Amsterdam Conference Recap - Day 3

Thursday, December 6th, Day Three, Keynotes & Breakout Tracks

Our keynote speakers were the perfect way start the last of out three pricing-filled days in Amsterdam.  Our first keynote, by Dr. Georg Tacke, CEO of Simon-Kucker & Partners, shared his recommendations for future pricing strategies and identified the most important challenges in the coming years.

Dr. Tacke highlighted the facts resulting from the 2012 Global Pricing Study conducted by Simon-Kucher &Partners in cooperation with PPS. He stated “Those Companies that have a professional pricing organization do much, much better than those who don’t” This fact-based statement brings great expectations for all of us involved in pricing. There’s a lot of work to do, lots of room for improvement and the need for professional pricers continues to increase.

We also heard from Laura Preslan, general manager of strategic practices for Microsoft, who allowed us to learn from her painful mistakes by sharing her strategies that worked, and those that did not.

Dr. Frederic Jallat from ESCP Europe shared with us compelling study results that explain why online price dispersion and price instability not only persist but have even increased over time.

Miguel Serrano, Director Global Pricing Strategy for Medtronic, Inc., told everyone in the room to become a pricing evangelist, to move, flight and talk to stakeholders in every country where your company has presence at. He also told the crowd how to achieve a long-lasting cultural change [on pricing] within the organization, which guarantees both the sustainability, as well as the returns on investment from creating a Price Management / Value Selling culture and practice.

After refueling energies the afternoon was packed with 12 breakout track options, lots of activity, learning and networking among the best in pricing in Europe and the World!

We shared some fun and laughs with all our exhibiting sponsors while they handed out fun and valuable prizes to the lucky winners, many walked out with iPad Minis, 3D Cameras, Vintage Champagne, and several other great prices.

We thank all our speakers for sharing such valuable pricing strategy knowledge.

Amsterdam Conference Recap - Day 2

Wednesday, 5th December 2012,
Day Two, Pricing Workshops and 4th Annual Global Pricing for Executives Summit

Nothing makes us happier than seeing hundreds of international pricing practitioners and executives gather together and share industry knowledge and lessons learned. Our Pricing for Executives Summit was a big hit, and participants walked away with practical, easy-to-use tips to improve their pricing strategies, like:

·         How to eliminate the discounting habit in sales people

·         Why pricing is the great opportunity of the recession

·         How to gather information needed to accurately price products

Participants also shared with us that the Summit’s format makes it very dynamic and engaging with 5 different speakers and closing with a presenter’s panel where their questions were addressed with tailored answers to their specific industries.

Stephen Martin led an enlightening workshop about Channel Pricing where he addressed the methodologies, tools and key issues about this complex and ever evolving field.

Paul Hunt and Fernando Ventureira had a massive workshop titled “Building a High Impact Pricing Strategy” they also added the effects of globalization, established markets vs. emerging economies and participants arrived to helpful conclusions about creating solid and enduring pricing strategies that are effective both locally and globally.

James Brown and Hong-May Cheng finished their 2-day workshop on Core Pricing Skills; this is a staple workshop that always draws great attendance in all PPS Conferences. The world of pricing keeps growing, PPS keeps attracting those new to Pricing and Core Pricing Skills is a must for anyone getting started in this fascinating and rewarding field.

The day started with a warm and cozy breakfast at the Sponsors Hall and ended at the same place with a lively networking reception sponsored by PROS, some cocktails and good food are always a good reward after a full-day of pricing training!

Check back with us tomorrow to read about the four great keynotes and twelve breakout tracks we have lined up for the last day of our conference.

Amsterdam Conference Recap – Day 1

Tuesday, 4th December 2012, Day one, first day of Pricing Workshops

We kicked off the first day of our European Pricing Conference with four information-packed workshops led by senior pricing experts from around the world – such a terrific way to celebrate Pricing Society’s 4000th member milestone as well.

We learned 17 different economic, behavioral and psychological influences to customer price perception from Tim Smith, PhD and managing principal of Wiglaf Pricing.

The workshop conducted by Daniel Soto-Zeevaert and Frank Korf was quite revealing about the depths and importance of using good data and the right balance between facts vs. experience to produce effective pricing decisions based on more reliable pricing analytics.

