Pricing Maturity Report_All Industry Benchmarks

Addendum - Industry benchmark

European Pricing Maturity2013Results and key findings per industry

Page 2 of 26


1. Industry Benchmark: Chemicals

2. Industry Benchmark: Postal & Logistics

3. Industry Benchmark: Telecommunications

4. Industry Benchmark: HighTech

5. Industry Benchmark: Automotive

6. Industry Benchmark: Life Sciences

7. Industry Benchmark: Machinery & Equipment

8. Industry Benchmark: FMCG & Retail

Content

3

6

9

12

15

18

21

24

Page 3 of 26


Respondents from the Chemical industry believe that they have a somewhat higher pricing maturity score than they do in reality. In reality, they come second only to the HighTech industry in terms of the highest actual pricing maturity.

The pricing managers who completed the survey all have more than 3 years of experience in a pricing function, while 60% indicate that their teams worldwide comprise of more than 4, but less than 15 dedicated pricing people.

For this group of respondents, 60% indicated that they are convinced that a dedicated price optimisation strategy is a “must have” business initiative.

80% of respondents believe that Big Data Analytics will lead to higher profit margins.

Perceived pricing maturity 2,80 = LEVEL 2

Actual pricing maturity 2,33 = LEVEL 2

Ambition within 12 months3,28 = LEVEL 3

Chemical industry – observations

2nd highest actual pricing maturity

Figure 1: Distribution of respondents within the Chemicals industry

Figure 2: Distribution of respondents within the Chemicals industry

Source : EPP European Pricing Maturity Study – 2013


Perception Reality Ambition

Level 1: Price list maintenance

0% 20% 0%

Level 2: Transactional control

20% 80% 20%

Level 3: Full value capturing

80% 0% 80%

Level 4: Full profit optimisation

0% 0% 0%

perception reality ambition

0%

20%

Level 1:Price List Maintenance

You try to sell anything to anyone at all prices

20%

80%

20%

Level 2:Gain transactional control

and optimize

You sell the right products to the right cutomers at the

right prices

80%

0%

80%

Level 3:Full Value Capturing

You sell segmented solutions at value based

prices

0% 0% 0%

Level 4:Profit Optimisation

You develop end-user solutions with different

revenue models

CHASM0%

Page 4 of 26


Based on the gap analysis for the Chemical industry, we have highlighted a number of attention points and possible actions that will improve pricing maturity of these components of the Pricing Framework. These are based on the widest gaps between actual and desired performance.

Number 1 focus for the rest of 2013 needs to be pricing segmentation. Once the segmentation is in place, set specific pricing goals per segment (ideally also per product line, customer etc. where possible), and a targeted price positioning vs. competition.

Use price/value maps (price positioning: perceived value vs. price) to steer portfolio and price strategy, pay attention to price elasticity, move towards a better understanding of value components per segment. Consider using pricing research to help with these aspects – this is highlighted again in the Tools & Systems section where a specific need for more attention to pricing research is expressed by the respondents.

Though respondents indicate that the move towards a performance based discounting structure has already started or is at least on the table at the moment, the challenge will be in implementing it with the buy-in of the sales team, as well as the customers..

Price strategy

Price policy & setting

Discount strategy

Chemical industry – gap analysis



Reality Ambition

Price Strategy 2,45 3,60

Price Policy & Setting 2,27 3,30

Discounting strategy 2,80 3,80

Price Execution 2,27 3,10

Monitoring 2,15 3,05

System & Tools 2,10 3,10

Governance & Org. 2,68 3,52

Tendering 2,05 3,14

Figure 3: Gap analysis: Chemicals industry

Figure 4: Distribution of maturity scores across components of the pricing framework

TenderingGovernance & Org.

System & ToolsMonitoring

Price ExecutionDiscount Strategy

Price Policy SettingPrice Strategy

Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

1.100.84

1.000.900.83

1.001.03

1.15

Page 5 of 26


60% of respondents in the Chemical industry make use of tendering. Next to price strategy, this is aspect also represents the most prominent gap between actual performance and desired level of performance for the respondents. While it seems sufficient for this industry to have the final price decision resting with the sales director instead of collaborating with the pricing director, respondents do indicate that they need to work on making complete information about the tender (item line-level) available to decision-makers in a timely manner.

Strive to offer margin improvement alternatives when possible instead of simply offering exactly what customers ask.

