Pricing

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Pricing

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Pricing cannot be built on a ‘one-fits-all’ model. Pricing is a result of many different aspects within the business. It should therefore be based on your cost structure and the realized value for customers and consumers. It’s more than just setting up the price, it’s finding the right balance between

• conditional• on- vs off invoice reductions• limiting exposure• hedging currency• timing risks when quoting

It needs a customized approach depending on the business and product you are selling.

It is important to take pricing as monetizing the value of the product and service you deliver while taking into

account the true value chain from customer & company perspectives

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There are many pitfalls when setting up the right pricing

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• Segmenting and capturing the wrong target group• Choosing the wrong pricing strategy• Determining the value creation• Failure to sustain and drive differential value• Price leakages

• Uncontrolled discounts, allowances and other deductions due to price leaks

• Poor visibility into pricing transactions leaving managers “blind” to true price performance

• Conflicting performance metrics that make pricing a political game between sales, finance, and marketing

• Poorly designed pricing policies that fail to align transaction-level pricing with the broader pricing strategy

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Each organization should ask itself following questions;

1.Does your organization truly understand the economic impact of its products and services and how/why it varies by customer?

2.Does the current price structure reflect the differences in value to different customer segments? Is pricing metric appropriate?

3.Is there unnecessary discounting and missed price realization across customer base?

4.Are pricing strategies aligned with targeting the right segments and gaining optimal market share?

5.Does the price structure force customers to acknowledge the value of company’s differentiation?

6.Does the pricing process control customers attempts for negotiating aggressively?

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Determining the right pricing

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Pricing is one of the main Marketing drivers, and should not be looked at independently

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Bu

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Price Premium

Market Share

Marketing Value

Bu

sin

ess R

esu

lts

Customer Equity

Intention

Awareness

Perception &Reputation

Preference

AcquisitionEngine

RetentionCommitment

Recommen-dation

Behaviour

Environmental and Competitive Scan

Tangible Action Plans

Marketing Drivers

Products / Technology

Services

Communication

Purchase Process &Experience

RelationshipBuilding

ChannelManagement

Price Positioning

Segmentation & Targeting

Positioning

Scope

Marketing Strategy

Business Paradigms

Value proposition Value creation Value capturing

Deep Channel & Customer Insights

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THoM promotes strategic or value based pricing and provides tailored consulting solutions in different areas

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We will use a combination of content, tools and examples to support better choices with regards to marketing, pricing and selling

How can we create value among

different customer segments?

How do we influence perceptions of value and willingness to pay through

communication?

How do we create offerings, value propositions

and related pricing that maximizes our profitability?

How do we increase price realization and profitability through transaction/contract

design? How can we improve negotiation?

How do we establish prices that reflect value

and drive the optimal mix of volume and margin?

What are the critical customer behaviors required

to drive growth? How are they best activated

especially given competitive dynamics?

CHANGE CAMPAIGN

Target Behaviors, Customer Segments, Leverage Points

Comprehend what drives value

Create offering choices

Communicate value and frame price

Convince thru

consistent policies

Capture profit/ growth

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PR

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Thom performs a 360° audit , using different tools

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1. Understanding customer

behavior and segments

2. Comprehendin

g customer value

3. Creating offerings that

align with value: price

setting

4. Communicate

value and frame prices

5. Improve price policies and processes

6. Capture value:

Economic modeling – Mapping

influence & competitive dynamics

Tools: • Price banding• Price Waterfall• Pricing decisions & process

mapping• Price/Value alignments• Price realization

opportunities

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It is important to take three inputs into account when setting up the strategic pricing

Philosophy:Financial prudence and ensures that each unit of sale achieves a target return over its full cost

(Finance & Accounting)

Costs Customers

Competition

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Philosophy:Market demands requires that pricing of products and services reflects what customers willing to pay

(Marketing & sales)

Philosophy:Price to maintain or grow market share, short term focus, or “me too” pricing

(Sales, Management)

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THoM’s Pricing service offerings can be bundled in 5 areas

