Pricing Strategy
Implementation
Toolkit
4
Pricing Action Maturity Model
Key Practice 1- basic 2 - emerging 3 - established 4- superior
Pricing Action
Pricing
Proc...
7
Pricing Action Deliverables
• Recommended external messaging
to be supported by Marketing
• Training conducted for accou...
10
ExecutionExecutionStrategyStrategy
ValueValue ActionAction
Pricing Action Integration Points
Targeted price increases f...
13
1B. RPM Key Steps
Key Executions Steps:
1. Refine RPM template to be relevant
for the business unit
2. Update the RPM m...
16
1E. RPM Example
Summary of
Strategic Factors
Summary of Value
Pricing Factors
Summary of Price
Execution Factors
Consol...
19
2B. Internal Messaging Key Steps
Key Executions Steps:
1. Identify all internal roles and
resources that will be impact...
22
2E. Readiness Assessment Example
Execution Readiness Assessment
This document is a partial preview. Full document downl...
25
Pricing Action Appendix Contents
1. Recommended Price Movement
2. Internal Messaging
3. Account Rep Training
4. Trackin...
28
3C. Available & Suggested Training Programs
Subject Source/Provider
Negotiation Skills • Multiple external courses
Exec...
31
Pricing Action Appendix Contents
1. Recommended Price Movement
2. Internal Messaging
3. Account Rep Training
4. Trackin...
34
4C. Tracking Scorecard Tool
Price Increase
Tracking Template
Subject Source/Provider
Tracking Template
Project Scoreboa...
37
Pricing Action Appendix Contents
1. Recommended Price Movement
2. Internal Messaging
3. Account Rep Training
4. Trackin...
40
5C. Pricing Guideline Supporting Tools
Supporting Tool Application
Price Calculator
Customer Value Estimator
Pocket Pri...
43
Pricing Action Appendix Contents
1. Recommended Price Movement
2. Internal Messaging
3. Account Rep Training
4. Trackin...
46
6C. External Messaging Tools
Supporting Tool Application
Customer Price Increase Letter
Distributor Price Increase Lett...
49
Pricing Action Appendix Contents
1. Recommended Price Movement
2. Internal Messaging
3. Account Rep Training
4. Trackin...
52
7C. Rewards & Incentives Supporting Tools
Supporting Tool Application
Compensation template
Account plan
Compensation
T...
55
◆Sales professionals
perform best when
rewards are directly
linked to individual
performance
◆3-4 balanced metrics
can ...
58
8B. Alignment Workshop Key Steps
Key Executions Steps:
1. Identify potential steering committee
members
2. Solicit and ...
61
8E. QFD Template Example
Customer Expectation
Importance
7DifferentiationofBoxesvs.Bags
5CustomerExpressOrders
25Reduce...
1
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Pricing Strategy Implementation Toolkit

This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here: http://flevy.com/browse/business-document/pricing-strategy-implementation-toolkit-726 This toolkit is focused on the point at which we actually ask the customer for a price increase. None of the strategic value of a pricing recommendation matters unless we take action with the customer. There are several tools and approaches that could make the increase more successful. This presentation has 63 slides, covering the following sections: - Pricing action overall issues &obstacles - Pricing action Maturity Model - key pricing action tools, including: - recommended price movement - internal &external messaging - account rep training - tracking scorecard - incentive and rewards - List of deliverables (supported by 10+ templates embedded in the presentation) - Roles of project team - Project work plan See also "Pricing Strategy Workshop" /browse/business-document/pricing-strategy-workshop-764 See also "Spare Parts Pricing Strategy" /browse/business-document/spare-parts-pricing-strategy-731 See also "Solutions Pricing Workshop" /browse/business-document/solutions-pricing-workshop-752 See also "Best Practices in Price Increase Execution" /browse/business-document/best-practices-in-price-increase-execution-681 See also "Best Practices in Direct Material Procurement" /browse/business-document/best-practices-in-direct-material-procurement-680
Published on: Mar 4, 2016
Published in: Business      
Source: www.slideshare.net


Transcripts - Pricing Strategy Implementation Toolkit

  • 1. Pricing Strategy Implementation Toolkit
  • 2. 4 Pricing Action Maturity Model Key Practice 1- basic 2 - emerging 3 - established 4- superior Pricing Action Pricing Procedures Front line employees must adhere to basic price list, otherwise they must raise pricing decision to their direct supervisor. Price list is regularly updated. The escalation criteria and approval process are documented for non-standard pricing decisions. Acceptabled price ranges are established and include factors such as volume and freight. Out of range price decisions are supported by pocket price calculations. A pocket price model is used on each transaction, with clear guidelines and appropriate incentives to enable rapid decision making by front line employees Roles & Responsibilities Pricing responsbility is often unclear and may reside with multiple individuals. Pricing responsibility is clearly defined and communicated. One person is accountable for each product line. All roles in the pricing decision process are defined. Often a pricing manager or pricing committee responds to field requests for pricing decisions A pricing manager or pricing committee proactively establishes and communicates pricing guidelines to the field. Metrics & Rewards Volume based sales incentives, margin is only tracked at an aggregate level for the business. Sales incentives are for volume, with some general consideration of profitability (which is based on price compared to an average standard cost) Sales incentives are for profitable volume only. The profitability is evaluated at the account, product, and sales rep level based on customer specific service levels and costs. Sales incentives and commissions vary with the level of profitability contributed by each individual transactions Tools & Technology Paper based price lists and generic excel tools are available to determine and calculate prices Price lists are available electronically. Preconfigured spreadsheet models are available to support pricing calculations Prices and pricing tools are an integrated part of a CRM system Robust pricing tools allow real-time calculations with integration into back office systems for cost, supply, and demand information This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 3. 