an entire price-tracking industry has emerged.
Finally, pricing is given a great deal of attention because it is considered to be the only real means of differentiation in mature markets plagued by commoditization. When customers see all competing products as offering the same features and benefits, their buying decisions are primarily driven by price.
Having a solid understanding of these issues is important because far too many firms and their managers use a seat-of-the-pants approach to pricing by guessing the best price for their goods and services. Guessing is never a good strategy in marketing; it can be downright deadly when it comes to setting prices.
2. In many (if not most) circumstances, cutting prices to increase sales volume is not a good idea. Explain why this is so. What are some alternatives that are preferable to cutting prices?
Answer/ ANS: All marketers understand the relationship between price and revenue. However, firms cannot charge high prices without goo.
Uncovering an Innovative Monetization Strategy to Keep Your Organization Rele...RocketSource
An innovative monetization strategy requires much more than meets the eye. While many organizations focus their efforts on acquiring new customers and filling the funnel, the most successful companies focus instead on retention.
Protecting Margins and Creating Value in TelecomLightwell
In 2010, Communications, Media, and Entertainment (CME) businesses are becoming more confident in their revenue potential with most companies feeling the recession is behind them or nearly halfway over. To prepare for spending growth, many CME businesses plan to increase their focus on sales strategies with a keen focus on improving customer collaboration as a top priority.
However, improving customer collaboration, especially in business-to- business (B2B) selling and order scenarios, is difficult to achieve due to product portfolio and selling/ordering process complexity. Within the CME marketplace, companies are offering customers a rich array of options including products and services via multiple channels. This is good news for customers, who demand freedom of choice and ease of use. But it makes selling and order management a complex task for CME companies, which are looking to optimise these processes to increase sales performance.
Predictive analytics reaps the value from CRM databases aided by customer segmentation, competitive intelligence, and learning from marketing campaigns.
Mass marketing yields less and less from more and more as the number of marketing channels for communication and distribution increase in numbers. Predictive analytics finds the patterns that help to identify the clusters of customers more likely to respond to specific messages and offers.
* In an increasingly copy-cat economy, the new basis of competition is business model innovation.
* Unfortunately, the work of business model innovation is too often left undone, at great cost to the organization's longer term growth opportunities and its profitability. This gap is the outcome of marketing's role increasingly being defined around demand generation and brand communications in increasingly fragmented channels, roles that have required many new marketing subspecialties.
* The CMO is ideally suited to facilitate business model strategy decisions, decisions that must be made by the leadership team as a whole.
* Deploying the CMO to facilitate business model innovation will align brand and business strategy, benefiting the success of both.
A Pinpoint Systems Corporation white paper discussing how companies must transform from being about them to being about the customer by:
-Committing to a philosophical and cultural shift
-Centralizing the 360° view of customer information
-Enabling intelligent outreach
-Enabling intelligent dialog
To support organizations in making the transformation from a product- and channel- focused organization to one focused on the customer, Pinpoint Systems has applied their expertise in the customer-centric space to create the Marketing System of Record solution, powered by the efficiency of the IBM Enterprise Marketing Management platform.
The tracking features of the solution allow analysts to complete these tasks:
• Attribute customer actions to specific campaigns and target cells.
• Use campaign and response history for audience selection and segmentation.
• Compute standard campaign performance metrics.
• Automatically report those metrics, as well as emerging sales trends, to product managers and other stakeholders.
MBA 5501, Advanced Marketing 1 Course Learning Outcom.docxaryan532920
MBA 5501, Advanced Marketing 1
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
6. Explore positioning, differentiation, and pricing strategies for effective marketing scenarios.
6.1 Compare the pricing strategies of a company and its competitors.
6.2 Describe pricing, distribution, or product strategies of a company with respect to the level of
differentiation.
6.3 Summarize how macro and micro environmental changes will impact a company.
Reading Assignment
Chapter 16:
Developing Pricing Strategies and Programs
Chapter 17:
Designing and Managing Integrated Marketing Channels, pp. 493–502
Chapter 18:
Managing Retailing, Wholesaling, and Logistics, pp. 527–542
Unit Lesson
Price is defined as the amount of money that is exchanged for something of value, which is defined by the
customer. This value proposition directly aligns with the amount of money that a consumer is willing to pay for
the prescribed product and/or service. Prices are adjusted based upon discounts, which could include
seasonal discounts, quantity discounts, cash discounts and/or simply sales discounts. Another factor that
could change the price are allowances; which include trade-ins and damaged goods allowances. Prices can
be set based upon a one-price policy, which suggests that prices are the same for everyone. These tend to
be low-cost, frequently purchased, and convenience goods. Alternatively, prices can be set based upon a
flexible price policy, which allows for prices to be set differently for different customers. These prices tend to
be set by salespeople who are working directly with the customer. A good salesperson understands his or her
customer enough to know how high of a price the customer will bear and will adjust the price accordingly in
order to secure the business. This model is used at car dealerships within the business-to-consumer (B2C)
model as well as in most purchasing situations in the business-to-business (B2B) sector.
