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.