Sales & Marketing | Strategic Pricing & Innovation: How to smartly increase profits? | Presentatie | Onno Oldeman Simon-Kucher & Partners
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1. The document is from a presentation by Simon-Kucher & Partners, a global pricing consultancy, about increasing profits through strategic pricing innovation. 2. Simon-Kucher has over 750 employees across 29 offices worldwide and has completed over 1,000 pricing projects in the last 3 years, making it a leading expert in pricing strategy. 3. The presentation outlines Simon-Kucher's approach to helping companies capture more value through strategic pricing, including developing a value strategy, gaining pricing power, and selling and defending value.
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Sales & Marketing | Strategic Pricing & Innovation: How to smartly increase profits? | Presentatie | Onno Oldeman Simon-Kucher & Partners
- 1. www.simon-kucher.com How to smartly increase profits? Strategic Pricing Innovation Amsterdam, February 12, 2015 Onno Oldeman Juriaan Deumer Amsterdam office Barbara Strozzilaan 380 1083 HN Amsterdam The Netherlands Tel. +31 20 75312 53 Onno.oldeman@simon-kucher.com Presentation Summary
- 2. 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 Source: manager magazine and brands ein thema , 2007-2013/IMB, survey among German top managers Simon-Kucher & Partners: Worldwide marketing, pricing and sales experts BusinessWeek The Economist Professor Peter DruckerThe Wall Street Journal Amsterdam Bonn Brussels Cologne Copenhagen Frankfurt Istanbul London Luxembourg Madrid Milan Munich Paris Warsaw Vienna Zurich Toronto Boston New York San Francisco São Paulo Santiago de Chile Dubai Beijing Tokyo Singapore Sydney 29 offices worldwide, 760 employees Strategy > 400 Sales > 500 Marketing > 500 Pricing > 1,000 Profitable growth strategies Product portfolio (re-)design Pricing excellence Customer relationship and customer value management Sales strategies and sales channel optimization World leader in pricing Global presence >1,000 projects in the last 3 years Simon-Kucher_Strategic Pricing Innovation_150212_Summary 1 Simon-Kucher & Partners 2 Boston Consulting Group 3 McKinsey & Company Marketing and sales Simon-Kucher & Partners Boston Consulting Group McKinsey & Company Marketing and pricing Simon-Kucher & Partners Boston Consulting Group McKinsey & Company Sales and CRM ... ... Source: manager magazin survey of top managers in Germany, August 2007 and 2011/IMB Source: brand eins Thema/Statista survey of 1,426 partners and project leaders from consulting firms and 1,300 C-level managers from German companies, May 2014 Best consultancy in marketing and sales 2
- 3. Unrivalled expertise in marketing, pricing & sales Consumer & RetailAutomotive Audi Continental Daimler Maserati Mercedes- Benz Porsche Renault Toyota Volvo VW Würth Beiersdorf Coca-Cola Danone Ferrero Henkel Nestlé Nikon Nutricia Swarovski Photos:www.colourbox.de Media & EntertainmentTransport, Logistics & Travel AirFranceKLM DB Schenker DHL EuroDisney Germanwings Lufthansa Thomas Cook TNT TUI Bertelsmann Eur. Directories Harcourt Scholastic The Economist Gr. WMG Pearson Persgroep Reed Elsevier TelecommunicationIndustrial Goods & Services Bosch Carl Zeiss Caterpillar Demag Geberit Schaeffler Siemens Tetra-Pak Thyssen Krupp 1&1 DTAG KPN Orange Ooredoo Skype Swisscom Telefónica Vodafone Software & TechnologyFinancial Services Citrix Google Intel Microsoft Novell Panasonic SAP Semikron SunGard ABNAMRO Allianz Am -Express DB Generali Western Union AXA Barclays BNP Paribas Pharma & Life SciencesChemicals & Ingredients 24 of the top 25 pharma companiesAkzo Nobel BASF Bayer Simon-Kucher_Strategic Pricing Innovation_150212_Summary CSM Danisco DSM FrieslandCampina Merck Solvay Source: Simon-Kucher & Partners project database 3
- 4. Profit driver Profit Price NewNew OldOld €10 m €13 m€57€60 €10 m €12 m1.05 m1 m €10 m €15 m€105€100 €10 m €11.5 m€28.5 m€30 m Variable unit cost Sales volume Fixed costs * Assuming ceteris paribus Source: Simon-Kucher & Partners Price as the most effective profit lever Simon-Kucher_Strategic Pricing Innovation_150212_Summary A 5% improvement of … ... leads to a profit increase of … +50% +30% +20% +15% 4
- 5. Source: Simon-Kucher Pricing power for capturing value Pricing power is the ability of a company to get the price it deserves for the value it delivers. Simon-Kucher_Strategic Pricing Innovation_150212_Summary 5