As the marketing team looks to establish pricing policies, company-wide marketing objectives need to be
analyzed. The first pricing objective might be profit-oriented, which includes the concepts below.
Target return: This pricing policy establishes a predetermined profit level guideline. This could be a
return on investment or a certain sales level. Prices are then based upon this guideline.
Maximize profits: This pricing policy suggests that prices will be set as high as possible in order to
maximize profit levels. While this seems like an ideal alternative, careful research must be conducted
to understand the profit level that the customer will bear before moving on to the competitor.
UNIT VI STUDY GUIDE
Pricing and Distribution Strategies
MBA 5501, Advanced Marketing 2
Another pricing objective might be sales-oriented, which focuses on increased sales without regard to profit
levels. This alternative se ...
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Pricing challenges and models for consumer goods companies
1. Pricing challenges and models for consumer goods companies
The explodingnumber of brands, channels, and distinct customer segments means that many companies must now juggle
hundreds of thousands—in some cases, millions—of price points w hile seeking to maintain consistent pricing strategies and
communications across an ever-increasing number of products and outlets. For a broad variety of manufacturers that sellto
consumers and businesses alike, this proliferation has made pricing more difficult but the rew ards formanaging it w ellmuch
greater.
The proliferation of channels and the microsegmentation of customers have driven the typical consumer packaged goods
(CPG) company to create new brands and stock-keeping units (SKUs) as it attempts to limit channelconflict, address unmet
needs, and reach for underserved consumption occasions. In extreme cases, some CPG manufacturers with a number of
brands and SKUs—selling through various channels at both regular and promotional prices across different geographies—have
tried to manage as many as 20 million individual price points each year. In food service, w here pricesmight move on a daily or
w eekly basis, each transaction may carry a unique price point, elevating the number of pricing decisions to more than 100
million. And sheer transaction volumes aren't the only issue. The introduction of new discount, rebate, and trade allow ance
categories, combined w ith customer-specifictrade terms negotiated by pow erfulretailers, has driven down the number of
"standard" transactions, furthercomplicating price management.
The environment of business-to-businesscompanies is no less thorny. A leading manufacturer of lighting equipment, for
example, manages more than 450,000 SKUs across ten major brands as it tries to meet local market preferencesand remain
nimble in the face of increasing domestic and overseas competition. Direct-sales representatives, key-account-management
teams, and third-party agents sellthese products to contractors, localdistributors, distribution chains, consortia of small
distributors and retailers, and, not least, large home center chains. With more than three million pricing opportunities annually,
the challenge of making the right pricing decision every time is enormous.
Traditional models for managing prices are clearly inadequate for these and many other situations. Distributed responsibility for
pricing decisions across functions and geographies leaves no one managing the total price-profit-volume equation. Without a
common process for making pricing decisions across different brandsand channels, as w ellas a common set of data to
support these decisions and monitor performance, pricing becomes unmanageable. The results are inevitable: pricing
performance varies enormously among business units, channelconflicts lead major customers to demand price protection, and
brand managers compete among themselves for the same consumers and shelf space.
In light of these issues, this chapter doesn't focus on strategies, tactics, or tools for setting prices. Instead, it explores the new
operating model many companies need to realize the full potential of today's state-of-the-art approachesto analyzing and
improving pricing performance.1
The model has three characteristics: better visibility into pricing performance and clearer
performance standards; a common systemfor pricing across brands, channels, and segments; and organizationalbalance,
w ith a centralpricing group that integrates the model throughout the company but doesn't make every decision. In many cases,
the model w illrequire substantialchanges in the w ay companies make daily pricing decisions, as w ellas changes to systems,
organizationalroles and responsibilities, performance metrics, and incentives. Making these changes stickcalls for real
dedication and, frequently, a new performance culture focused on pricing.
Visibility into the performance of pricing
For many companies, generating even simple bottom-line price and margin reports for individualcustomers or SKUs is a
monumental taskexacerbated by the proliferation of brands, channels, and segments. Companies frequently find themselves
w ith a variety of systems that capture key pricing data. Integrating the data is difficult and time consuming—and therefore rarely
done. With so little information available centrally, it isn't surprising that sales forces have even less information w hen it is most
critical—at the point of negotiation. Few companies have tools to help the frontline sales force manage or improve pricing.
