Refining Value-Based Pricing Creates Higher Profits
Maintaining profitability in a tougher market. In 2002, a global high-tech leader sought to identify opportunities for improving business performance in an increasingly competitive, commoditized marketplace. Management recognized it would have to diagnose both issues and opportunities within its sales and marketing organization and then develop and execute a new marketing strategy to position the company for long-term success.
Diagnosed issues and opportunities through the Web-based performance benchmarking tool, the Marketing Excellence Survey (MES®), Imprint assessed the knowledge and attitudes of as many as 2,000 members of the worldwide sales and marketing force. Results profiled individuals’ performance against their company, job function and the MES® database of more than 35,000 marketing professionals worldwide.
Identified need to improve marketing profitability and value-based pricing techniques organization-wide, as demonstrated by the MES® test results.
Customized and implemented Imprint’s Value-Based Pricing Workshop worldwide and companywide. This course has been held several years now and is still ongoing. It includes both instructor-led classroom sessions and e-learning sessions for senior executives to reinforce key aspects behind value-based pricing techniques.
Conducted regular manager interviews worldwide to assess pricing challenges. These interviews underscored that the business had to maintain and grow market share, revenue and profit in an increasingly commoditized global market. This feedback provided rich material for case studies and real-world examples that were integrated into the value-based pricing workshops.
Ongoing strategic guidance. Through an Applied Consulting Engagement, Imprint is continually working with this company on developing and fine-tuning a workforce development strategy. The aim is to strengthen and sustain marketing capabilities across the company and reinforce the value-based pricing techniques and strategies that Imprint has been embedding.
Imprint provided this market leader with valuable tools and strategies that have enhanced its long-term competitiveness. Marketing and sales processes and pricing strategies are now better coordinated across regions, enabling the pursuit and successful implementation of longer-term business strategies. Meanwhile, the sales and marketing organization’s tools and skills have translated into significant business improvements, including:
- Increased targeted market share
- Improved operating margins by $35 to $70 million over five years
- $3.5 million in incremental profit
- Significant profit saved by avoiding a price war
The tools helped to validate what solution we needed to implement to be most competitive. The Value Map is an easy tool to understand and works well as a practical tool to present to upper management.
I like the way that objectives, competition, benefits and price were tied together.
I feel that we have experienced significant breakthroughs. We now have a structured monthly pricing phone call where countries participate and address pricing issues. It has aided in setting the stage of thinking more long term and in a more structured manner.
The workshop opened my eyes and validated the importance of value when utilizing pricing strategies…. The examples and tools offered in the course were great. This was probably one of the best [company] classes that I have ever attended.
Diagnostics Assist Dell Team with Capability/Career Development
The Marketing Talent and Capabilities group led an effort to better understand the readiness of their marketing teams and their ability to execute Dell’s transformation strategy. The assessment sought to gain insight into their capabilities at a macro level, to share those insights with management, and to build targeted programs and curriculums to up-level marketing capabilities.
The goal was to ensure that marketers have the right functional, technical, teaming and leadership skills to build and activate differentiating customer solutions.
The marketing transformation effort lacked an agreed set of success measures and an understanding of competency gaps across the marketing organization. Without this baseline understanding, Dell was not in a position to track and monitor progress and to target competency development initiatives to support the organization’s transformation.
The diagnostic assessment helped Marketing Talent and Capabilities systematically identify, prioritize, and deliver improvements to marketing training and development programs. The identification of specific capability gaps helped all marketing leaders understand organizational strengths and gaps and the specific areas for development.
The Dell marketing skills self-evaluation tool was part of Dell’s enhancement of employee career development and an extension of Dell’s Marketing Career Development Guide. As part of the survey, individuals were asked the following questions :
- Do I have the right skills for my current job?
- Do I have the right skills for the job I aspire to do?
- What other jobs does my skill set match up with?
The tool allowed users to:
- Identify strengths and those skills that present the best development opportunities for their current role.
- Recognize the marketing skills required to develop for a potential future position.
- Assess their current marketing skills against those required for a future position.
- Identify those skills that present the best development opportunities for a potential future position.
- Identify a potential future position that fits well with current skills.
Customized Workshops for Improved Marketing Performance
Need to improve global marketing performance, despite technical leadership. A key business unit of a leading global life sciences company sought to strengthen its marketing performance. Specifically, it sought to capitalize more effectively on its distinct value propositions as its products’ technical advantage was becoming less differentiated.
Diagnosed potential issues. Imprint administered the Marketing Excellence Survey (MES®) to identify opportunities for improvement.
Helped identify strategic goals and objectives. Although perceived in its field as the market leader, the business unit aimed to become more “market forward” by actively defining and driving the market to maintain leadership.
Created curriculum tailored to marketing force needs. Based on the MES® results, Imprint customized its curriculum of instructor-led workshops. Imprint tailored the content and tools to the needs of the organization, including terminology, processes, and company- and product-specific case applications.
Ensured learnings were immediately applicable. The course material and its format were pragmatic, not theoretical, and immediately and directly applicable to the company’s business environment.
Consistent concepts embedded within marketing organization. Hundreds of marketing managers have attended these courses, thereby embedding the same critical concepts throughout the organization.
Formation of marketing strategies that drive business goals. By applying key concepts introduced by Imprint, managers say the business’ marketing and messaging decisions are based on solid concepts and a common language.
Great blend of learning material, business cases, personal experiences and humor.
[This] changes the way we think. Individuals with diverse set of backgrounds/responsibilities were able to come together and “see the light.”
The breakout sessions were educational and allowed open dialog to view differences and open our minds to new ideas and concepts.
Excellent examples used. Staying with a “case study” throughout and building on that in each breakout was excellent.
