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Dr. Manu CARRICANODirector Pricing Center, EADA Business School
Director Research, Pricing Solutions Europe
THE RULE OF ALL RULES:“PRICING IS HIGHLY REWARDING”
Jan’00/Jun’11 analysis by
+ 90% (2000 – 2011)
+50% (2008 – 2011)
S&P 500 vs Pricing Virtuosos Weighted Index
Source: Compustat, F500 & S&P 500
Pluralitas non est ponenda sine necessitate
Plurality must never be posited
without necessityWilliam of Ockham
Transactional Data
Customer Data
Product Data
Transactional Must Have Data • Invoice Number/ Lines – Unique
identification Number
• Time (Year, month, day, time, etc.)
• Volume (Quantity)
• Price
• Levers
Customer Must Have Data• Customer number - Unique number
for each Customer
• Customer Name
• Segments (transactional)
• Geography (Country, Region, City, etc.)
• Related KPIs
Product Must Have Data• Product Number - Unique number for
each Product
• Product Name
• Segments (transactional)
• Brand
• Category
Start With Must Have Data…
… But do not forget scalability
ERP
Research
Socio-Market
Data
CRM
+
+Data from Pricing Optimization:• Predefined Calibrated Scenarios
• Optimal SO & Net Price points
• Competitive & Market DisruptionIntelligence
Transactional Pricing Analytics
Data from Value-Based Analytics:• Behavioral Segmentation
• Value Perception / Utilities
• Premium/ Elasticity / Market Response
Calibration: linking estimated price points to oberved price points
Premium
Premium
% V
olu
me
at
Ris
k%
Vo
lum
ea
t R
isk
Scenarios: Relate an optimal value at a certain stage
with dependent actions to be taken
Optimal
Condition 2
Optimal
Cost of Sales
Decided Sell-Out
Optimal
Condition 1
Optimal
Net Price
COGS
Gross Margin
Z (
Pro
fita
bili
ty)
Optimization: Identification of winning scenario among mutuallyexclusive / conjointly exhaustive options available
Learn how to track & document disruptions: Variance analysis is at the heart of Pricing
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
-250
-125
0
125
250
375
500
625
750
875
1000
Consolidated Crop Commodity Price Index ($/ton) BR Price variance without Gly (%)
SYN Price variance without BR and Gly (%)
t
Price Commodity Index
Price Variance BU 1
Price Variance BU 2
Learn about your own Pricing Power: Relate Environmental disruptions to predefined scenarios
Pricing Power is a copyrighted tool from
Learn how to Track Performance: Pricing Dashboards as a key element of change
ProfitabilityVolume
Gross Profit Margin
Net ProfitMargin
YTD Profit
Gross Profit Margin
Net ProfitMargin
$
SalesVariance
Gross SalesVariance
Net Sales Variance
PriceVariance
Gross PriceVariance
Net Price Variance
Pocket Margin
Variance
Other
MS
MixVariance
SoWSales Effectiveness
Premium
Price Volume
Elasticity
EfficiencyROI
PricingPower
Brand Equity
Competitiveness
PricingLeadership
Relative COGS