The Strategic Pricing Management Group (SPMG), one of the world’s leading pricing consulting firms, is proud to inaugurate its very first seminar in Manila under The Price Class brand series.
Titled ‘Creating Value through Strategic Pricing and Revenue Management’, this specialized seminar will address a wide range of critical and timely topics that will enable corporate leaders and entrepreneurs to better understand the factors and underlying dynamics of pricing.
The seminar is designed to discuss the theory and practice of pricing in general, drawing insights from classical economics to behavioral economic thinking. However a greater emphasis will be placed on how to establish and ensure value-based pricing models.
Key Learning Highlights
- Learn proven techniques on how to increase prices by 1% to 3%, which will drive 10% to 15% increase in profitability.
- Develop and implement innovative pricing strategies and tactics that achieves a delicate balance between top-line and bottom-line growth.
- Understand pricing models used by world-class companies from a broad range of industries and business settings.
- Create an effective strategic pricing planning process and systems.
- Challenge your way of thinking about pricing, discounting, and value; thus giving you a fresh perspective.
- Effectively create pricing strategies that involves your marketing, sales force, finance, and channels.
- Quantify the value and financial benefits customers receive from your products and services.
- Know how to identify your most profitable and least profitable business
- Price your offering precisely through segmentation.
- Have confidence to sell value and not price.
The learning from this seminar is intended to be fully functional to industry and any business setting; striking a balance between good theoretical foundation and practical application.
Ultimately, participants will learn to improve their company’s Top-Line and Bottom-Line Performance by harnessing Pricing Power.
To register, http://www.thepriceclass.com/enrollment.html
Strategic Pricing Management Group (SPMG) Inaugural Seminar in Manila – Creating Value Through Strategic Pricing and Revenue Management
Come and hear me and other notable speakers from the Strategic Pricing Management Group (SPMG) and Asia Pricing Professionals discuss key pricing topics at its inaugural seminar and workshop in Manila, ‘Creating Value Through Strategic Pricing and Revenue Management’ on May 12 -13th.
Our main speaker is Michael Hurwich President of Strategic Pricing Management Group (SPMG) One of the foremost pricing consultants around the world, Michael has consulted to major Fortune 500 firms for the past 18 years.
Michael has helped clients developed numerous corporate pricing and business unit strategies in a broad range of industries including telecommunications, finance and insurance, software, logistics and distribution, pharmaceuticals, Medical Equipment OEM’s, retail, and not-for-profits.
On top of the one full day discussion on the theory and practice of pricing, five timely and relevant topics in the field of pricing will be discussed on the second day of the seminar,
- ‘Retailing in the 21st Century: Moving from a Product to a Customer-Centric Approach’, By Michael Hurwich
- ‘A Strategic Approach to Maximizing Value Over the Product Lifecycle’, By Dr. Michael Ortiz
- ‘Setting Prices to Complex Services’, By Roger Taylor
- ‘Commercial Pricing Excellence’, By Jesper Hansson
- ‘Re-Imports and Grey Markets: A Pricing Perspective’, By Eric Robles
For further details on registration and course syllabus you may visit the seminar’s official website http://www.thepriceclass.com/
In competition-based pricing, one primary activity is to benchmark prices with that of the competitors and the market. The success of using this pricing approach depends when price points are set competitively against the prevailing prices. One effective way to successfully obtain competitive price information is by performing price reconnaissance activities.
Price reconnaissance is the process of leveraging on intelligence gathering techniques and deep knowledge of the trade and market in order to locate and obtain relevant price information.
Here are four basic steps to accomplish price reconnaissance for competition-based pricing.
1. Goal and Objectives. Setting the objectives and goal is paramount in order to achieve the desired price information effectively and efficiently. This will also streamline information making it more focused and relevant when setting prices. The key is to apply the 80/20 rule when setting the objectives. The more focused the plan is the better.
- What product categories or specific products to focus to?
- What products groups are revenue drivers / volume drivers and needs to be sustained?
- What products or categories are losing to the competition and requires priority?
- What specific price information to obtain (e.g. suggested price, discounted price, installment price, bundled price )?
- How to measure success of the set objectives (KPIs)?
- How many competitors and trade areas to cover and survey?
- Who are the key competitors and what commercial areas to prioritize?
- When to perform the price reconnaissance activity (e.g. ad hoc, weekly, monthly, quarterly)?
2. Methods and Tools. Once objectives are set, developing the right methods on how to successfully obtain price information from the competition should follow. While well designed methods are critical to the success of the objective. Using the appropriate tools to support the method is equally important to consider.
- Where to obtain price information (e.g. commercial establishment, Internet, price lists, price quotes)?
- How to extract and obtain price information from competition and relevant sources (e.g. approach, techniques, tactics)?
- What tools to use to retrieve and store price information (e.g. pen and paper, electronics devices, gadgets, web query tools, database)?
3. Analysis and Synthesis. Once price information is evaluated and processed, the next step is to generate actionable pricing insights and recommendations.
- How prices information will be analyzed through data modelling (e.g. calculation, estimation, forecast, others)?
- How it will be used by the different business organizations (e.g. pricing analysis, sales planning, product management)?
4. Reporting. Customize the reporting in a way that it will be valuable not only to the pricing organization but also to the rest of stakeholders. The more these reports are customized and suited to specific needs the better it will help decision makers.
- How will the price information be disseminated and communicated (e.g. spreadsheets, dashboards, database, other tools)?