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360° Pricing Audit

Pricing Processes

New Product Pricing

• Review processes & Implement process improvements• Link with CPM methodologies

• Price setting (conjoint analysis)• Pricing along PLC

Offer Structuring

• Price menu development (Structured Trade Terms)• Bundling• Pricing link with segmentation & communication

• 360° Pricing Audit• Quick hits that identify immediate improvements to

pricing strategy and profit potential

Sales Execution

• Measure price data points per Sales rep• Develop sales guidelines• Coach Sales to sell on value (trade-offs / price concessions)

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Why the House of Marketing

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In a business context where turbulence is the new norm,

The House of Marketing provides marketing excellence at

the right moment, exceeding clients' expectations by

delivering higher return on investment and by making the

organization more agile.

We achieve this by recruiting passionate marketers for

whom we create an inspiring and nurturing environment.

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What is the current business context?

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Business context: Turbulence

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Turbulence is a combination of (1) vulnerability and (2) opportunity.

It is from now on the normal condition of markets and companies.

It is un-avoidable, but companies can choose how they will face it.

P. Kotler, Chaotics, 2009

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Marketers need to proof themselves ... (again)

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They are perceived as being prone to dispersion and inertia

Their relevance is questioned

They are blamed for lacking business sense

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How we make this vulnerable situation an opportunity?

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We introduce a strong vision on marketing …

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Marketing is a mindset

throughout the whole company,

and only happens through

uncompromising and ruthless focus on

the total process of

customer engagement.

Marketing is a key contributor to

achieve business objectives and to

optimize shareholder value.

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… applying ‘FACTS’ as guiding principles.

• Simplicity• Strategic consistency• Leadership continuity• Prioritize & making choices • Consistent brand across all channels• Seek leadership in specific category• Customer centricity• Focused team

• Detect trends & act• Early warning systems & processes

• Agile & up to date organization• Built around customer

engagement• Willingness to change• Flexibility & Speed

• Innovative company culture• Diversity of profiles• Idea generation process• Idea valuation• Porosity & open-mindedness

• KPI’s & dashboards• Scenario analysis & ROMI• Connect with marketing intelligence• Analytical culture & skills

• People: yours & every stakeholder• Planet: ACT on innovation, packaging, promotion...• Profit: business-minded marketers

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We are convinced that the key to long-term profitable marketing agility lays in organizational flexibility ...

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Resource Demand Chart

1/95 4/9 7/9 10/9 1/9 4/9

0

1,000

2,000

3,000

4,000

5,000

FTE (hours per month)

Project 1Project 2Project 3Project 4

Capacity

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…. and bridging competence gaps

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SocialMedia Strategist

Project Management

CR

M s

pecia

listShopper marketer

Performance management

CPM specialistOnline specialist

Mob

ile m

ark

ete

r

Web master

Data cruncherE-commerce

Packag

ing

………

……

…

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How do we work?

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We deliver tangible value by bridging the knowing doing gap

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Operational pragmatism

Strategic excellence

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We offer a unique combination of strategic excellence and operational pragmatism

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We help you in realizing more from your marketing strategies and building the marketing capabilities for systematic results

Operational pragmatismStrategic excellence

• Proven track record in strategic marketing advice

• Creating relevant insights in the business

• Identifying the true leverages for significant improvements

• Turning opportunities into structured and prioritized business initiatives

• Track record in making things happen within international and complex companies

• Applying practical knowledge of successful corporate sales and marketing organizations

• Turning initiatives into tangible actions

• Helping you to successfully implement strategic recommendations

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Brand Managers

Broad FMCG experience Coordination activities of

specialists in production, sales, advertising, promotion, R&D, …

Churn analysis, churn reduction

Product placement optimization

Business Analysts

Market & competitor analysis

Market assessment & quantification

Clustering of customers

E-Marketers & Social Media

Specialists

E-strategy definition & roll-out

Coordination, design & implementation of e-marketing actions

Website management, email marketing, social media, mobile

Marketing Managers

Channel & Category Managers

Process Managers

B2B and B2C environments

Marketing plan, go-to-market strategy & implementation, people management, business intelligence

