Manufacturing pricing strategies
The company priced products at a premium level, increasing their price gap with the market over the years. Meanwhile, competitors introduced similar products at a much cheaper price.
A simple alignment could not be considered. A few scenarios and modelling of market reactions would only highlight how much this could damage the profitability of the business. In such situation, the priority is to increase efforts on market intelligence.
Market investigation included in depth interviews with distribution partners, survey to end-users, competitive benchmarking, mystery shopping and field visits with sales teams. In this case, we learned how high the price gaps could be and about acceptable price premium. We understood clearly where we were effectively losing volumes or putting market share at risk.
We could identify the real drivers accounting for the growing penetration of low-price products. We also assessed the relevance and accuracy of existing price responses. A detailed review of discount mechanisms and processes was conducted. We created a new market segmentation enabling a more tactical approach to pricing decisions and built a pricing tool enabling systematic review of performance and price change impacts.
Revised commercial strategy and pricing policy expected to preserve market share and revenues against competitors with 30% cheaper price points.