Determining a clear market and pricing strategy is the basis for successful price management. The central cornerstones of price management are defined in order to produce guidelines for operational pricing. Nevertheless, many companies only have an implicit pricing strategy which is rarely written down. They are therefore lacking an important basis for aligning all their actions with the same targets.
One of the central issues of pricing strategy is the specific control of revenue and profit. Price management is a key driver for specifically controlling profit, revenue and volume targets for different business units and regions. This control tool has to be clearly aligned by the management. If used correctly, pricing strategy is an important management control tool for aligning single business units and regions with the companies’ targets. It is designed to integrate the following aspects into a consistent and strategic framework:
- Individual business unit targets (earnings, growth, revenue etc.)
- Company's (price) positioning
- Targeted price image
- Competitive behavior (e.g. price leadership and price dynamics)
- Target customer segments
- Customer expectations
During joint workshops with the relevant managers and the management board, we consequently derive the pricing strategy from the overall business strategy. In doing so, we jointly identify markets with strong potential, as well as the company's strengths and weaknesses in comparison to the competition. In this way, we create the basis for specific and differentiated price optimization measures in the following process steps.