Market/Value Based Pricing Case Study

Market/Value Based Pricing Case Study

SITUATION	Mid-market distributor pursued a “premium provider” business and pricing strategy across portfolio of tens of thousands of products and thousands of customers. Price setting consisted of management manually updating large Excel worksheets, with no clearly defined links to premium-provider strategy. Sales professionals understood value prop elements at a high-level, but lacked ability to properly address too frequent price objections when customers argued unreasonably high price gaps over the competition. This resulted in a less confident sales force and upset customers more prone to defection.
SOLUTIONS IMPLEMENTED	Analytics/Price Setting Developed competitive intelligence databases for pricing inputs on competitors' price points, availability levels, and offer features. Clearly defined value-based pricing strategy, varying price premiums over competitive alternatives based on segment-specific willingness to pay for differentiated offer features. Built robust price setting tool to ensure price setting processes reflect these strategies. Execution and Change Management Through company intranet site used by the sales professionals, disseminated hard competitive intelligence data, analyses of competitors' marketing materials, and other competitive intelligence useful to sales professionals. Partnered with sales professionals to leverage newly-available market analyses to draft segment/competitor-specific talk tracks to overcome price objections, shifting focus of customer conversations to competitors’ weaknesses, and to the quantifiable worth of company’s value-adds.
TESTIMONIAL ON RESULTS	"The methodologies Lee introduced were instrumental to defining the strategies and processes that since have formed the cornerstone of our market-aligned, value-based pricing policies. Thanks to these tools, the corporate team is able to keep prices more aligned with dynamically changing competitive market conditions, and our sales force is more confident and better able to leverage our value-adds to manage competitive pricing issues in the field. These improvements helped the organization meet or exceed margin targets while growing the top line.” Director of Pricing

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