This lack of visibility increases the likelihood of w ide variations in price points for similar products acrossdisparate channels
and customer segments. What's more, the level of discount offered usually isn't related to the size or importance of individual
customers, as might be assumed, and raises the riskof channelconflict and arbitrage. In industries ranging from CPG to
building products to commodity chemicals, examples abound of very small customers receiving huge discounts and, invariably,
of companies serving unprofitable customers. In some cases, the variation among accounts is so significant that companies
fear that imposing greater order and structure on frontline pricing could disrupt their business.
Given the importance of incorporating clear information as w ellas the grow ing need to bring pricing decisions closer to
customers, an integrated database and frontline tools for pricing are essentialingredients of success. Unfortunately, despite the
increased sophistication of pricing software, companies stillhave great difficulty extracting the insights they need to improve
their performance in this area. The information required to develop these insights—product volumes, list prices, promotional
spending, trade allow ances, payment terms, and data on the cost of products, for example—typically resides in a broad array of
isolated systems run by finance, sales, logistics, and customer service. At the lighting company mentioned earlier, for instance,
managers had to pull data from more than 35 sources to develop a comprehensive profit-and-lossstatement for productsand
customers.
Since compiling and integrating so much disjointed information is a daunting and time-consuming task, it's not surprising that
many businesses lackeven the most basic insights into profitability at the more granular levels. This failure can prevent the
best companies fromoptimizing their pricing and discount levels. How can you manage pricing w hen you can't compare net
prices across markets or don't know w hether a particular price levelw illleave you w ith a profit or a loss? Since a 1 percent shift
in overall prices can affect profitsdisproportionately, rules of thumb and gut instinct aren't sufficiently reliable for fine-tuning
prices.
Creating transparency
2. The answ er is to combine a laserlike focus on the most important information needed to make pricing decisions w ith a simple
process that integrates this information so that salespeople can use it. One leading beverage company regularly captures and
synthesizes accurate field pricing data, including prices, promotions, and shipments at the retail level. This company also
enlists its vast field sales forces to calibrate pricing on a market-by-market basis.
By methodically capturing information in a pricing database and support tool, a company creates a consistent set of data to
guide its decisions and measure their impact. Both aspects are vital, since visibility and accountability go hand in hand. A
Fortune 500 building-products manufacturer, for example, saw that the amounts paid by customers receiving its highest and
low est prices varied by more than 40 percent, even though its products were largely considered commodities. This company
faced a common problem: a strong traditional focus on volumes combined w ith scant pricing data meant that the sales force
drove dow n prices to win deals. Once the company installed a relatively simple software package to integrate its pricing data, it
could institute a compensation structure that rewarded grossmargin dollars and percentages (in addition to volumes), thereby
improving the alignment betw een the incentives of the sales force and corporate profitability.
After creating visibility, a company must bring this information to bear on decisions. Consider, for example, the very large
distribution company that designed a new process its sales reps could use in making on-the-spot pricing decisions. This
process not only used discount guidelines that varied by account type, product type, dealsize, and geography but also
provided for decentralized—though consistent—decisions. To w ork, however, pricing guidelines for the company's 30,000
products had to be easily accessible to more than 1,000 salespeople. The answ er was a relatively simple frontline pricing tool
that show ed salesreps the range of their pricing authority and displayed historicalpricing for the customer at hand as w ell as
recent pricing for comparable accounts.
The pricing tool, supporting interactions betw een the frontline force and the centralpricing group, w as a criticallink in the new
process. When-eversales reps wanteddiscounts outside these guidelines, the tool alerted these individuals to forward the deal
to the centralorganization for evaluation. Discounts beyond the guidelines w ere rarely approved, and competitive pricing data
played a key role in evaluating these requests. By centralizing the decision-making process forexceptionalcases, the
organization minimized unnecessary discounting and reduced the frequency of frontline pricing disparities—including those
among separate locations of large national customers—forhighly visible SKUs.
Understanding trade spending
Softw are that makes the impact of trade spending more visible can also improve the performance of pricing. Many CPG
manufacturers annually manage hundreds of thousands of individualpromotional events or other initiatives across a w ide range
of retailers, brands, and SKUs. The return on these investments varies a good deal. Usually, it is correlated w ith some
combination of promotional price, duration, frequency,the use of point-of-sale displays and features, geography, customer,
product, and time of year. Combining internal shipment and trade-spending information w ith syndicated store data linked to
each event is tedious and time consuming. As a result, most CPG companies measure the performance of only a very small
percentage of their events, and even these efforts are inconsistent, sincethey vary fromaccount manager to account manager.
Some leading packaged goods companies, by contrast, have made the return on their promotional investments a key
component of the pricing system. To examine more events, these companies have deployed promotion analysis tools that
provide regular and consistent measures of the w ayevents perform. Such tools give the frontline staff immediate feedbackthat
guides future investments. The companies can also review and synthesize their events centrally, which helps themto develop
better overall promotional strategies and to allocate funds across brands, channels, and customer segments more effectively.
