The Pricing Enablement Center

Transcription

1 The Pricing E Center Why Pricing E? Most pricing projects stop as soon as the implementation of a new pricing strategy is under way. But without the right internal capabilities, it is quite possible that the initial results you ve worked so hard to achieve will slowly fade with time. Now is the time to sustain and magnify your results. Pricing E boosts your organization s pricing capability, allowing your people to extract the maximum value from pricing long after our consulting team is gone. As a result, your team remains capable of capturing an even greater portion of the significant opportunity we help identify in a typical pricing project. Pricing E Helps Companies Sustain and Magnify Initial Project Results Return on spending Traditional pricing project (continued on reverse) Pricing E project Total opportunity identified. Impact from the Pricing E project Impact from a traditional pricing project Post-E results Project timeline

2 The Pricing E Center What We Offer Our Pricing E program includes five core elements: A pricing-maturity assessment Talent assessment, sourcing, and development programs Trainings, academies, and coaching Best practices and benchmarks on running the pricing function Tools and IT system navigation We tailor our programs to the specific needs of your organization. We help identify key areas in which capability improvements will drive step-change business results, and we work with you to take your pricing function to the next level. Our dedicated experts in BCG s Pricing E Center collectively have decades of experience in building pricing capabilities across a wide range of industries. We work with your team to assess your pricing capabilities, identify the right talent, transfer the required skills, improve your tools and systems, and align the overall organization to achieve superior and sustained pricing results. For further information, please us at: e-pricing@bcg.com The Boston Consulting Group, Inc All rights reserved.

3 The Pricing E Center How We Assess Your Pricing Capability Pricing is a complex task. We find that even the strongest organizations have areas in which they need to up their game in order to capture the maximum benefits of a pricing strategy. To gauge a company s starting position, our Pricing E program typically begins with a comprehensive maturity health check across all pricing elements. We evaluate the status quo and compare the company s capabilities with industry best practices. This maturity assessment allows us to determine the key capability gaps that must be addressed to improve the company s pricing results. Key Areas We Assess During the pricing-maturity assessment, we aim to answer critical questions, such as the following, about the health of your pricing organization. The Elements of a Pricing-Maturity Assessment Strategy and execution Processes and decision rights Strategy and Execution Do you have a clearly defined and well-communicated pricing strategy? Is your pricing strategy working? Does your pricing strategy support your overall business strategy? (continued on reverse) Client pricing group People and talent Aspirations, desired results, context, and constraints Tools and resources Organization

4 The Pricing E Center Key Areas We Assess (continued) Processes and Decision Rights Is there clearly defined ownership of and accountability for pricing decisions? Do you have robust pricing processes that are well understood throughout the organization? Organization Does your pricing group have sufficient resources to drive effective pricing decisions? Do all areas of your business marketing, sales, finance, and leadership understand their roles in setting prices effectively? Tools and Resources Is there an effective set of pricing metrics across your organization? Are effective systems in place to gather and disseminate relevant information? Do you have the right tools for evaluating the effectiveness of pricing and discounting programs? People and Talent Does your organization have the required strategic and analytic pricing expertise? What skills can you build internally and what expertise do you need to bring in from outside the organization? For further information, please us at: e-pricing@bcg.com The Boston Consulting Group, Inc All rights reserved.

5 The Pricing E Center Our Talent-Development Approach Our Pricing E program helps ensure that you have the most talented pricing experts in your organization with the right combination of analytic skills and pragmatic business acumen. We assist you in identifying talent needs, assessing current talent, acquiring talent from external sources, and transferring required skills to your organization. Our Approach to Talent Development Talent planning Determining talent needs on the basis of strategic and business requirements through, for example, capability mapping and role requirements We focus on critical aspects at each step: Planning. Identifying the key pricing capabilities you need in order to deliver against your business objectives Assessment. Evaluating the capabilities of your people and identifying key gaps relative to your talent plan Acquisition. Finding, recruiting, and bringing new talent on board Development. Building the right set of skills inside your pricing organization (continued on reverse) Strategy Talent development Developing capabilities aligned with business requirements and strategy Exit Planning Development Assessment Acquisition Talent assessment Evaluating current talent levels and developing plans to retain top talent Talent acquisition Sourcing capabilities that do not already exist and cannot be efficiently developed