Speakers from Simon-Kucher & Partners were in charge of two workshops today covering the fundamentals of pricing during a 2-day workshop and also sharing their experience about B2B pricing where attendees learned about the impact of pricing decisions in oligopolistic markets and had a chance to deal with price elasticity before experiencing it the hard way in real market scenarios.

The sessions progressed just like the day outside, by mid-morning it was warmer and lively; a great array of food, tea, coffee and sweets kept everyone going strong until the end of the day, it doesn’t get better than that when it comes to learning about pricing! 

We’re looking forward to day two, and especially excited for our 3rd Annual Global Pricing for Executives Summit.

The Pains and Gains in Pricing

Guest Post by Stephan Liozu

A recent survey conducted with 557 CEO’s and Business Owners around the world showed they pay little attention to pricing. When asked how they would allocated 100 points of attention between cost cutting, growth programs and pricing initiatives, pricing received an average of 16 points. A vast majority of the time is spend on fixed and variable cost control (54%). Clearly, and even though they realize the power of strategic pricing, top executives do not pay enough attention to it. So what is behind this lack of interest and attention paid to pricing by top executives? I conjecture that this lack of attention primarily comes from the fact that the pricing function does not excel at identifying, measuring and communicating the business pains of poor or non-existent pricing management. The pricing function also has a hard time measuring the gains generated by pricing activities as well as calculating the ROI of pricing activities.

So here are some tips on how to get started and make progress with this difficult exercise.

1) Show the pains

Pricing professionals should spend more time up front identifying and articulating the pains relating to pricing. That can be done by conducting a pricing capability assessment and performing the fundamental pricing analysis: cost-to-serve, waterfall, pricing cloud, etc. These pains then have to packaged in a dramatic fashion with one or two critical numbers that might turn into a story hook. These numbers have then to be communicated inside the marketing and pricing organization without created tensions and rejection.

2) Articulate the gains

Obviously, once the financial and efficiency related pains are identified, measured and articulated, the next step is to evaluate the potential gains of investing in pricing. This remains a very difficult exercise. A focus on short term gains might be necessary to get some initial attention. Like in the Lean Six Sigma methodologies, quick wins are greatly appreciated by top executives as they have a tendency to focus on short term impact. That gives pricers an opportunity to get a foot in the door, to tell their story and to come back for more "face time" later.

3) Create a story

Once pains and gains are identified and somehow measured, the next step is to create a story. That story has to be adapted to the business context, the dynamics of the external environment, the culture of the organization and the management style of the top leaders. Story starts with a strong hook which in this case is the pains: “every year, our organization loses $1 million in profit due to poor pricing.” The hook grabs attention and creates the opportunity to give your one minute non-technical elevator speech. The message is to convince top executives what you can deliver for them in gains to help reduce the pains. That story should be repeated in business meetings, in pricing discussions, and might be translated into goals and objectives for the pricing team. The story has to be crisp, credible, well articulated and somewhat dramatic.

4) Be ready to compete internally

In an organization, you compete for attention. You also compete for human and financial resources. This competition is internal and consists of functions that are in the mainstream and are able to calculate their ROI very well. That includes R&D, operations, innovation, technology and IT for example. For them, calculating ROI and demonstrating payback is expected and second nature. It is therefore very critical for the pricing function to be able to do the same.

5) Keep It Simple Stupid (KISS principle)

Top executives are busy people who have a very short attention span. Therefore you might have to talk to them like as if they were a two-year old child suffering from ADD. It is recommended to keep the message simple, well articulated, and business like. If you manage to get 30 minutes of top executive attention, do not bore them with long analytical explanations, super technical pricing methods, or 30 pages of PowerPoint. Work on a very simple story line using plain terms. That might sound like: "We are currently leaving $2.5 million on the table by not managing our profit leakages and not fully capturing pricing opportunities. With an investment of $150,000, we could get some quick wins, get our company on the path towards pricing excellence while getting a payback for it under 2 years."

I do find it paradoxical that pricing is a very analytically focused function which is not able to calculate and articulate the ROI of programs and activities. This is why Dr. Hinterhuber and I are launching another short survey to explore more information about how the ROI of pricing might be better calculated and communicated. Please support our initiative by taking this short survey.