- How will the end-users utilize the report (e.g. price setting, sales planning, marketing, product management)?
- What will be the frequency of the reporting (e.g. schedules, dates, timing)?
Finally, what is important is to have a clear goal and well defined objectives when retrieving competitive price information. And to support this, a clear methodology, measurement and feedback system should be established.
The General Manager of a mid-sized company just got informed that despite the high volume (units) the company produced this year, sales units and revenues are dropping compared to previous years. Last year, external forecasts predicted business challenges for the following year due to the economy’s volatility. During a general meeting the marketing department reported that market share has dropped significantly in all four quarters for the first time in five years. Historically the company has enjoyed double-digit growth year-on-year since it was established in the region. And as expected competitors are gaining ground due to their lower prices and growing presence in the market. Meanwhile the finance department also furnished their report, and the same undesirable performance reaches the General Manager. That profit margins are leaking away particularly with the top products being sold by the company. Checking on the financial data it was found out that discounts and rebates was not properly administered due to hesitations of losing volume further. Customers has now become more hesitant when responding to the company’s prices. And to complicate the situation, the sales organization was not only short of its sales targets but also the quality of profit margins gained on a per unit sold was not healthy – and on frequent occasions even losing.
The General Manager has now decided that it is high-time to stop the bleeding, shift-gears and make a move to change how prices is managed. But how will he start the change?
The succeeding are ten key elements required to establish an effective pricing organization and achieve pricing excellence.
- Pricing Road Map. Begin to diagnose and map the organization’s current pricing policies and practices. Evaluate existing challenges and opportunities – identify what is relevant and what is not. What needs to be challenged, what needs to be changed, and what needs to remain. Assess the current pricing operations, processes, systems, tools, capabilities and alignments within the organization. Identify the key departments, business units and ‘champions’ that will be key in nurturing and realizing long-term and short-term pricing goals. Establish a common purpose and road map.
- Pricing Body (Leadership). An effective pricing organization should not be built in isolation but a collaborative function; therefore it is important to have a high level of coordination with key departments or business units that will have the most impact to overall pricing strategy. For instance Finance, Marketing, Sales, and Demand Planning Department are some of the key departments that its individual performance have a direct impact to pricing. However, this will depend to the organization’s structure and nature of business. The bottom line, buy-ins is critical when making pricing decisions, thus the presence of a pricing body or committee is a must when establishing the pricing organization. Organize a body or leadership committee composed of representatives from key departments and senior management to champion the pricing organization.
- Pricing Champion. The incumbent will champion the discipline of pricing in the organization. And will bring in best practices, innovation and strategic ideas to help establish the pricing road map. Another key role will be to effectively reconcile data and information from key departments and conclude with actionable analysis and recommendations. The incumbent will also act as a ‘ambassador’ who can effectively communicate from different perspectives and successfully align commitments from key departments. The pricing champion will perceive pricing as both a science and an art. However it is important to note the role and responsibilities of the pricing champion may still differ according to the purpose, objectives set and organization.
- Change Management. Employ change management program to prepare the organization for the transition and to realize the desired change. This will lay the foundation for the pricing road map. Friction and resistance from employees is expected especially that old processes and routine will re-organized and re-established. Partnership with the Human Resource department is ideal to reinforce the change.
- Key Performance Indicators. Develop and employ well-defined performance metrics / KPIs aligning departmental objectives to support long-term and short-term pricing goals. The objective is to align and enforce commitments and resources.
- Pricing Policy and Guidance. It is important that a pricing policy and guidance be put in place both in the (a) regional level in order to align and reinforce local level pricing and discounting policies, and (b) country level to give the organization flexibility to meet market demand requirements, respond to competitive moves and to make the most out of short-term business opportunities. A good policy and guidance will clearly communicate the company’s pricing objectives and set guidance on how prices and discounts will be set and implemented.
- Price Exemptions and Discounting. A comprehensive and well-defined price exemption / discounting policy and process should be implemented in order to properly administer and police discounting and rebates. Discounting and rebates should be designed and planned in a way that will drive both sales units and profits, and as well protect the product’s brand position.
- Sales Incentives. Formulate and put in place well-defined sales reward programs and incentive schemes to help administer prices effectively and purposely. This is also a good way to align sales KPIs to short and long-term business objectives. Create control mechanisms and integrate it to the sales rewards and incentive program. For instance, (a) sales rewards and incentive KPIs should be anchored to the extent of discounts the sales man will give to customers. Another way, (b) sales rewards and incentive KPIs should be tied to the quality of revenue a sales man will bring in to the company – e.g. “..is the large percentage of the revenue driven by high profit products, or is it driven by low profit products?” It is important to understand that the sales organization is the last element in the ‘price value chain’ responsible for implementing the prices and realizing the strategy. Any inefficiencies in this level will increase the chances of a failed price strategy.
- Reporting. Communicating to stakeholders through regular weekly, monthly or quarterly reports are important to keep track of outcomes of pricing decisions made. This is not only good practice to achieve transparency but as well it strengthens accountability of each department. Numbers are measurable and remains to be the best indicators to track strategy realization.
- Milestones. Celebrate and communicate pricing milestones to the organization. Communications is key in sustaining the strategy in the long run. Economic benefits gained during a business period such as sales units, market share, profit margins, and revenue are good examples of milestones. Milestones are clear indicators of the organization’s achievement, performance and progression in the pricing road map.