6 The Pricing E Center How We Transfer Skills to Your Organization Our pricing experts have deep expertise in a broad range of pricing topics. We leverage this expertise to transfer critical pricing skills to your organization. Our curriculum, which covers 32 pricing topics, can be customized to meet the development needs of people in your organization. Our Proven Pricing-E Curriculum Pricing strategy Infrastructure and Price setting and realization and architecture running the function 1. Pricing fundamentals 2. Market structure and pricing power 3. Value extraction 4. Pricing along the life cycle 5. Pricing basis and structure 6. Opportunity identification 7. Basic pricing mechanisms (such as auctions, bids, and negotiations) 8. Advanced pricing mechanisms (such as bundling, free business models, and versioning) 9. Value pricing 17. Price waterfalls 10. Competitive pricing 18. End-customer discounting 11. Elasticity 19. Pricing programs 12. Price ladders, gaps, and incentive curves 20. Promotions 13. Pricing by country and 21. Rebates currency (macrozones) 22. Negotiations 14. Pricing by region and (nonstandard zone (microzones) discounting) 15. Dynamic pricing 23. Channel programs and trade spending 16. Channel pricing 24. Cost to serve 25. Organizing by function 26. Roles and responsibilities 27. Decision rights by pricing lever 28. Processes (price increases, exceptions, and test-and-learn approaches) 29. Talent and capabilities 30. Metrics and reporting 31. Tools and technology 32. Incentive alignment (including incentives for the sales force) To achieve results that are sustainable, your people must master the required pricing skills as they work in the real world. Lectures are insufficient, so we focus on learning by doing. Together, we define a set of business objectives. Your team works with BCG experts to deliver against these objectives. Learning methods range from formal workshops and online learning to coaching your team, certifying skills, and building an internal training team. For further information, please us at: e-pricing@bcg.com The Boston Consulting Group, Inc All rights reserved.

7 The Pricing E Center How We Build the Next Level of Pricing Infrastructure Our pricing-maturity assessment determines how your organization s current pricing capability compares with the world s best-in-class organizations. We then work with you to design and put in place the critical infrastructure necessary to move your organization significantly closer to best-in-class performance. Four key areas we often address include the following questions: Organization and Decision Rights Where should the pricing organization reside within your company? What is the right structure for the pricing group? What are the highest-priority pricing decisions and who should be accountable? Roles and Responsibilities How should pricing activities and roles be distributed across your organization? What is the target profile for pricing-team members? Processes and Tools Which new or refined processes should be added to improve pricing management? What tools are needed to help drive processes and pricing decisions? Metrics and Incentives Which metrics are best for offering visibility into pricing performance? How should internal incentives be aligned with a pricing strategy? Specific answers to these questions vary from company to company. Our proven methodology, which is based on our experience with hundreds of projects, can help your team build the most effective pricing infrastructure for your organization. (continued on reverse)

8 The Pricing E Center The Tools and IT Systems You Need The plethora of pricing tools and systems can be difficult to understand. Some companies give up and make key decisions using the most basic of tools. Others spend millions on systems, but in many cases, they fail to reap the full range of the benefits. We help you navigate pricing systems and vendor solutions, including those focused on business-to-business activities, consumer products and services, retail customer transactions, and revenue management. We help you choose the right systems and get more from the systems you already have in place. Furthermore, we work with your people to customize easy-to-use and effective tools from BCG s proprietary pricing toolkit. We pass the tools on to your team during our skill-transfer program. Finally, we work with your teams, preparing them so that they will have hands-on experience in using the tools when they grapple with real business challenges. Learning how to interpret results from these tools is vital to getting the maximum value from your investment. For further information, please us at: e-pricing@bcg.com The Boston Consulting Group, Inc All rights reserved.

