Achieving a sustainable pricing advantage is becoming progressively difficult, yet increasingly more important as global economic pressures, depleting resources and raw materials, energy price volatility, and regional anomalies cause major shifts in the value chain economics across all industries.
But how does pricing pose a challenge? The problem is that mastering a sustainable pricing strategy to achieve competitive differentiation requires any organization to adopt a dynamic and integrated approach. However, the complexities of this concept force some two-thirds of all manufacturers to cling to a cost-plus strategy, despite its well-known shortcomings as a reactive posture that leaves money on the table and ignores market and customer dynamics.
Moving away from a cost-plus strategy to an integrated approach requires cultural change—an organization must be ready to let go of old, familiar practices and embrace more complex processes. Companies that have realized a sustainable, fully integrated, world-class pricing competency can accelerate improvement in many other important areas, including route-to-market channel optimization, key sales account planning, management and customer contract negotiations, Sales and Operations Business Planning, and product portfolio management.
Finally, the most compelling reason to adopt an integrated pricing strategy is quite simple: it is proven to deliver at least a 2% to 3% year-over-year increase in operating margins—a huge pay off for any company.
Learn to adapt the ability to dynamically, aggressively, and proactively adjust pricing as a part of the corporate strategy and stay ahead of the competition in 2013.
— By Richard Buoni