The whole process [demonstrates] a logical way to drill down to what is important in developing a strategy.
Applicable/creative and insightful tools.
I now see the need for much more competitive analysis.
Negotiation Skills Capture Value in a Mature Market
Pending spin-off amid growing global competition and changing market dynamics. The textile division of a major chemical company was preparing its spin-off into an independent subsidiary at a time when its trademark products faced growing competition from generic brands worldwide. Buyers, weavers and apparel manufacturers were also becoming increasingly sensitive to local and regional market dynamics, including the emergence of suppliers from low-cost countries offering high-quality garments at low prices.
Push to leverage brands effectively. The business sought new approaches to leverage its brand strengths, market access and market research capabilities in its direct-to-customer markets and retail/consumer interface.
Need for cohesive, culturally adaptable negotiation approach. The business recognized the need for common global sales and marketing principles to drive consistent customer messages and demonstrate a market-driving strategy across its operations in North America, Europe, South America and Asia. Meeting that objective would require a single-negotiation approach that accommodated differences in local culture and negotiating styles and enabled the client organization to capture the value premium.
Enhanced negotiation skills via educational program for sales and marketing managers and staff worldwide to maximize the effectiveness and profitability of the newly independent company.
Leveraged total product value, deemphasizing price as the primary negotiation component.
Embedded universal strategic negotiation concepts using standardized tools and frameworks to promote consistent messages to customers worldwide.
Ensured consistency across regions while accommodating local knowledge, culture and language.
Produced tools and materials to impart, measure and reinforce learnings. These included program materials; questionnaires to benchmark participants’ knowledge prior to and retention following the program; customized, region-specific cases for participants to practice the new negotiation framework; and intranet-based information reinforcing the program’s messages.
Successful quantitative and qualitative results achieved after only three months with a new negotiation framework that was:
- Responsible for winning business in two cases
- Used extensively in 22 negotiation sessions
- Greatly improved what had been a historically adversarial negotiation session
- Instrumental in six negotiations that accounted for the majority of the bottom-line impact
- Implementation of organization-wide best practices
- Senior managers measured on the negotiation program’s usage as part of their performance evaluations
- Met language and cultural needs
- Pre- and post-testing of participants
- Trained all account executives in one month
- Follow-up interviews three months after program concluded
- Negotiation process shared across the organization
- Improved mastery of negotiation terms, concepts and approaches, as per pre- and post-course questionnaire delivered over the intranet.
- Integration of options beyond price into customer negotiation sessions and creation of win-win results for both parties; this was identified as the most significant take-away.
- $17 million in new business were attributed to new negotiation framework, as per follow-up interviews with managers worldwide.
I am now looking for creative solutions and have parameters around my organizing process. I am more prepared, and the results show. I have used the tools 4-5 times and have closed all these negotiations successfully.
The difference with this training initiative was how well the learnings were integrated into the business. Leaders, managers, and individuals understood what was expected, learned new skills and how to integrate them, and then were held accountable. As training managers we talk about this but struggle to make it happen as effectively as possible.
We know that there are many factors that can be attributed to the success of new business but as leaders responsible for solid ROI, we are certain that driving this initiative has given us revenue several times over what we have invested in money and time. The results were immediate!
Thanks very much for a highly interactive and useful two days. I had expected a dry, financial modeling type of presentation, but you made it light, and even entertaining.
Strategic Positioning Turns Technology Start-Up into Market Driver
Positioning a new technology company with a novel product in a mature market. 5nQ, Inc., an early-stage healthcare supply chain optimization company, was attempting to position a novel Internet-based inventory platform in a mature segment of the hospital distribution market. The company therefore required a value proposition and market entry strategy that would resonate with a diverse target audience ranging from hospital administrators to investors.
Created a value proposition. 5nQ’s QSight franchise provided real-time inventory information at the point of use or sale in selected vertical markets where inventory visibility had historically been lacking. Imprint helped 5nQ define its positioning platform to appeal to end users and potential channel partners and place it above a noisy market of traditional server-based healthcare inventory solutions.
Provided strategic input. Imprint helped 5nQ define its target market and profile potential alliance, i.e. “go-to-market” partners.
Refined inventory tracking processes. Imprint provided input into the development of QSight’s Web-based methodologies tracking high-value inventory located near the point of use.
Helped increase 5nQ’s valuation. Imprint’s overall efforts helped 5nQ focus and maximize the value of its offering, i.e., basing it on the economic benefits QSight generated for target customers.
Attracted investor interest. 5nQ attracted several acquisition proposals that led to the eventual sale of the company to Owens & Minor, Inc. (NYSE: OMI)
Improved profitability and intangible value for old-line distribution company. Through its novel approach to inventory management and Web-based architecture, O&M’s QSight platform has become an internationally recognized standard for the management of high-cost healthcare inventories within hospitals. O&M has successfully optimized the QSight platform as a commercial business and internal supply chain services platform. Used in nearly 400 U.S. hospitals, and with more than 500,000 detailed patient encounter records to date, QSight has become the most detailed real-time comparative database on medical surgical product utilization in the United States. This eventual outcome was at the heart of Imprint’s market and strategy analysis for 5nQ nearly four years earlier.
Often the tendency of a young technology company is to undervalue its offering while overdeveloping its technology platform’s features. Imprint’s strategic processes and decision support steps clearly helped 5nQ, Inc. maximize its value and allocate its resources effectively.
By helping 5nQ, Inc. focus on [our] true value proposition…, we were able to crystallize our message, rise above the market noise created by competitors and stand out as a novel, valuable solution provider.
Thaddeus O. Mac Krell
Director, Business Development, Owens & Minor
Former CEO, Co-founder, 5nQ, Inc.
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