Tag Archives: pricing strategy

Getting Ahead of Your Competition Through Pricing Analytics

Plenty of revenue is lost through inefficiencies in business. Close to the top amongst the profits that could have been … but did not, inadequate pricing strategies is a major cause for many companies to miss out on the 'low-hanging fruit' / “leave too much money on the table” from direct sales to their established customer base.

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Is Your Pricing Strategy Optimal to Support Your Strategic Objectives?

A lot of companies lose out on potential profits by pricing too low, lacking understanding of what a customer is willing to pay for goods and services that they want. Many ad hoc attempts to improve income can fail or backfire without this awareness of customer value drivers.

Whether your objective is to increase your market share, improve bottom line, strengthen your resources and capital availability, or just meet sales targets, make sure your pricing strategy relies on value-centric predictive models.

The Targeted Pricing Strategy

For example, imagine for a moment you owned a retail store. You have a vast array of products on the shelves. At any time you could raise or lower prices to a reasonable extent. Some of these products aren't selling well. Should you lower prices to make them more attractive to buyers and grow volumes? Or Will your customers allow you to raise prices without changing the (low) volumes and improve margins?

is running a retail store just subject to the whims of customers? Or can you actually influence / predict how pricechanges will affect demand & bottom line?. Raising prices might cost you a sale and have them walk towards your competitor or could simply result in higher margins.

Pricing & Value management science can help develop better (not perfect… but better) ways of managing this fine line.

Why is that product not selling? Is it because of the packaging? Is it because other products are cheaper? This means that the product does not feel particularly valuable to your customers. Lowering prices might make it look even less valuable. Remember the old saying, caveat emptor – let the buyer beware. As you lower the prices, it influences what the customer may believe about the quality of a product.

You need to be more value-conscious than just price-conscious. Even the customer that professes to be a bargain hunter will often judge products based on

a) how much can be obtained for a given price;

b) the quality of the product for the price;

c) and the time and effort spent obtaining the product.

Meanwhile, the customers who are in a hurry or want the best quality items will hardly be moved by the lower price. In fact, raising prices of better quality items would make those lower-priced items look much more attractive without changing their price.

Customer segments more concerned with quality will likely not even notice the slight change in price, meaning improved profits at no loss to your sales volumes. Price-conscious customers would pick the  lower-priced item because it appeals to what they deem valuable. People who buy according to need feel privileged by being offered choices. Some items or stores do better when they serve as status symbols.

In general, this is why people don't obey the bell curve of pricing and demand. Lower prices don't mean increased sales. With Pricing/Value research you can understand how customers make purchasing decisions using both logical and emotional factors.

Customers are not a monolithic block. Effective pricing strategy takes advantage of the fact that different people have different priorities, and will pay more as you meet their specific needs…. By providing different / targeted value propositions (.. at different prices)

When you make changes to your pricing strategy; no matter if you work in retail, business to business, or as a manufacturer; remember that maximum profit lies in appealing to specific market segments. You can often adjust prices to appeal to one segment without impacting sales in another.

Effective Pricing Policies are Value-centric

Value capture is about offering customers the best price they can afford for the level of quality they can expect. This is how you can raise prices while still keeping all your customers. It is also how you can improve sales and manage the image your product conveys. How can pricing research help you meet your objectives?

Do you want to increase your market share? Always trying to undercut your competition can be unsustainable, and worse yet- impact the perception of quality of your product in the eyes of your clients.

Do you want to strengthen your business resources and capital availability? Are you really getting the most out of your marketing investments?

How about meeting quarterly revenue targets? Is there a way to improve income without having to drive the sales force harder or sinking funds into a marketing bonanza?

And of course, developing and releasing a new product is a key moment when awareness of customer needs / value drivers, competitor performance on key attributes, and willingness to pay may be the difference between success and failure.

PriValEdge can help you significantly improve your bottom line with improved pricing policies and better client conditions.

