Newsletter Summer 2009 – vol. 2 no. 1
.png) In this issue…
Pricing for Long-Term Profit and Growth (Part III of III) by Jim Saunders  In Parts I and II, we established the framework for performing price optimization to maximize long-term profit, by looking at the Customer Lifetime Value and the impact of pricing on the possible future outcomes. We also discussed how the “Price/Volume/Profit Tool”, a vital element for achieving Level 3 of the World-Class Pricing framework (www.pricingsolutions.com), links to this model. In addition, we also delved into the available margin pool and extracted a number of factors that could affect future profitability from a pricing management stand point. In this newsletter, we will discuss how to grow volume profitably in a long-term price optimization model (see the profit/growth model in Figure 3).Ultimately, the optimization of both everyday prices and promotions leads pricing managers to focus on segmentation. More effective segmentation, as well as a pricing structure that responds to the needs of specific segments, provides an opportunity to improve both growth and profit in the long-term – the “Holy Grail” of pricing. Figure 3 shows the range of potential impacts that a pricing move can have. A move that takes the company up the vertical axis (such as a price increase) can increase profits but does not improve value and may, in fact, hurt the long term future of the business. Similarly, a promotional move that entices new customers, (e.g. temporary price reduction), but does not link customers to the value of the brand can grow the customer base, but possibly trains these customers to wait for future promotions leaving them unprofitable. Frugal is the New Black by Paul Hunt Positioning your company as the smart choice in the tide of consumer and corporate thrift. Conspicuous consumption is passé. Nowadays, frugal is the new black. Cheap is chic. The value calculus for making purchases has changed. There is a much sharper focus on price. People are re-evaluating everything before laying out their hard-earned cash. Consequently, it’s a dangerous time to be the high-priced player in any category, as Starbucks is learning the hard way. While the once high-flying chain is closing stores and trying to figure out how to avoid being seen as an unnecessary luxury, consumers are flocking to McDonald’s for its inexpensive, yet tasty, coffee. Pricing Research Practice Update Greg Thomas, Leader, Pricing Research Practice, reports that Pricing Solutions is experiencing high client demand for our pricing research services. According to Greg, “Our new and existing clients recognize the need for pricing research to be conducted by highly specialized pricing experts such as Pricing Solutions, particularly in this challenging economy with changing consumption patterns.” The Pricing Research Practice is also proud to announce the successful completion of the Marketing Research and Intelligence Association’s Gold Seal Certification Review process, and our new designation as a Gold Seal-Certified Corporate Research Agency. The Gold Seal Certification is one of MRIA’s primary mechanisms for developing and delivering world-class professional standards and ensuring member compliance. This achievement demonstrates Pricing Solutions’ continued commitment to excellence. To discuss how we can apply our pricing expertise, innovation and collaborative approach to your research projects, please contact Greg Thomas, Leader, Pricing Research Practice at 416-863-0685, ext. 120 (as of July 15, 416-943-0505, ext. 120) or email him at gthomas@pricingsolutions.com. News and Events Webinars
Seminars and Workshops
Pricing Managers Forum
French Pricing Club Breakfast Meetings
Pricing Practitioners Breakfast Meeting
Pricing Solutions welcomes Avy Punwasee Avy Punwasee has recently joined Pricing Solutions Limited as a Senior Consultant, focusing on pricing management and strategy. Prior to joining Pricing Solutions, Avy was responsible for pricing management in the service parts business of a major domestic automotive company. In this capacity he managed over 400,000 SKUs and $700 million of revenue to a diverse customer base. In addition, he was a key contributor to developing and implementing the organization’s long-term strategic vision and financial business plan. Avy has a wealth of experience in numerous operational areas including channel pricing, competitive realignments, promotional pricing, input cost negotiation and change management. Over his pricing tenure he has added tens of millions of dollars in profit while still maintaining a focus on increasing sales. To reach Avy, please call Please note that effective July 15, 2009, Pricing Solutions’ new North American (Toronto) office number will be: 416-943-0505 Keep Informed Sign-up for the following e-publications, learn about relevant webinars and events, at www.pricingsolutions.com: e-Newsletter: This publication on pricing strategy and upcoming Pricing Solutions events Price Clippings: Our current pricing news digest Pricing for Researchers: Our concise summary of practical and relevant research methodologies and innovative ideas Pricing Solutions’ Events: Notice of webinars, seminars and speaking engagements FOR MORE INFORMATION or to provide comments or suggestions on this newsletter, please contact Christine Terashita (cterashita@pricingsolutions.com) or visit our website at www.pricingsolutions.com You have received this email as you expressed interest in Pricing Solutions’ services or you have subscribed to the Pricing Solutions e-Newsletter. If you do not wish to receive the e-Newsletter or any other communications from Pricing Solutions, please unsubscribe as detailed below. |
