Sales & Marketing | Strategic Pricing & Innovation: How to smartly increase profits? | Presentatie | Onno Oldeman Simon-Kucher & Partners

www.simon-kucher.com

How to smartly increase profits?

Strategic Pricing Innovation

Amsterdam, February 12, 2015

Onno OldemanJuriaan Deumer

Amsterdam office

Barbara Strozzilaan 380

1083 HN Amsterdam

The Netherlands

Tel. +31 20 75312 53

[email protected]

Presentation Summary

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

AmsterdamBonn

BrusselsCologne

CopenhagenFrankfurtIstanbulLondon

Luxembourg

Madrid MilanMunichParisWarsawViennaZurich

TorontoBoston

New YorkSan 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

1Simon-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

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

Ph

oto

s:

ww

w.c

olo

urb

ox.d

e

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


CSM

Danisco

DSM

FrieslandCampina

Merck

Solvay

Source: Simon-Kucher & Partners project database

3

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


A 5% improvement of … ... leads to a profit increase of …

+50%

+30%

+20%

+15%

4

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

1)The "Best" classification comprises 10% of all companies participating in the studySource: 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%


1) NPD = New Product DevelopmentSource: 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%


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


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


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


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


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 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


… … …

13


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