7 Pricing Action Deliverables • Recommended external messaging to be supported by Marketing • Training conducted for account reps on executing price actions • Recommended changes to metrics, incentives, and individual goals • Summary scoreboard for business unit • Updated forms and reports to facilitate price change • Recommended Price Movement (RPM) detail and summary by customer This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 4. 10 ExecutionExecutionStrategyStrategy ValueValue ActionAction Pricing Action Integration Points Targeted price increases from each of the three areas feed into the Pricing Action The business justification and explanation for the price increase needs to be summarized and communicated to the account rep Segmentation and Value Pricing analysis will help identify pilot tests and the priority for approaching customers Lessons from the initial Pricing Actions need to feed back into the three areas to refine and adjust targets This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 5. 13 1B. RPM Key Steps Key Executions Steps: 1. Refine RPM template to be relevant for the business unit 2. Update the RPM macro database for the business unit customers and data 3. Populate the RPM’s with customer names, SKU’s, and prices 4. Gather input from each pricing analysis stream 5. Consolidate input from each stream and develop preliminary price target 6. Review overlaps and refine recommendations 7. Document rationale and justification points 8. Review RPM’s with business directors and sales managers 9. Sales managers distribute RPM’s to account reps and communicate expectations 10. Conduct weekly review with account reps to assess progress Week 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 XYZ Resources 1 Manager to facilitate RPM formulation and review Client Resources 2+ IT and finance, plus sales manager review time Other Resources This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 6. 16 1E. RPM Example Summary of Strategic Factors Summary of Value Pricing Factors Summary of Price Execution Factors Consolidation & Final Targets Measurable Pricing Action This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 7. 19 2B. Internal Messaging Key Steps Key Executions Steps: 1. Identify all internal roles and resources that will be impacted by the pricing action (stakeholders) 2. Determine how these stakeholders will be impacted, both positively and negatively 3. Examine how prepared each group is for the changes 4. Define the key communications and messages for each group of stakeholders 5. Develop an overall communications plan to support the pricing action 6. Implement the communications plan and monitor execution 7. Adjust media and messaging as required Week 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 XYZ Resources .5 Change management resource Client Resources 1 Marketing communication and HR Other Resources This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 8. 22 2E. Readiness Assessment Example Execution Readiness Assessment This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 9. 25 Pricing Action Appendix Contents 1. Recommended Price Movement 2. Internal Messaging 3. Account Rep Training 4. Tracking Scorecard 5. Pricing Guidelines 6. External Messaging 7. Rewards & Incentive Options 8. Alignment Workshops This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 10. 28 3C. Available & Suggested Training Programs Subject Source/Provider Negotiation Skills • Multiple external courses Executing Price Increases • Developed for client Discovery Process • Multiple external courses This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 11. 31 Pricing Action Appendix Contents 1. Recommended Price Movement 2. Internal Messaging 3. Account Rep Training 4. Tracking Scorecard 5. Pricing Guidelines 6. External Messaging 7. Rewards & Incentive Options 8. Alignment Workshops This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 12. 34 4C. Tracking Scorecard Tool Price Increase Tracking Template Subject Source/Provider Tracking Template Project Scoreboard Pricing Action Scoreboard This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 13. 37 Pricing Action Appendix Contents 1. Recommended Price Movement 2. Internal Messaging 3. Account Rep Training 4. Tracking Scorecard 5. Pricing Guidelines 6. External Messaging 7. Rewards & Incentive Options 8. Alignment Workshops This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 14. 40 5C. Pricing Guideline Supporting Tools Supporting Tool Application Price Calculator Customer Value Estimator Pocket Price Calculator customer value calculator This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 15. 43 Pricing Action Appendix Contents 1. Recommended Price Movement 2. Internal Messaging 3. Account Rep Training 4. Tracking Scorecard 5. Pricing Guidelines 6. External Messaging 7. Rewards & Incentive Options 8. Alignment Workshops This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 16. 