Here is the link: http://weatherhead.qualtrics.com/SE/?SID=SV_ezWVJUBYxXpYTiZ

An executive summary will be sent to you if you choose to participate. Thanks for the support.

Stephan Liozu (www.stephanliozu.com) is the Founder of Value Innoruption Advisors. He specializes in disruptive approaches in strategy, innovation and value management. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu.

What does it take to start your journey to Advanced Analytics? How can facts and numbers shape your pricing insights?

As many of our personal gurus have stated it the past, math will rock your world, and analytics is the new cool. So cool, actually, that the word is now being used and abused and many seem to lose track of what it actually really means. Our cozy pricing world is not immune to this trend, and we have enough material to spend days discussing about what it really means for us.

For example, did you ever stop to think for a minute that reporting hasn’t fundamentally changed since 1869? And there are no typos in this date; often we just keep applying the same old approach on a new medium, leaving untapped the incredible potential sleeping in our databases. Of course, “Advanced” analytics is something different, because it changes the game fundamentally. Or does it? And what type of skills does it require?

And when you start playing with the data you have available, what are the pitfalls to avoid? And with the plethora of data sources, software solutions, magical formulas and cutting edge processes, where should you begin your journey and what can you do with the data?

We started with a simple question: What information do we regularly use to make decisions, and how can we improve the insights by being a bit creative with analytics? The answer was as simple: we all have sales figures, an internet connection, and from time to time we get to do some market research. And with these three entry points, we want to show that it’s already possible to integrate pricing facts in your organization, and rationalize discussions and the decision making process.

After our extensive research and relentless passion for the subject, we came out with enough material to talk about this for a full-day. We selected real examples to illustrate our discussion; for example we will show you that the iphone did not, actually, make people smoke more. We will discuss why you should always build models, yet never trust them blindly, and realize why price elasticity is such a complicated thing to evaluate precisely. We will see how perceptions shape market reality and that failing to convert preferences to sales is NOT always a pricing issue, and why it’s a good idea to look for perception patterns before jumping to pricing actions. Finally, still with a real case to illustrate it, we will also see how you can run simulation and combine industry acumen with market data to set price strategies.

And we also found the best time and venue to share all of this with you! 

We called it  “Improve Your Pricing by Fact-Based Decision Making” and it will be a full-day live workshop on this subject conducted by Daniel Soto Zeevaert and Frank Korf from Deloitte; the workshop will be part of the PPS Annual European & Global Pricing Conference and Workshops to be held in in Amsterdam on 4-6 December 2012. For more information about this workshop and many other pricing training sessions please visit www.pricingsociety.com/amsterdam2012

Save the Date:
18-19 April 2013 - Singapore

Please mark your calendar and plan to attend the PPS Inaugural Asia-Pacific Pricing Workshops & Conference in Singapore on 18th – 19th April 2013. The event will take place at The Fairmont Singapore – Swissôtel The Stamford Hotel. You can learn the latest pricing strategies and tactics at the largest, most comprehensive pricing event of 2013 in the Asia-Pacific Region! The full program will be announced within towards the end of January 2013. Please stay tuned for updates. PPS delivers the best Pricing Training, Networking and Pricing Resources in the World. This conference will give you the necessary tools to deal with the current challenges and improve your company's profitability. We look forward to seeing you in Singapore! The Professional Pricing Society

Pricing Practitioners Speak! - PPS Conference in Amsterdam 2012

The 8th Annual European & Global Pricing Conference and Workshops
4-6 December 2012 Amsterdam Marriott Hotel

The top 3 reasons why pricers attend our conferences are:

1. Networking among peers
2. World-Class Pricing Training
3. Learning from other Pricing Practitioners

The list of pricing practitioners in this conference is extensive, but we want you to take a look at this impressive Pricing Practitioner's Track:

• Developing Strategy and Pricing by Country & RegionJim Rich, CPP. Director of Pricing, Spandex Group
• It’s Not the Pricing it’s the People: A Case Studywith Alistair Hands, Commercial Yield Director - Mainstream Tour Operations, Thomas Cook UK & Ireland
• Creating a Pricing Department in a Dramatically Changing Environment - with Eloy Sasot, Head of Pricing at HarperCollins Publishers

Revenue Improvement: Right Data = Right Pricing Decisions with Daniel Golik, Sr. Director of Sales Processes & Tools, DHL Express

Join us in Amsterdam and learn from the best in Pricing from around the World. All in one place, all from the World's most trusted resource in Pricing: The Professional Pricing Society.