Institutionalizing core pricing processes
If a lack of visibility makes it difficult to monitor and enforce good pricing, inconsistent processesacrossan organization further
complicate the execution of pricing. As the products and channels of companies become more complex, each silo w ithin an
organization develops its ow n approach to making important pricing decisions, such as pricing new products, negotiating the
pricing of deals, and managing trade funds. Without consistency acrossthe organization, a company can't leverage best
practices, shift and promote talented w orkerseffectively, or present a uniformimage to customers w ho make purchases in a
number of product categories, often fromdifferent salespeople.
To ensure consistency acrosssilos over time, it is criticalto identify and standardize the tw o or three most important pric ing
processes and to institutionalize them across the business. By formally establishing a consistent set of core pricing processes,
companies can deploy best practices and process improvements more quickly and make key pricing and promotion decisions
more transparent. Other benefits include predictable planning cycles, standardized communications to key retail and
distribution partners, and a systemof internal checks and balances to avoid poor decisions and potentially illegal pricing
actions.
The process problem
The pricing of new productsoffers a clear example of the challenges generated by the traditional disarray and show show an
embedded pricing process can addressthem. New brands, products, and packaging have proliferated as companies respond
to changing consumer tastes and shifting retail dynamics. Such companies commonly introduce their new products at price
points near those of their existing ones, thus cannibalizing the portfolio. Instead of increasing their market share, they divide it
among a larger number of SKUs, each competing for the same shelf space, consumer acceptance, and internalresources.
3. Ironically, considering how criticalthese decisions are, companies often set prices for new productson an ad hoc basis just
before they hit the market, w ith limited or no pricing research to support them.
Manufacturers selling to businesses face an equally profound problem, w hich frequently stems fromintroducing new versions
of products without effectively retiring the older ones. The net effect is increased inventory costs, greater management
complexity, and declining production efficiency. A major medical-device manufacturer's experience showssome of the
problems. This company faced very short product cycles, usually lasting 12 to 18 months. Whenever it launched new versions
of a product, it aimed to shift 80 percent of the sales volume to them w ithin 6 months. Yet the company also continued to sell
older versions and allow ed the sales force to offer deeper discountsto make them attractive to interested customers. These
price cuts encouraged such customers to stay with older products. In addition, the company risked dragging dow n the price of
new products, since such heavydiscounting could have tarnished the value perception of an entire line. Despite annual R&D
investments of hundreds of millions of dollars, the average price for every product line the company offered wasdeclining each
year.
Creating consistency
Companies can respond to these challenges by institutionalizing a pricing process for their new productsas part of the pricing
system. A leading consumer electronics company showed how this can be done in the face of common obstacles. The
company sold a range of products targeted at different customer segments that frequently overlapped. Further complicating the
picture, each product group had its ow n manager and its ow n approach to product pricing, and there w as relatively little
interaction among silos. To create consistency acrossthe entire organization, the company established a new process —used
by all product-management teams—based on four core principles:
1. Pricing must play a role early in the product-development cycle, and any new product must either address a portfolio's gaps
(such as price point gaps or underserved segments and channels) or explicitly replace an existing product.
2. New -productintroductions represent opportunities to increase prices overall.
3. Whenever possible, product managers must commission research on consumers to understand their price sensitivity and the
perceived value of a product relative to competing alternatives.
4. Plans to introduce any replacement product must include a clear strategy for the end-of-life management of the existing one.
These four principles became the centerpiece of a clear process the company could repeat again and again to manage the
pricing of new products throughout its portfolio. The process led not only to better pricing decisions for individualproducts but
also to a more cohesive product portfolio, with fewerconflicts and less redundancy.
Pricing new productsis just one example of the kind of core pricing processesthat companies can standardize acrosstheir
operating silos. Each company should identify the tw o or three most criticalpricing decisions it faces and focus its efforts on
institutionalizing the processes needed to make them. By concentrating investments in process design, training, and support
systems on relatively few pricing processes, companies can build capabilities that truly differentiate them fromtheir
competitors.
Striking an organizational balance
As companies try to make their pricing performance more visible and to institutionalize core pricing processes, the question of
w ho manages and maintains the infrastructure becomes increasinglyimportant. If most pricing decisions remain decentralized,
w ho makes sure that strategy and tactics are integrated across brands, channels, and segments? Who maintains the central
pricing database and mines that data to create reports and identify pricing opportunities? Who trains the organization's people
in the elements of the pricing system? Leading companies have answ ered these questions by creating a centralpricing
organization—a center of pricing excellence—that maintains basic systems and functions and can collaborate w ith the rest of
the company.
Source : McKinsey
Recommended by : Steve Rogers ( steve_rogers2014@outlook.com )