They also want to move to a situation where information is collected well before the tender, and is checked, critically assessed and actively used in pricing.

Timely & complete information

Improve margin

Critically evaluate info

Chemical industry – Tendering

Page 6 of 26


Together with respondents from the Chemicals sector, they have the highest perceived pricing maturity at 2,80, while reality paints a different picture with their pricing maturity being only 2,27.

However, they do have significantly more dedicated pricing team members at worldwide level (headquarter incl.) than the Chemical industry -- 40% of respondents have more than 15 persons working exclusively on pricing in their organisations and the same percentage have more than 10 years of experience in their functions.

All of them attach great importance to a proper big data analytics infrastructure and 80% find that a price optimisation strategy is an absolute “must have” business initiative.




Postal & Logistics industry – observations

Highest perceived pricing maturity

Figure 5: Distribution of respondents within the Postal & Logistics industry

Figure 6: Distribution of respondents within the Postal & Logistics industry





0% 20% 0%


20% 80% 60%


80% 0% 40%


0% 0% 0%


0%

20%



20%

80%

60%


and optimize


right prices

80%

0%

40%



prices

0% 0% 0%



revenue models

CHASM0%

Page 7 of 26


With European postal markets opening up in 2011 and 2013, price will be one of the most important factors for customers when new entrants with similar service levels appear in markets (Kleindorfer & Szirmay, 2009). Below, we highlight a number of attention points and possible actions which arise from the gap analysis in Figure 3.

Conduct a price positioning exercise per segment and align with marketing strategy. Pay attention to responsiveness of consumers to fluctuations in price to help determine optimal pricing.

There seems to be a great need for the further development of pricing research tools within the Postal & Logistics industry. These tools need to provide insights on segmentation, value attributes, price perception, willingness to pay, and price elasticity in the very least. As far as tools are concerned, if we look at this aspect, together with the results of Monitoring, we see that though a wealth of customer data is gathered in this industry, but there is very little regular advanced analysis of this information. A reliable tool which integrates all sources of quantitative and qualitative data needs to be put in place for effective reporting, monitoring and price guidance.

Improve value selling skills of sales force, provide them with value argumentations per product line, across each segment. Don’t underestimate importance of the economic value calculation exercise in this.


Tools & Systems

Price execution

Postal & Logistics industry – gap analysis



Reality Ambition








Tendering 2,39 3,18

Figure 3: Gap analysis: Postal & Logistics industry






Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

0.790.68

1.100.601.00

1.001.13

0.80

Page 8 of 26


Tenders are widely used in the Postal and Logistics industry (80% of respondents), and all respondents indicate that improvement is necessary. These are the 3 key areas they would like to focus on in the next 12 months:

How tender information is obtained: Information should be collected well before the tender, it should be checked and critically assessed by the commercial team and then actively used in pricing the tender.

How item selection for a tender takes place: Margin improvement alternatives should be identified and offered whenever possible.

The use of formal life time value calculation when evaluating tenders: Formal calculation needs to take place, taking all possible factors (e.g. account year-end rebates and bonuses of sales team, etc.) into account.

Timely & complete information

Improve margin

Life time value calculation

Postal & Logistics industry – Tendering

Page 9 of 26


With 80% of respondents having more than 5 years of experience in a pricing function, that makes this sector the “most experienced” in pricing.

We also notice that 80% of the respondents have pricing departments worldwide that comprise more than 15 people.

Not hard to imagine that this is necessary if we take into account the profound changes that this industry has experienced in the last 20+ years with the move of revenue streams from fixed to mobile. Just as a matter of interest, did you know that the mobile penetration rate in Europe in 2010 was already at 128%? (Whitehead, Phillips, Page, & Molina, 2011).

Being such a technology driven industry, the importance of Big Data Analytics is more than clear and is also illustrated by the fact that their survey scores reveal a strong need to further develop the systems and tools to complement their pricing initiatives.




Telecommunications industry – observations

“most experienced” industry in pricing

Figure 9: Distribution of respondents within the Telecommunications industry

Figure 10: Distribution of respondents within the Telecommunications industry





0% 40% 0%


40% 40% 40%


60% 20% 60%


0% 0% 0%


0%

40%



40% 40% 40%


and optimize


right prices

60%

20%

60%



prices

0% 0% 0%



revenue models

CHASM0%

Page 10 of 26


On the right, we highlight a number of attention points and possible actions which arise from the gap analysis in Figure 11.