We look forward to seeing you there!

Call for Speakers San Francisco 2013

Why You Should Seriously Consider Earning Your CPP Designation

Guest Post by Stephan Liozu, CPP

In 2009, I was proud to earn my Certified Pricing Professional (CPP) designation. I was first in ARDEX Americas to reach CPP status. Today, we have over 20 CPPs in the company and half a dozen more professionals studying hard to join the group. Today I am still very proud to be a member of an exclusive group of CPPs who have earned the right to place these three letters at the end of their names. The aim of this short paper is to share my views about the value of the CPP designation and why it is important to have more CPPs directing pricing activities in firms around the world. 

Over the past few months, I have spoken with many pricing professionals who were considering the CPP process and I have strongly encouraged them to attain their designation. I have no hesitation in saying that this is the only designation that can bring your pricing career and your company's pricing success to the next level. 

1) Unique Designation Known Around the World 

CPP is a unique designation that you cannot get anywhere else. The process is terminal, meaning that you have to pass the exam to obtain the certification, to be able to add CPP next to your name and to join the exclusive group of CPP pricing experts. The process is not just a training class. It is a professional process consisting of courses and workshops - including a thorough review of all pricing concepts and methods - which is punctuated by a comprehensive exam. As a business executive, I strongly believe in professional certifications versus regular executive education programs. Whether you pursue a Six Sigma belt or the CPP designation, it shows employers and peers that you are serious about professionalizing and improving your skills. There is no other pricing program in the world that can offer you this designation and this is why I obtained my CPP in 2009. 

2) Strong Knowledge Foundation 

The CPP program covers all necessary pricing curriculum, including the critical aspects of business profitability, organizational dimensions of pricing, and technological aspects of pricing. The overall content is rich in methods, concepts and theories that will equip you to make superior pricing decisions. 

While you can choose CPP online-courses and workshops that match your interests, challenges or learning objectives, the CPP manual is a set curriculum with 14 chapters covering pricing from multiple angles. These 14 chapters have been written by the PPS faculty and have been validated by some of the best practitioners and scholars in the field. The content of these chapters is regularly refreshed to properly integrate new concepts, theories and best practices. 

The CPP process gives you a strong pricing foundation in all important theories, concepts and methods in pricing and value management. You will learn the vocabulary and terms necessary to be fluent in pricing. At ARDEX Americas, we have used the CPP process to bring everyone to the same level of knowledge and vocabulary. This is why sales managers, financial staff, operations leaders and marketing professionals have become CPPs. We all speak the same language and can move faster in our pricing transformation towards pricing excellence. 

3) Access to the Best Experts in the Pricing Sphere 

While pursuing your CPP designation, you have the option to attend pre-conference workshops or online courses. In both cases, courses are given by world-class experts you might not otherwise have a chance to have access directly. These experts are the best brains in the pricing space and have strong connections with the Professional Pricing Society. New courses on relevant and innovative themes are added constantly and new speakers are added to the roster based on their skills and experience in the field. You will have access to unique content from the best consultants, practitioners and scholars in the world. You cannot get this level of content and access anywhere else! 

4) Very Flexible Process 

The CPP process is designed to be flexible in many ways. You can select workshops to interact with faculty and network with your peers. You might prefer to choose the online process and watch online courses at your own pace and anywhere you want. These courses are available on demand. You also have access to an expansive  library of content. I recommend to my staff to go through the process in 12 months. Some of them have done it in less and others in more. You can pace your CPP training to reflect the reality of your work and personal constraints. 

The CPP designation is earned. It is not a difficult process but it is not easy either. You have to take the process seriously and earn the right to place CPP next to your name. People often ask me how difficult it is or how much time it requires. I always respond by saying that I take everything I do seriously and give it 100%. The question is not how difficult it is but how valuable it is. I say without hesitation that CPP designation differentiates you from the pack and show that you are a pricing professional. Be bold, become a CPP! 

