Increase of +75% in EBITDA while keeping the same level of sales, thanks to a new pricing strategy and an adjusted product offering. The new and consistent pricing process allowed the client to review and validate their offer, considering product relevancy within the market (customer demands, competition offer, and perceived value).
The client had a “cost-plus” pricing process which was not always consistent. By ignoring the shoppers’ perceived value of different products, the company’s sales staff found it difficult to justify the price positioning. It was also impacting the level of rotation (certain products could be underpriced as they could have a relatively low cost vs. the market-perceived value). Furthermore, in a tough economic environment, our client needed to maximize value captured from the market.
In order to adopt a coherent pricing methodology, an outside-in approach was performed. The objective was to understand existing gaps between market (competition offers, customer perceptions, moment of purchase) and its value proposition. This included both in-depth analyses of the market (shopper interviews, on-line surveys, and store staff interviews) and the company (management business vision, internal pricing process, costs identification).
Globalpraxis know-how, client knowledge, and ad hoc research made possible the development of a pricing methodology based on the product’s perceived value in the market. The client now handles their own pricing process, which both optimizes costs and maximizes margin while providing the market with a coherent value proposition.