Urgent attention to pricing tools & systems needed: Improve availability of cost price info amongst pricing decision makers. Trigger automatic signal for sales price updates to avoid realising too late that there were serious cost price fluctuations.

Actively enforce systematic win/loss analysis by the sales team and analyses plus feedback by the pricing/analytics team – use as input for action plans. Better prepare price increases and equip sales force with value argumentations. Link sales force’s incentive scheme to price realisation and margin optimisation targets.

Establish clear value components per segment and use them for guiding value pricing. Review pricing policy minimum twice per year and follow up deviations with corrective actions. Investigate the price elasticity of offerings and use it to anticipate and prepare for the outcome of pricing initiatives.

Tools & Systems

Price execution


Telecommunications industry – gap analysis



Reality Ambition








Tendering 2,21 3,14

Figure 11: Gap analysis: Telecommunications industry






Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

0.930.92

1.400.95

1.331.00

1.230.70

Page 11 of 26


While the percentage of respondents who make use of tendering is rather small in the Telecom industry, half of the respondents find that it is sufficient to maintain a philosophy of winning the tender first (price to win) and then looking at opportunities to increase the margin within the agreed price. The other half is more in favour of moving to the best practice of having a margin improvement plan per tender in place with regular account reviews taking to check the life time value of the tender.

Other areas they have identified for improvement are:

How tender information is obtained: Information should be collected well before the tender. It should be checked and critically assessed by the commercial team and then actively used in pricing the tender.

How item selection for a tender takes place: Margin improvement alternatives should be identified and offered whenever possible.

Calculate the total amount of sales revenue the tender customer contributes to the company over the life of the relationship, taking all possible factors (e.g. account year-end rebates and bonuses of sales team, etc.) into account.

Price to win vs. optimise margin

Thorough evaluation of info

Item selection


Telecommunications industry – Tendering

Page 12 of 26


HighTech respondents score significantly higher than any other industry on their pricing maturity. They come in ahead of all the rest at 2,62.

When looking at the possible reasons, we discover that 86% have more than 15 people working exclusively on pricing globally, with the remaining 14% having between 8 and 15 people focussing on pricing.

Significantly, approximately 71% of respondents have held their pricing function for more than 3 years.

All respondents indicated that they are convinced that a price optimisation strategy is a “must have” business initiative which has to be worked on continually, and with support from the top.

Big data analytics form a substantial part of the strategic arsenal with which every respondent in this sector handles their pricing and profit optimisation.




HighTech industry – observations

Highest pricing maturity in Europe

Figure 1: Distribution of respondents within the HighTech industry

Figure 2: Distribution of respondents within the HighTech industry





14,29% 28,57% 0%


28,57% 28,57% 28,75%


42,86% 42,86% 57,14%


14,29% 0% 14,29%


14%

29%



29% 29% 29%


and optimize


right prices

43% 43%

57%



prices

14%

0%

14%



revenue models

CHASM0%

Page 13 of 26


The survey confirms what we have observed first hand during the EPP HighTech Forum in 2013. Senior management in European high-tech companies are increasingly focused on further developing pricing and profit optimisation skills in their organisations. They have indicated the topics on the right as key focus areas for the coming 12 months:

The collective goal of the HighTech respondents is to understand the value attributes of their offering, as well as the value per attribute better, so that this can be used in value based pricing per segment. Another point for improvement is the use of price elasticity analysis in predicting and anticipating the outcome of pricing decisions.

Periodic reporting and net prices per customer / segment / channel need to be available so that the sales force can perform what-if analysis to guide them in offerings. Cost price evolution needs to be readily available and immediately shared with relevant pricing decision makers, who should in turn receive a signal to check sales price of particular items which had an increase/decrease in cost price. Price promotions need to be systematically monitored and discussed with marketing/sales to come to better insights for next promotions.

Need to evolve to a stage where permission to overrule prices in the system is very limited, and controlled/monitored by price management team. Root causes of price overrides need to be investigated to decrease occurrence.


Monitoring

Organisation & Governance

HighTech industry – gap analysis



Reality Ambition








Tendering 3,24 3,57

Figure 3: Gap analysis: HighTech industry






Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

0.330.80

0.710.82

0.760.57

0.830.57

Page 14 of 26


43% of HighTech respondents make use of tendering.