Stephan Liozu is President and CEO of ARDEX Americas, an innovative and high-performance building-materials mid-sized company located in Pittsburgh, PA. He is also a Ph.D. candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu or by visiting www.stephanliozu.com. 

4 Days Left Early Bird EXPIRES on September 7, 2012

PPS 8th Annual European & Global Pricing Conference and Workshops

 



Save the Date: 4-6 Dec. 2012
Amsterdam Marriott Hotel

Please mark your calendar and plan to attend the PPS 8^th Annual European & Global
Pricing Conference and Workshops in Amsterdam on 4^th – 6^th December 2012.

Once again PPS brings the biggest and most comprehensive pricing event of 2012 in Europe!

The full program will be announced within the next 2 weeks, stay tuned for updates.

This year we have an extended 3-Day Program including: 

Three Full-Day Pricing Training Workshops on 4th December One 2-Day Pricing Training Workshops on 4th-5th December Three Full-Day Pricing Training Workshops on 5th December Five High Level Executives leading the Global Pricing for Executives Summit on 5th December 2012 Four World-Known Keynote Speakers on 6th December Twelve Breakout Sessions divided in three Tracks Women in Pricing Luncheon on 6th December

The best Pricing Training, Networking and Pricing Resources within your reach. This conference will give you the necessary tools to deal with the current challenges and improve your company's profitability. We look forward to seeing you in Amsterdam! The Professional Pricing Society

Orlando 2012 Fuehne-Collins One Day Workshop PPS 23rd Annual Fall Pricing Workshops & Conference

The New Pricing Imperative: Own the Disruption - PPS Pricing Conference - Orlando 2012

Early Bird Limited Time Offer

PPS 23rd Annual Fall Pricing Workshops & Conference One of 11 Compelling Workshops Offered

PPS Announces the 23rd Annual Fall Pricing Workshops & Conference

Winning the Profits Game!

Save the Date--October 23-26, 2012

Early Bird Registration is OPEN NOW! 

Omni Orlando at ChampionsGate Hotel
The best and largest pricing training event is approaching!

The Fall Conference will get you in the Profits Game.  You will get the insights and strategies to make your organization highly productive and profitable.

The Workshops & Conference complete agenda will be released very soon so you can make your workshop(s) selections and map out your tracks to make the most of your educational experience with us!

Join us in Orlando and learn all the right moves to Win the Profits Game!

www.pricingsociety.com/orlando2012

Pricing Myopia

Guest Post by Chris Provines from Holden Advisors

In 1960, Theodore Levitt wrote the classic Harvard Business Review article Marketing Myopia.  It’s about how companies miss growth opportunities by taking the wrong perspective.  Levitt provides many examples of missed opportunities caused by companies defining their business too narrowly.  Usually, it is because they see their business as selling products and not solving customer problems.  It’s the failure to see the big picture that leads to wrong decisions and missed opportunities.

Myopia in business is about focusing too narrowly in thinking or decision making.  Pricing professionals in B2B markets can often suffer from a form of myopia.  I call it the “Pricer’s Myopia.”  Honestly, I have to admit that I have, from time to time over the years, suffered from this terrible affliction.  Pricer’s  myopia is a condition where you assume that fixing the company’s pricing strategy, price setting and price management will solve all the pricing problems.  It is also a mistaken belief that what a customer pays equals their “willingness to pay” or how much they “value” your solution.

There’s one big missing piece from this myopic view – the sales force.  If you sell products and solutions through a direct sales force, your ability to capture price often depends in large part on:

• The sales team’s ability to communicate value
• The negotiating skills and ability of each individual salesperson

In the age of the professional procurement organization in many businesses, selling in a B2B environment has pushed and tested the sales team like never before.  Salespeople are often outmatched by highly trained negotiators who have an entire bag of tricks to deploy.  The result is eroding prices, increasing requests for price exceptions, sales force frustration with price levels, and conflicts between pricing and sales.

As a former procurement person, I can tell you firsthand that what a company pays for your product or service is rarely their “willingness to pay” or how much they “value” your offering. Professional procurement has learned how to pay less and get more, and often buy far below their walk away point.  The actual price paid is more a function of the skills of the salesperson to sell value and negotiate.

