Product and Price Management



From product portfolio to discount trap



The main task of product management is to manage the product portfolio

The probability of buying a product or service depends mainly on the price but also on its “problem-solving ability” for the customer.




Managing market-oriented product developments, market launches and the product portfolio should be the main tasks of B2B product management.

Price management for existing and new products or services is one of the key levers for increasing earnings. No other instrument works faster, more directly and is easier to implement. Nevertheless, price management is still neglected in many companies and some companies have more discount types than customers.

Don’t find customers for your products, find products for your customers

Seth Godin




Less often is more

Product Portfolio Management

Many companies have historically grown product portfolios that are no longer logical in themselves and should no longer be offered according to their life cycle. Learn more>>



You don’t introduce new products on the side

Product-Launch and Go-To-Market Plan

In order to assess the overall success and turnover potential for a new product or service, the question must be at the beginning whether a specific need of a defined target group will be solved. Learn more>>



How do I tell my customer?

Price increase concept

As communication systems become more interconnected, market transparency over prices, discounts and conditions increases. Learn more>>



Get out of the discount trap

Redesign price lists and conditioning system

On the cost side, companies are looking for every Penny they can save, but on the price side they throw that money out the window again: Price lists are simply continued linearly with a political percentage. Learn more>>



Haggling for success?

Price management and-strategies by product and market segment

Many companies have a historically grown discount and price condition system. By targeted analyses at the customer and product level identified misalignments on price and margin often can lead to quick profits. Learn more>>








Product Portfolio Management



Base for a professional portfolio management is a detailed portfolio analysis

Less often is more



Many companies have historically grown product portfolios that are no longer logical in themselves and should no longer be offered according to their life cycle.

On the other side, core areas or potential products are not sufficiently promoted and further developed, as the marginal products consume too many resources. The goal is to identify the optimal level of standardization.

By portfolio analysis, variant optimization, and portfolio management growth and profit segments can be defined and controlled in more detail, and this helps to increase profitability.

In addition to product-related sales it needs to be taken in account :

  • Contributions margins
  • ABC product analysis
  • XYZ classification (schemes of ordering)
  • ELA classification (life cycle)
  • STU classification (number of customers)
  • License income
  • Warranty costs
  • But also expert discussions with sales, controlling, service, technology and production as well as strategic aspects.

Consulting example “Building a Product Portfolio Strategy”

  • Product-specific segmentation and potential analysis
  • Portfolio analysis and valuation
  • Product value analysis, options for value enhancements, variant optimization
  • Development of portfolio goals and strategy
  • Portfolio cleanup (product exit action planning)
  • Action plan for new portfolio
  • Process determination and monitoring

© New Business Consulting GmbH







Product Launch and Go-To-Market

Plan



New product launches should be planned in a timely and detailed manner-including detailed competition and customer analysis

New products are introduced

not side by side



In order to assess the overall success and turnover potential for a new product or service, the question must be at the beginning whether a specific need of the target group will be solved. If this can be assessed positively, the probability of purchase (citing the target price) in the target group must be verified.

The development and marketing of new products or services does not automatically mean that a company is able to achieve a permanent competitive advantage if the other elements needed for competiveness are missing, such as:

  • If the sales system and sales channels do not match the product or the required standard of service
  • The market and potential customers are not sufficiently segmented and identified
  • The marketing and supportive actions are too poorly targeted

Successful new product launches are not created by the product or service alone. In addition, concepts for product design, marketing focus, sales channels, pricing, positioning and service are requested.

Such an overall approach must be implemented quickly and in one stroke in order to gain clear competitive advantages and a competitive lead. In addition, launches are independent projects that have to be managed based on the rules of project management.

Consulting example “Product Launch Plan”

  • Pre-phase (clarification of the probability of success)
  • Requirement specification (market data, target prices, relevant competitive products, assessment of “strategic fit,” evaluation of alternative product ideas)
  • Functional specifications (internal, technical implementation handing over marketing/product management to development)
  • Development
  • Testing phase
  • Preparation
  • Business concept
  • Design launch (Go-To-Market Strategy)
  • Preparation Market Launch Plan
  • Implementation market launch, handing over to sales

© New Business Consulting GmbH







Price Increase Concept



The announcement and implementation of price increases is a sensitive and difficult area and must be planned in detail and in good time

How do I tell my

customers?



As communication systems become more interconnected, market transparency over prices, discounts and conditions increases. Most customers also know the purchase prices for raw materials, energy and also the labour costs of their suppliers. So you can’t fool the customer anymore if you want to raise prices. It needs a clear strategy and, above all, communication and reasoning.

Consulting example “Price Increase Concept”

  • Careful timing of the announcement of a price adjustment
  • Type of communication (letter, email, personal)?
  • Who (board, sales manager, regional salesman)?
  • What data and facts should support and why?
  • What does the competition do?
  • What reactions from the customer can be expected, what is my strategy?
  • What customer-specific aspects speak against an increase (strong sales growth, upcoming large order, high number of complaints, etc.)?
  • Analysis of the possibility of a customer-value-oriented approach

© New Business Consulting GmbH







Redesign Price Lists and

Condition System



In many B2B companies, there are far too many different conditions and discounts. A logical and thoughtful system helps everyone.

Get out of the discount trap

On the cost side, the companies are looking for every Penny they can save, on the price side, on the other hand, they throw this money out of the window again:

  • Price lists are simply continued linearly with a certain percentage
  • Margin effects are not taken into account when setting prices (for example, because variable product costs are not known)
  • The prices ultimately realized and the list prices often have nothing to do with each other at all, as high discount rates up to 80% are not uncommon
  • In the case of multi-stage distribution channels, the excessive granting of discounts to distributors often leads to competition between manufacturers and distributors at the end customer.

Purposed-leading processes and the corresponding know-how help to increase conversion rates and to increase contribution margins sustainably In proposal-management and pricing there is an enormous potential for B2B companies, which unfortunately far too often is not used.

In order to determine the price readiness of customers for individual product features, the Conjoint Measurement Method can be used to work further.









Price Management and Strategies

by Product and Market Segments



Haggling for success?



Many companies have a historically grown discount and price condition system. Targeted analyses at the customer and product level often allow misalignment to be identified quickly and quick profits can be made. A systematic optimization of pricing in all areas creates clear and quickly realizable earnings enhancement potentials.

Price management covers the 4 areas of pricing strategy, product pricing, customized prices and price enforcement.

Current

measure

price strategy and processes

Pricing strategy and pricing processes are not in place, pricing culture is not anchored

Building a pricing strategy and processes

Product-Pricing

Prices are mostly cost-based. Country prices are controlled only to a limited extent.

Active value pricing and building an international pricing

Customer-Pricing

Condition system has grown historically and the conditions are not awarded in line with performance

Redesign of a condition system and introduction of a target price calculator

Price enforcement

Sales are not sensitized to price enforcement. He can decide too freely. Tools are not available

Introduction of a value selling tool and price monitoring. Set the price windows for the sales staff. Training.

Is price setting not very systematic and is more likely to be driven by one’s own assessment? Then, through systematic decision-making preparation and clear rules, pricing should take place. A pricing audit also quickly sheds light here and can serve as a basis for price process optimization.