Learn more on http://www.privaledge.net/services/pricing–value-capture

Pricing Research to Maximize Value

Price is not just the ‘’4 p” component used to capture get a just remuneration for your products or services, it is also,to many a key driver of your image and Value perception. This is why trying to undercut the competition by always pricing below their market rate doesn't always work. People buy because of rational and emotional factors, and to many price represents a promise of quality. People buy certain things because they are expensive, and feel good about it. People have expectations of quality goods, and if a company has a reputation for delivering quality goods and services, they may choose it over the competitor despite higher prices.

When comparing prices, different elements help people switch from the mindset of those looking for the cheapest price and into that of wanting to maximize the value of what they can get.

Pricing research is about finding what customers deem valuable, and the corresponding price they are willing to pay.

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Pricing and Value Management Excellence in Luxury Brands – PowerPricer

Managing Value to Customer (and user) and pricing are critical business processes for Luxury Brands. However, they come with many operational & strategic challenges: complex & variable value perception (for distributors as well as customers); Value measurement in an industry where much of the value comes from the brand and with relatively few sales per product is particularly complex.. Defending Brand values and image whilst dealing with vast differences in markets potential and priorities as well as channels require subtle adaptation of Value propositions and Pricing whilst maintaining a coherent Brand strategy. As a result, Luxury Groups must enforce strict corporate guidelines, as well as control, auditability and traceability to ensure compliance. A lack of unified processes and systems can lead to uncontrolled and ineffective Pricing Strategy, pricing that is out of line with value perception or gradual loss of value in the eyes of customers. All of which can lead to revenue leakage, ineffective value capture or loss of competitiveness… not to mention potential compliance issues or disruptions in channel strategies.

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Profit Improvements opportunities with a Pricing Consultant

When a customer looks at a product on the shelves or consider hiring a service, several concurrent thoughts immediately run through his or her head. Is it high-quality? Is it fast? Is it affordable? Will buying it impact my lifestyle?

In the end, what every customer wants is maximum value for his money. Thus, to attract greater sales, many believe that lowering prices is the way to go. A Pricing & Value Consultant however, can show you that this simplistic attempt at pricing often fails to maximize profit. Pricing increases that do not address the customer's assessment of value will often backfire.

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Pricing Case Study – FMCG – Price Structure Realignment

How the battery division of a leading FMCG repositioned its offer & Pricing to optimize Value Capture

 Project summary: FMCG Battery Brand


Leading Brand of retail & professional batteries

Increasing pressure from buying groups and sophisticated buying agents to increase discounts and incentives

Several retailers threatened removing product from shelves without an increase in discounts an incentives

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B2B2C Pricing Case Study – Pricing Audit & Roadmap

How a leading international Group used the 'Pricing Audit & Roadmap' approach to gradually cliemb the 'Pyramid od Pricing & Value Excellence'

B2B2C –Roadmap to Pricing Performance Improvement

 • One of North America’s leading suppliers of Coating & Additives, committed to offering innovative, high quality products and services to businesses.

 • Seasonally and geographically adjusted formulations to meet the demands of North American climates

 • Development of a Pricing Management Strategy for each of the business segments through a reengineering of the Business Process towards Value Market Based Pricing

 • Specifically, our consultants assisted The company in assessing the pricing strategy and structure, price level setting, identifying opportunities for future success, and providing the support that they needed to implement changes
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Pricing case study – Retail Division of Petrochemicals Group – Price Optimization

 How PriValEdge Price Optimization tools & methodology help a retail petroleum doubles its profits

Petrol Retailer Revaluates Pricing Strategy, Identifies Millions in Margin Opportunities

Background and Problem

A national Brand Petrol retailer was facing Intense competition from Competition & Supermarkets’ petrol courts that were largely using Petrol as a loss leader to their more profitable other activities. PriValEdge was engaged to assist in developing a pricing strategy to maximize sales and margins (on the combination of Petrol & Convenience store sales).

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Pricing Case study : B2C Healthcare – Value Based Pricing

How an Value Based Design approach led to the creation of a hit product.

Retail (OTC & Prescription) Skin Care Products

Problems :
• Very position in the skincare products industry. Products are sold to more than 120 Mio Customers in Europe, North America and the Pacific Rim
• Margins had been gradually eroding – Management believed that bottom-line performance could be improved by improving the management discipline around pricing strategy
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