So the next time you feel Pricer’s Myopia coming on, you need a dose of sales:

• Go and co-travel with your sales team.  Ride with the very best and the not so best salespeople in your company.  Ask a lot of questions, and have some fun.  It’s certainly more fun than sitting at headquarters looking at spreadsheets.  See how the salesperson brings value to the customer.
• Participate in customer negotiations.  Ask to get a copy of the negotiation plan (see if one actually exists!).  Ask the salespeople when was the last time they received negotiations training.
• Go look at the sales tools and collateral provided to the sales team.  Is it value based, or laden with features?  Would you feel confident about defending the company’s value with the tools that are provided?

Don’t miss pricing opportunities by being myopic.  In all my experience, I have always found that good salespeople are usually high achievers and big believers in self-improvement.  Selling is a tough job.  Give sales the help they need so that they can help you in the last mile of price improvement.

Guest Post: The Need for More Academic Research in Pricing

Guest Author: Stephan Liozu 

In recent publications, I suggested that the pricing field is under-researched and under-published compared with other elements of the marketing mix. Empirical research from McKinsey & Company reported by Clancy and Shulman in 1993 shows that less than 15% of companies do any systematic research on pricing. In 1996, Malhorta conducted a study on the nature of published marketing articles that concluded that less than 2% of all articles published in major marketing journals cover the subject of pricing.

More recently, a group of dedicated scholars conducted a review of the nature of 1,900 pricing-related papers published in the top 20 marketing journals over the last 30 years. Yes, some people are dedicated enough to conduct these types of analysis and publish their findings. While 1,900 journal articles sounds like a lot, only 106 of these papers related directly and exclusively to pricing strategies and tactics as well as to price–quality relationships. One hundred six papers published over 30 years in the top 20 academic marketing journals. That does not sound like a lot to me. Herein lies the main problem: not enough high-quality academic research directly related to pricing is conducted and published in top marketing journals. You might ask yourself: why should we care? Let me tell you why.  

Consultants Do Not Conduct Fundamental Research 

Let me first say that consulting research helps in many ways. It is descriptive, timely and provides snapshots of pricing practice. Consultants have access to customers and prospects, and build survey questionnaires to satisfy their need for innovation and to investigate potential trends that might enhance their pricing consulting practice. For the most part, however, consulting companies do not produce explanatory models linking variables to potential performance outcomes. Their research is sometimes qualitative, is anecdotal and lacks statistical robustness. From these surveys, one cannot draw new theory or claim significant discovery that will advance the field of pricing.

Theory Building in Pricing 

Theory is built through a thorough and transformational research agenda. Getting published in top marketing journals can be a very difficult process requiring multiple iterations of the paper, the analysis and the research framing. Because papers undergo blind peer review by top pricing scholars, their research frameworks, methods and findings are profoundly challenged. Theory is built over time. Theory building is incrementa. It happens when new research builds on past research, contradicts past research or proposes another angle to it. In the pricing theory space, little of that has happened since the golden years of Nagle, Monroe, Anderson, Noble, Gruca and Cressman. Recently, thanks to your support and to support from the PPS, we have been able to conduct academic pricing research on a variety of topics. We hope that our papers might survive the grueling review process.

The Bridge Between Pricing Theory and Practice 

It does take time to build theory in academia. I think it is a journey and not a destination. It is real, hard work that requires patience and resilience. Besides the recognition in academic circles, the exciting outcome to generating knowledge and theory building is to see them used in practice. For example, it took decades of research supporting and contradicting the positive influence of firms’ market orientation on profit performance, but eventually, theory-based knowledge was moved into practice, and firms embraced a market orientation. Could we envision a similar outcome for the study of value-based pricing and its impact on firm performance? Value-based pricing has been linked to superior firm performance by many consultants. However, that link has never empirically validated. It is time for our profession to conduct such a study so that we can convince top executives to embark on the pricing transformation from cost to value.

Please Join the Next Wave of Exciting Academic Research 

In 2011, the Professional Pricing Society supported my Ph.D. academic research process by circulating an electronic survey to their current and prospective members. We were able to use 748 complete surveys out of over 1,200 total responses. But given our less than acceptable response rate, the chances of our results being published in a top marketing journals are slim. At the same time, a consulting company gathered 3,000 responses from their annual pricing survey. I was puzzled by these statistics. I give a lot of credit to the Professional Pricing Society for embarking on more academic research that will hopefully lead to new knowledge and theory. The profession needs it to make sure pricing gets its well-deserved place at the marketing table. It is time to bring new, robust empirical findings to the world so that pricing practitioners can benefit from them in their daily work. It is time to bring the pricing profession to new heights and to reach the next frontier.