While about two thirds of the group indicate that they are satisfied with their current performance on tendering, the remaining third indicate that they still need to improve the following aspects during the coming 12 months:

Install a margin improvement plan with specific margin targets and responsibility for reaching it before the tender is submitted.

Apply an aggressive overall price strategy, taking into every item in the tender.

Use a formal life time value calculation when evaluating your tenders, taking into account year-end rebates and bonuses of sales team.

If you would like more information or to arrange an informal discussion on the issues raised in the EPP European Pricing Benchmark Study and how they affect your organisation, please contact:

Project Manager:Nicolene [email protected]

President & Founder of EPP:Pol [email protected]

Satisfied with current performance

Improve margin

Improve pricing strategy


HighTech industry – Tendering

mailto:Nicolene.Barnard%40pricingplatform.eu

mailto:pva%40pricingplatform.eu

Page 15 of 26


With sales in the automotive industry in 2013 at its lowest level since records began in 1990, according to industry association ACEA, there seems to be much more focus on pricing, not only at “finished good” level, but also on the aftermarket playing field.

77% have between 8-15 or more people responsible for pricing on a daily basis at worldwide level.

32% of respondents have more than 5 years of experience in pricing, but the biggest portion, 45%, have between 3-5 years of experience.

The majority, 81%, agree that a specific price optimisation strategy cannot be missed in their companies and these same respondents are also convinced of the important role played by big data analytics. As if to strengthen this point, their maturity scores show that price monitoring and reporting emerges as one of the key areas on which they would like to focus during the coming 12 months.




Automotive industry – observations

Price optimisation strategy is essential

Figure 17: Distribution of respondents within the Automotive industry

Figure 18: Distribution of respondents within the Automotive industry





18,18% 45,45% 0%


22,73% 45,45% 36,36%


59,09% 9,09% 63,64%


0% 0% 14,29%


18%

45%



23%

45%36%


and optimize


right prices

59%

9%

64%



prices

0% 0%

14%



revenue models

CHASM0%

Page 16 of 26


Move to a situation where permission to overrule prices in the system is very limited, and controlled/monitored by price management team. Ideally, overrule authorisations should be reserved only for strategic pricing decisions at director level.

Provide sales force with value argumentations per product(line), across each segment and decision making unit. Implement full and regular win/loss analysis and use it as input for new solution development. Ensure alignment throughout Sales, Marketing and Product Management by means of training on value pricing and value selling. Pay attention to ensure that discount structure does not trigger channel conflicts or grey markets. Eliminate unconditional discounts, replace by performance based incentives/discounts.

A better view on competitor intelligence would bring the Automotive industry a step ahead according to respondents. Information should be systematically gathered, monitored and translated into corrective actions or changes in pricing policy where necessary. Translate this info into a competitor attack plan. Monitor the results of any price promotions, share it with sales and marketing and develop new promotions based on the insights gained.

Organisation & Governance

Price execution

Monitoring

Automotive industry – gap analysis



Reality Ambition








Tendering 2,35 3,07

Figure 19: Gap analysis: Automotive industry






Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

0.711.25

0.941.11

1.231.08

0.950.99

Page 17 of 26


60% of Automotive respondents filled in the tendering section of the survey. Points for improvement during the next 12 months are:

Move beyond the philosophy of winning the tender first (price to win) and then looking at opportunities to increase the margin within the agreed price. Respondents indicate that they want to focus on having a margin improvement plan per tender in place before actually submitting the tender.

Build in regular account reviews to check the life time value of the tender.

Automotive industry – Tendering

Improve margin

Life time value review

Page 18 of 26


With its 12,4% of representation this is the third most represented industry in the survey, after Machinery Manufacturers and Automotive. It encompasses Medical Technology, Pharmaceutical and Biotechnology companies.

Approximately two-thirds of respondents for this sector have more than 3 years of experience in a pricing function, with about 20% of this group having more than 10 years of experience.

60% of respondents have pricing departments at a worldwide level that comprises more than 15 people.

The vast majority of respondents (93%) believe that a pricing optimisation strategy is a must have business initiative in today’s day and age and that this has to be supported by the appropriate big data analytics set up, though this appears to be a particular challenge for several firms.