Coordination of Marketing activities

Strong analytical and negotiation skills

Enhancing retail partnerships by increasing category sales and aiding in fact based/strategic selling

Extended experience in SME and large matrix organizations

Alignment of organization towards similar goals

Clear roles & responsibilities definition, organizational design

We work on temporary assignments….Mostly function based

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… and on strategic marketing challengesMostly project based

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• Attract new customers• Increase customer spending• Reduce customer churn• Increase Innovation success rate

Volume driven

Margin driven

Positioning

• Restore customer trust• Capture more customer value• Margin management• Doing more with less resources• Tracking of ROI

• Define or redefine positioning• Changing customer experience from product push to relational (customer-centric)

• Positioning on the sustainability dimension

• Positioning towards current and potential employees

• Customer intelligence: translate data into relevant insights

• Segmentation• Business and marketing planning• Innovation Management Program

• Customer intelligence: translate data into relevant insights

• Category assessment• Marketing performance management (ROMI, CLTV, dashboards)

• Marketing audit

• Consumer intelligence: translate data into relevant insights

• Customer (store) experience• Sustainability• Employer branding

Consumer analytics and insights are crucial for each of the three challenges

Client challenges THoM expertise & solutions

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To guarantee the excellence, we split marketing into four expertise areas and develop our people in all four of them

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I. Strategic Marketing

II. Go-to-Market

• Market Intelligence• Segmentation• Branding & Positioning

• Pricing• Product/ Brand/ Category

Management• Communication (offline &

online)

III. Organization capabilities

IV. Performance Management

• Customer Process Management

• Organization & Change Management

• Customer Experience

• Marketing Dashboards• Marketing Performance Management• Customer Lifetime Value & ROMI

• Business & Marketing Planning

• Employer Branding• Sustainability

• Social Media• Shopper Marketing• Customer Relationship

Management

• Marketing Audit• Marketing Coaching &

Training

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You are always hiring a whole team of marketing specialists

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Hiring a THoM consultant isn’t just hiring a person, it’s acquiring expertise:

•THoM consultant: your day to day contact

• Counselor, Client Manager and Mentor: first help, coaching and stretched goals for the THoM consultant

• All THoM consultants with their specific skills, expertise and experience: the second resort for the THoM consultant

• THoM knowledge base (training, career development plan, books, papers, former projects, experience of previous THoMers)

Visible

Invisible

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To make agility also part of your company DNA, it demands the right talent at the right place with a continuous evolution The House of Marketing can help you attract, develop and keep the right talents.

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Training

Coaching

Relevant Marketing training, from general to very specific & tailor made

- product management- project management- communication (online, offline)- social media- email marketing-……

Personal coaching focused on marketing related skills and technical skills

Marketing Talent program

Talent attraction and on the job guidance: a one company or multi company program, more details available as from October 2012

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For whom do we do this?

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ICT & Media

Utilities & Resources

Financial & Other

Services

Healthcare & Public Sector

Transport & Logistics

We have clients from many different sectors (1)

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Consumer Goods &

Retail

We have clients from many different sectors (2)

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Durables & Industrial

Goods

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“We appreciated that the THoM team supported us in the bottom up approach involving customers,

prospects, sales, specialists.” (Danny Vandevyver, Head of Marketing

Com Belux)

… talking about the tangible value delivered by The House of Marketing

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“THoM’s pragmatic approach is to me a key differentiator, as they are able to talk the language of

actual executors and to predict or foresee many operational issues we need to tackle.”

(Ronald Hannet, BU Manager)

“THoM succeeded in creating change thanks to their straightforward and efficient solutions and

approach.”

(Michael De Koster, Segment Manager)

“The added value of THoM is that they do not only deliver strategic advice, but their recommendations

are tangible and can be implemented.”

(Luc Deflem, CEO)

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So, what can we do for you?

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Your personal point of contact

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Davy VerhulstMobile: +32 (0) 475 83 99 98

E-Mail: Davy.Verhulst@thom.eu

The House of MarketingKardinaal Mercierplein, 2

B-2800 MechelenBelgium

Fax +32 (0)15 444 044www.thehouseofmarketing.be

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