At the end of May 2012, we will launch another academic research project on the topic of change management. We would like to ask for your support in making this research a successful endeavor. We will all benefit from that. Thanks in advance for your support.  

Stephan Liozu is President & CEO of Ardex America Inc (ardexamericas.com), an innovative and high-performance building-materials company in Pittsburgh, PA. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu.

Guest Post: LeveragePoint Adds Value to B2B Pricing

Guest Author: PJ Jakoveljivic 
Intro: Technology Education Center's (TEC) PJ Jakoveljivic is a well-known and astute software analyst who covers pricing software platforms and systems. He recently conducted an interview with Steven Forth, CEO of LeveragePoint, that focused on the separate, but complementary, roles of value management and price execution. An excerpt of that interview is below. Other articles by Jakoveljivic can be accessed at http://blog.technologyevaluation.com. 

PJ: Why do you believe that a value-based pricing approach is better than segmentation on customers’ willingness to pay (WTP)/sensitivity to price?

SF: Value-based pricing and value-based selling are focused on the customer’s business model, not the seller’s historical pricing data. This focuses the seller on the customer and how the solution helps the customer, which is the best way to understand customer needs and business requirements, built trust, and justify a price premium.

Value-based pricing recognizes that the customer has alternatives, i.e., competitors, internal solutions, doing what they do now, even doing nothing. Value models include these alternatives as a reference price and formally model the advantages that the alternative may have. Acknowledging the value of alternatives builds trust and allows sales to deal with price objections more systematically.

Value-based pricing is outward-facing and depends on customer and competitor data and not on internal legacy data. This makes it much more effective in addressing changing market conditions where historical value and pricing relationships are being disrupted, for entering new markets, and for setting the price on new products. Finally, value-based pricing builds a collaborative and mutually supporting relationship between pricing and sales organizations. Instead of pricing analysts telling sales reps what the price should be and sales pushing back or defaulting to undisciplined discounting, it gives these two key business functions a framework and meaningful customer and competitor focused data that can be used to optimize pricing and messages.

PJ: What are the traditional hurdles to better pricing software adoption and how can they be overcome (sales folks’ anxiety, general unawareness of the potential benefits, companies being secretive, etc.)?

SF: Our entry point into most large companies is the pricing function, but in the pilot process we develop cross-functional teams and ensure that these teams get to use the software and directly experience its power. The VP of Sales and the VP of Product Development is our ally in winning the sale and driving adoption. At this point, companies are adopting value-based pricing software for the following two main reasons:

1. They want to do a better job of pricing new products or new markets and segments. To that end, value-based pricing software provides them a way to link price to differentiated value, which is essential if they are to capture their investment in innovation. 
2. They want sales to negotiate prices based on the value to the customer rather than defaulting to discounting or basing price targets on “willingness to pay” as customers and sales people are skeptical about claims coming out of black box software. 

PJ: What motivates customers’ product managers to act as advocates as well? (I understand why sales folks would be)

SF: Product development has learned to think in terms of how product features provide customers with benefits (feature-to-benefit mapping, which is something for which we provide explicit support). But in today’s competitive markets this is not enough. In the B2B space, economic factors loom large in the buying process and product managers have to go beyond benefits and link features and benefits to differentiated value.

If a feature does not either provide a differentiated value or eliminate the differentiated value of a competitor then it should not be developed at all. Product managers have to make many trade-off decisions. A feature may deliver differentiated value, but how much and for which sectors of the market? The holy grail for product management is to focus resources on those feature sets that deliver the maximum differentiated value for the lowest cost to develop and the lowest cost to serve.

Product managers also need to think in terms of the whole solution – what is the package of goods and services that the customer needs to maximize differentiated value and how much will it cost to deliver this. Value-based approaches help product managers think through trade offs. Companies using value-based pricing are able to launch products at higher prices and actually win those prices in negotiations.
Value driver and data libraries that are developed as companies use pricing software platforms provide an important source of customer and competitor information that are valuable to product management. The product increases in value over time. Its ability to share resources and collaborate multiplies that value.