Life Sciences industry – observations

3rd most represented industry in this study

Figure 21: Distribution of respondents within the Life Sciences industry

Figure 22: Distribution of respondents within the Life Sciences industry





20% 40% 6,67%


40% 53,33% 20%


33,33% 6,67% 66,67%


6,67% 0% 6,67%


20%

40%



40%

53%

20%


and optimize


right prices

33%

7%

67%



prices

7%0%

7%



revenue models

CHASM

7%

Page 19 of 26


The sheer complexity of the environment in which Life Sciences firms operate leads us to expect a much higher pricing maturity than what was measured in the PMI survey of Q2 2013. On the right we take a closer look at where these companies believe that they need to improve.

Improve monitoring of effects of price promotions. Respondents indicate that urgent action is needed on capturing competitive intelligence from scattered sources, and to improve accuracy of cost information and availability of this info to pricing team.

Per product launch, price elasticity research by means of advanced tools (e.g. conjoint) needs to be performed. Important here to note that 73% of the respondents are from the MedTech sector and 13% from Biotech. For the pharma respondents, this type of research is already used much more extensively. For all Life Sciences respondents, more attention to price positioning is essential. More specifically: draw up price/value maps per segment, and align with market strategy. They also need to gain a clear understanding of value components per segment and use them for value pricing.

Convince management to invest in pricing research & pricing software to take full advantage of pricing intelligence gathered for effective operational and strategic initiatives.

Monitoring


Tools & Systems

Life Sciences industry – gap analysis



Reality Ambition








Tendering 2,27 3,07

Figure 23: Gap analysis: Life Sciences industry






Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

0.790.95

1.231.37

1.221.20

1.271.13

Page 20 of 26


This sector, especially Pharmaceuticals, is quite well-known for its use of tendering in the sales process. 87% of respondents of this survey indicated that they use tendering. The aspects of the process on which they feel that most improvement is possible are:

The degree to which tender information is collected, compared, critically analysed and used in price setting for a tender.

Pay attention to the pricing strategy for tendering in general, and also look at a margin optimisation strategies per tender. More emphasise needed on margin targets and responsibility for reaching it before the tender is submitted. Margin targets need to take into account the life time value of the tender.

Tender information

Pricing strategy

Life Sciences industry – Tendering

Page 21 of 26


This is the most represented industry in the Q2 2013 survey of Pricing Maturity in European Organisations, with 28% of respondents classifying themselves in the machinery & equipment industry.

This is also the most realistic industry. Their perceived and actual pricing maturity is almost a perfect match at 2,06 vs. 2,08. Interestingly, they are also the most ambitions, with their desired end state after 12 months being 3,24.

5,88% of these respondents are already operating on level 3 of pricing maturity. They score quite high on price and policy setting, discount strategy, price execution and monitoring. Nonetheless, they are still striving to improve their operations across the scope of pricing activities in their organisations.

Half of all respondents in this sector, have global pricing departments with more than 8 persons.

56% of respondents have more than 3 years of experience in pricing, leaving a rather big portion of respondents with 2 years or less of pricing experience.




Machinery & Equipment industry – observations

Most realistic industry and most ambitious

Figure 25: Distribution of respondents within the Machinery & Equip-ment industry

Figure 26: Distribution of respondents within the Machinery & Equip-ment industry





29,41% 41,18% 5,88%


35,29% 52,94% 23,53%


35,29% 5,88% 70,59%


0% 0% 0%


29%

41%



35%

53%

24%


and optimize


right prices

35%

6%

71 %



prices

0% 0% 0%



revenue models

CHASM6%

Page 22 of 26


26% of respondents still work in Excel sheets with pricing know-how dispersed in the organisation, while 53% have moved to more centralised price and discount grids, linked to the ERP system which means that specific price reports can be generated in addition to financial reports. All these respondents feel that a move towards a pricing software solution, fully integrated in ERP and CRM is a step forward. The pricing software needs to be managed by the pricing team and used by whole organisation for effective reporting, monitoring, price guidance and deal making.

Similar to the Automotive industry, their biggest and most immediate challenge is to develop a system for their sales force to capture competitor intelligence effectively. In addition to that, they need to consistently measure effectiveness of price promotions. Ultimately their goal is to move away from price promotions towards value promotions to enhance value perception.

Pay attention to understanding the value components per segment and use it to determine willingness to pay. Better manage unconditional discounts by moving to a performance based system, preferably with off-invoice discounts. Perform price elasticity analysis, even if only via transactional price data analysis, it is better than not doing this important exercise at all, as the case is now with 58,8% of respondents.