46 6C. External Messaging Tools Supporting Tool Application Customer Price Increase Letter Distributor Price Increase Letter Press Release Direct Customer Price Letter Template Distributor Price Letter Template SBU X Price Increase Template & Info V4 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 17. 49 Pricing Action Appendix Contents 1. Recommended Price Movement 2. Internal Messaging 3. Account Rep Training 4. Tracking Scorecard 5. Pricing Guidelines 6. External Messaging 7. Rewards & Incentive Options 8. Alignment Workshops This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 18. 52 7C. Rewards & Incentives Supporting Tools Supporting Tool Application Compensation template Account plan Compensation Template Account Plan Template This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 19. 55 ◆Sales professionals perform best when rewards are directly linked to individual performance ◆3-4 balanced metrics can be used to drive desired results while minimizing dysfunctional behavior ◆Margin should be one of these few metrics, but balanced with volume and other strategic measures of sales rep success 7E. Incentive Compensation Structure Example This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 20. 58 8B. Alignment Workshop Key Steps Key Executions Steps: 1. Identify potential steering committee members 2. Solicit and confirm steering committee members 3. Schedule steering committee workshops and reserve space 4. Prepare for first SC meeting 5. Conduct data review and initial challenge session 6. Prepare for second SC meeting 7. Present and challenge preliminary findings and conclusions 8. Prepare for third SC meeting 9. Present and challenge preliminary recommendations 10. Prepare fourth SC meeting 11. Agree to direction, actions, and accountabilities Week 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 XYZ Resources .5 Project Manager to organize and facilitate workshops Client Resources 1+ All key team leads should participate Other Resources This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
  • 21. 61 8E. QFD Template Example Customer Expectation Importance 7DifferentiationofBoxesvs.Bags 5CustomerExpressOrders 25ReduceCashDiscountforImproperTerms 8RepackagingChargescausedbyCustomer 83Globalleverageofbestpractices 69Lessthancontainer 1HopperTruckShipping 11DirectWarehousePick-upCharges 45PricespaidbyPartnersvs.Non-Partners 87Incentivesforshipment 91Changeinshipmentmethod 27ServiceChargesforLatePayments 73Consolidatedistributors 31PricingSalesTools 28Pricevs.CreditTerms 26ProxBillingAccounts 3ShippingDelaysbyCustomer 46DistributorEvaluation Collateral Impact at Industry Level (Risk) 10 H H H H H H H H H H H H H H H H M M Likelihood of PTOI Realization 10 H H H H H H H H H H H L H H M L M M Opportunity has identifiable Y 10 H H H H H H H H H H H H H H H H H H Fast estimated time to implement 8 H H H H H H M H M M M H L M M H H H Fast estimated time to initial benefit 8 H M H M M M M L L L L H L L M M M M What is the direct PTOI impact 8 L L L Low estimated FTEs required to implement 7 H H H H H H H H H H H H H H H H H H Opportunity has historical data for Y 7 H H M H H M H M H H H M H M H M H H Estimated ability to influence the revenue 5 H H H H H H H H H H H H H H H H H H Opportunity has identifiable revenue impact 5 H H H H H H H H H H H H H H H H H H Total 630 590 588 582 582 540 534 532 518 518 518 508 502 476 474 468 462 462 QFD Scoring Sheet QFD Definition Worksheet Y's X's Customer Expectation Importance Notes Opportunity List Notes Opportunity has identifiable Y 10 H = Yes L = No 1 Hopper Truck Shipping Adjust the price for hopper truck shipping upwards where additional cost can clearly be identified. Opportunity has historical data for Y 7 H = < 1 month to get M = 1-3 months to get L = >3 months to get 2 Shipping Rates Charge customers accurate shipping rates based on volume and mode of shipment. Opportunity has identifiable revenue impact 5 H = Yes L = No 3 Shipping Delays by Customer Charge customers for demurrage when delays are driven by customer shipment issues. Estimated ability to influence the revenue 5 H = Need ECP Business Team or Lower M = Need P&IP VPGM L = Need Corporate 4 Oversees Shipping Services Negotiate with customers to provide a broader range of paid overseas shipping services for which ACME obtains at a very low price compared to other companies. Low estimated FTEs required to implement 7 H = 1-2 M = 3-4 L = 5 or more 5 Customer Express Orders Charge customers for rush orders that are 'same day'/'next day' shipping on the day it was ordered (generally not air-freighting) Fast estimated time to implement 8 H = < 2 months M = 2-6 months L = > 6 months 6 Customer Damaged Returns Consistently charge customers for damage to products (where fault can be determined) and packaging on returns. Fast estimated time to initial benefit 8 H = < 2 months M = 2-6 months L = > 6 months 7 Differentiation of Boxes vs. Bags Although there is no price differentiation between box and bag (there is differentiation between smaller packaging and bulk) there is a small cost variation that could be passed through to the customer. What is the direct PTOI impact 8 H = >$750M M = $250-$750M L = <$250 Blank = Cannot Evaluate Likelihood of PTOI Realization 10 H = positive M = neutral L = negative Blank = unknown Collateral Impact at Industry Level (Risk) 10 H = positive (no) M = Neutral (unknown) L = negative (yes) This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/pricing-strategy-implementation-toolkit-726
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