- 6. 1)The "Best" classification comprises 10% of all companies participating in the study Source: Simon-Kucher Global Pricing Study 2014 Simon-Kucher experience: The "Best"1) (10%) show how it goes! … 41% higher pricing power Average realization rate for price increases Price implementation … 45% higher share of successful new product launches Share of new products which meet their profit targets New product success 15,9% 12,8% Best Rest … 25% higher EBITDA margin EBITDA margin over the last 3 years EBITDA 51% 36% Best Rest 39% 27% Best Rest +25% +41% +45% Simon-Kucher_Strategic Pricing Innovation_150212_Summary 6
- 7. 1) NPD = New Product Development Source: Simon-Kucher Global Pricing Study 2014 Four key success factors separate the "Best" from the "Rest" Leadership & strategy: Clear directions, guidelines and owner- ship from C-level executives in pricing Organization: Clear pricing roles/responsibilities and dedicated pricing organization Innovation process: Early and permanent integration of pricing/marketing in the NPD1) process Technology/Know-how Usage of customized tools, software solutions and methods 68% 34% 42% 34% 39% 26% 33% 24% Share of respondents Best Rest 1 2 3 4 +74% +31% +27% +40% Simon-Kucher_Strategic Pricing Innovation_150212_Summary 7
- 8. Overview of the session Value pricing: How to gain pricing power? Value strategy: How to prioritize? Value selling: How to sell and defend value? Implementation: How to make it stick? 1 2 3 4 Simon-Kucher_Strategic Pricing Innovation_150212_Summary 8
- 9. Value strategy: How to prioritize?1 Take-aways Commercial excellence is all about obtaining pricing power Power pricing requires action on three disciplines: value strategy, value pricing and value selling Value strategy: – Clear leadership directions, ensure ownership from C-level executives – Develop clear strategic goals and a differentiated approach per market segment – Identify value drivers per customer segment – Smartly bundle your offering to maximize willingness-to-pay Simon-Kucher_Strategic Pricing Innovation_150212_Summary 9
- 10. Value pricing: How to gain pricing power?2 Take-aways A lack of pricing structure results in unexplainable price differences between customers Use different pricing methods in combination Increase margins on slow movers and fix historically grown inconsistencies Build a conditional discounting framework make discounts defendable Improve value selling through Peer Pricing Create a tool-based environment to support pricing power Simon-Kucher_Strategic Pricing Innovation_150212_Summary 10
- 11. Value selling: How to sell and defend value?3 Take-aways Prepare your deals: Regain control in negotiations through balancing power, gain insight into value drivers and your relative position Use a structured process to ensure deal success Make discounts conditional and dare to give smaller steps than usual Equip your salesforce: Develop a practical sales excellence playbook and optimize sales processes Simon-Kucher_Strategic Pricing Innovation_150212_Summary 11
- 12. Implementation: How to make it stick?4 Take-aways Provide clear leadership directions, ensure ownership from C-level executives Speak the same language, get the data right Define clear responsibilities and governance, build a dedicated pricing organization Clarify processes and KPI's, you get what you measure Enforce in systems and tools, avoid manual loopholes and exceptions Simon-Kucher_Strategic Pricing Innovation_150212_Summary 12
- 13. Source: Simon-Kucher & Partners Simon-Kucher expertise: World-class methods and tools to ensure fast and proven results Competition Map Price Maps Sales Playbook Peer Pricing Discount Optimizer Service Monetizer Balance of Power Market Simulator Segmentation via ComStrat Portfolio Renovator Price recommen- dation Tool Tender Manager Value sellingValue pricing € Value strategy + Simon-Kucher best practices of >2000 projects in the last 3 years Simon-Kucher_Strategic Pricing Innovation_150212_Summary … … … 13
- 14. Source: Simon-Kucher & Partners Typical project approach Phase III Prepare implementation Phase II Develop solutions Phase I Status quo analysis Value pricing awareness and capability development Handover of sales & pricing methods, processes and tools 3-6 weeks TBD1-3 months Prioritized & quantified improvement opportunities and solution directions Roadmap for solution development and implementation Development of implementation- ready solution measures, incl. quick wins Optimization of sales & pricing strategy, processes and organization Redirection of commercial organization, support market launch and IT alignment Business case and implementation roadmap Simon-Kucher_Strategic Pricing Innovation_150212_Summary 14