Monitoring

Tools & Systems

Price setting

Machinery & Equipment industry – gap analysis



Reality Ambition








Tendering 2,24 3,27

Figure 27: Gap analysis: Machinery & Equipment industry






Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

1.031.15

1.411.22

1.171.15

1.191.17

Page 23 of 26


55,88% of respondents make use of tendering. These are the main areas identified by them for improvement during the coming 12 months.

Like most other respondents in this survey, very little attention is paid to the life time value of a tender customer. 47% of respondents do not measure life time value at all.

In most cases (53% of respondents), item selection is based on an exact match with what the customer asks. Sometimes (21% of respondents), alternatives with better margin are available and known by the person selecting items, but not always offered. One of the goals within the next 12 months according to respondents is to make sure that these margin improvement alternatives are always offered when possible.

Life time value

Margin improvement alternatives

Machinery & Equipment industry – Tendering

Page 24 of 26


The only B2C industry represented in this study, and remarkably, the industry with by far the lowest actual pricing maturity in Europe (according to the Q2 2013 survey). Interesting to note that respondents significantly underestimated their own pricing maturity.

40% of respondents have 8 or more people working on pricing in their organisations worldwide.

All respondents have 3-5 years of experience in their functions as pricing/revenue managers.

According to respondents, a price optimisation strategy and a strong data analytics system is much more than a “nice to have” business initiative. They all agree that it is of utmost importance during the journey to pricing maturity.

Since tendering hardly features amongst respondents of this survey, with only 1 person using it, this report will focus on some extra pricing performance gaps which respondents identified, instead of devoting a section to tendering as in the other industry reports.




FMCG & Retail industry – observations

Lowest actual pricing maturity

Figure 29: Distribution of respondents within the FMCG & Retail industry

Figure 30: Distribution of respondents within the FMCG & Retail industry





60% 100% 0%


40% 0% 20%


0% 0% 80%


0% 0% 0%


60%

100%



40%

0%

20%


and optimize


right prices

0% 0%

80%



prices

0% 0% 0%



revenue models

CHASM0%

Page 25 of 26


In 60% of the cases, the discount structure grew historically and is not monitored very well. This needs to be reviewed to make sure that there are no channel conflicts. Also, respondents indicate that they would like to move towards a more performance based discounting structure, eliminate unconditional discounts. Think, for example, of loyalty programmes etc. On the other side of the spectrum, they also indicate that price increases need to be better prepared, again in 60% of the respondents companies increases are poorly prepared and effects are not monitored.

Every single respondent from this sector in the Q2 2013 survey indicated that pricing know-how is stored in Excel sheets and dispersed throughout organisation. Next step for them is to centralise price lists and discount grids and link it to their ERP system to enable specific price reporting. Retailers are often drowning in the amount of data available to them, but they lack the insight into how to use it and the resources to help them move forward.

Develop and implement value argumentations to support the sales force and enforce win/loss reporting and analysis. Prepare and monitor the effects of price increases (and decreases) closely to improve future promotional efforts. To the degree possible, move towards an incentive system which is linked to target price realisation. Reduce deviation from standard contract terms by implementing and enforcing authorisation structure.

Discounting strategy

Tools & Systems

Price execution

FMCG & Retail industry – gap analysis



Reality Ambition








Tendering 2,00 3,00

Figure 31: Gap analysis: FMCG & Retail industry






Actual PMI score

0.00 1.00 2.00 3.00 4.00

Gap with Ambition

1.001.241.90

1.501.57

2.001.40

1.40

Page 26 of 26


80% of respondents admit that there is only limited management of product life cycles at their organisations, and that this is mostly not integrated in their pricing strategy. They often end up with obsolete stock.

Life cycle pricing needs to be focussed on, with the goal in the near future being to establish active fade in, fade out pricing strategies.FMCG & Retailers need to better understand the relation between perceived value and price. Price/value maps need to be installed per segment and aligned with market strategy.

Price elasticity needs to be explored and understood at least via transactional price data analysis, if not via advanced research tools. 4/5ths of respondents indicate that knowledge about the responsiveness of consumers to fluctuations in price is not readily available to the pricing team.

Product/price life cycle

Price positioning

Price elasticity

FMCG & Retail industry – gap analysis

Business

Pricing Maturity Report_All Industry Benchmarks