9 The Pricing E Center Our Team s Advantage Our Pricing E Center features a committed group of experts and coaches, each of whom brings years of in-depth, real-life pricing experience in multiple industries, as well as proven results. All are focused on driving substantial and lasting impact for you and your organization. Representative Experts on the Pricing E Team Richard Hutchinson Senior partner and coleader of the PEC More than 15 years of pricing experience across multiple industries, with a focus on business-toconsumer markets Based in Atlanta Jean-Manuel Izaret Partner and coleader of the PEC More than15 years of pricing experience across multiple industries, with a focus on business-to-business markets Based in San Francisco Our Pricing E team features broad experience: Sudipto Banerjee Expert principal More than 10 years of pricing experience across multiple industries Based in Atlanta Dozens of partners, principals, and experts worldwide, who, with their significant pricing focus, have delivered breakthrough results for clients in hundreds of pricing engagements Deep knowledge of business-to-business and business-to-consumer pricing A collaborative working style with the ability to mobilize the organization A strategic, holistic perspective Most of our work is conducted in the field an approach that we find is, by far, the most effective. But many of our experts and coaches are based at our Pricing E Center in Atlanta, Georgia, where we have our training facilities. (continued on reverse)

10 The Pricing E Center Proven and Lasting Results Our Pricing E programs deliver both step-change business results and the next level of pricing capabilities. Our typical pricing program provides two to five points of revenue impact to the bottom line. E programs ensure that these results are sustainable over time. Full programs almost always provide value greater than ten times the BCG engagement fee. We define success in terms of your organization s ability to sustain and improve results over time. During the course of the program, we make sure that we embed new business practices and skills deep into the core of your organization. For example, we not only help you design a price increase process, but we also help make sure that your people are able to implement the process successfully. We recognize that achieving truly sustainable results requires an ability to continually optimize business systems and to adapt to the changing business environment. BCG s Pricing E Center experts will help you tackle new issues as they arise even after the official engagement is over. Ultimately, we stand by our promise to deliver sustainable results. For further information, please us at: e-pricing@bcg.com The Boston Consulting Group, Inc All rights reserved.

11 The Pricing E Center Our Impact Business-to-Business A $2 billion division of a leading industrial-goods manufacturer had been facing a double-digit decline in sales and a shrinking installed base due to the economic downturn and intensifying competition. As part of a multiyear companywide effort, BCG developed new pricing strategies and helped enable the pricing organization. The division successfully raised prices by more than 4 percent, when no one thought that would be possible, and enjoyed a dramatic boost in EBIT. As part of a pricing project to improve the division s price realization and ability to execute, we created a pricing model with consistent and adjustable logic, enforcement of price realization discipline, and an adjustment of the pricing infrastructure to reduce complexity and lead times. In parallel, our e team did the following: Coached executives in a systematic pricing model for the future Codeveloped a methodology for pricing guardrails that would ensure price control going forward Helped the team ensure that price increases would stick Overhauled reporting structures that would assist the company in analyzing and refining pricing over the long term (continued on reverse)

12 The Pricing E Center Our Impact (continued) Business-to-Consumer A $4.5 billion consumer-goods company was being hit by heavy competition from private labels and branded competitors in its mass-market, grocery, and drugstore channels. These challenges had led to significant price erosion. As part of a three-year effort, BCG developed new pricing strategies and helped enable the pricing organization. As a result, the company raised prices by more than 10 percent across each division, boosting volume and increasing profits by more than $500 million. Major elements of the pricing project included streamlining complex pricing processes, restructuring and aligning sales force incentives, and designing and implementing an infrastructure blueprint in one business unit before rolling it out in others. Over the long term, we improved price realization, built pricing capabilities, and integrated tools to add rigor to the pricing process. In tandem with the development of a new pricing strategy, our e team did the following: Conducted training that helped the pricing team make complex decisions on the basis of market data, using the most up-to-date tools Rolled out a dashboard of key metrics to improve employee engagement with pricing trends Implemented a new trade process for identifying opportunities for improving revenues and effectiveness Infused pricing into the organization s overall strategic focus at the highest levels For further information, please us at: e-pricing@bcg.com The Boston Consulting Group, Inc All rights reserved.