Value-based pricing is a standard part of many of the stage-gate processes used in new product development and introduction (NPD&I) at many companies. Companies want to ensure that what they are developing will have a differentiated value and will sell at a price premium that will enable them to get a high return on investment.

PJ: Competitive offerings are important. But what if both the company’s sales reps and competitors’ folks are out of touch with what the market can bear (i.e., WTP)?

SF: You need to know the next best competitive alternative as this establishes the reference price. If you have a differentiated offer you provide value above the reference price, but the price for the commoditized part of your offer is set by the market. The next best competitive alternative is sometimes a competitor, but it can also be an "internal option" (make it in-house) or even “doing nothing” (and even doing nothing can have a cost). The problem with WTP is that it does not parse out into actionable information for sales. Sales force has to know why different segments have differing willingness to pay and not just that they have them. Part of the sales process should be to uncover the next best competitive alternative, and most prospects will share this with you or it can be inferred from an request for proposal (RFP)/request for quotation (RFQ). The customer is often coy (or misleading) on cost, but a good pricing team invests time in understanding the competitive alternatives and how they are priced. Pricing cannot be purely inward focused on legacy transactional data. It must look out to competitors and customers.

PJ: How does segmentation come into play with value based pricing?

SF: In regards to segmenting using WTP, it is actually quite straightforward. You are basically trying to find groups of customers that show the same demand elasticity at the same price levels. You then define these as a segment. Normally you would also layer in your price waterfall data so that you could create a grid with one axis being demand elasticity and the other being the components of the price waterfall such as cost to serve, shipping costs, etc. Personally I don’t think this is a very good approach for most companies. If I was putting in place this sort of segmentation, I would want to first test for any legal issues as my understanding is that in the US there are restrictions on selling the same thing for different prices. But more to the point, I think this approach does not help understand the customer or why the willingness to pay differs. Segmentation is most useful when marketing and sales can use it to execute, and I think that generally requires insight. The most powerful segmentation has the following three axes:

1. Key value drivers 
2. Buying process 
3. Cost to serve (or, in some cases, by cost to serve plus customer acquisition cost) 

PJ: How applicable is value-based pricing to selling configurable products with multiple options?

SF: For configured products, the standard approach is to build a large value model that supports the different configurations. Depending on your business process and how involved pricing is in individual sales one can then either use the “save as” feature and make a new value model for the case or have sales reps turn value drivers on and off and tweak parameters. We have heard from some customers that the sales force must be able to build new value models and we are looking into accelerating development in this area.

The full interview, as well as a link to Part I of this analysis, can be accessed at http://blog.technologyevaluation.com/blog/2012/02/08/leveragepoint-adds-value-to-b2b-pricing-%E2%80%93-part-2/.

Getting Started with Pricing Does Not require $$ Millions!

Guest post by Stephan Liozu

A commonly held belief that emerged from our research journey is that pricing is expensive, requires tremendous resources and is only for large firms. This is also one of the most commonly known pricing myth out there! Au contraire! There are several steps in the pricing maturity model whether you consider the PPS model, the SPMG model or Pricing Solutions model. You have to start at level 1 and move up the maturity levels. And yes at some point getting serious with pricing programs and orientation will require significant investment and sweat equity!

Firms and their managers find many reasons why not to get started with pricing. Typically they relate to lack of time and the cost required to put pricing systems in place. We propose that, to get started, you can follow some of simple steps that can make some quick impact, get the organization started and raise the visibility of pricing within the marketing and finance processes:

1. Create a pricing council that meets every month just to discuss price trends, competitive pressure, and new-product pricing prior to launch. Invite your marketing, sales, and finance leaders and champion the process. Cash Expense = $0.


2. Buy several copies of the best pricing book and give it to your key staff and members of the pricing council to read. Then meet to discuss what you learn, what you can quickly adopt in your firm, and what the gaps are. Cash Expense = $500.


3. Send one or more of your marketing managers to a pricing conference held twice a year by the Professional Pricing Society. There you will learn from the best, meet top pricing professionals and get lots of insights. Cash Expense: $2,000 (PPS proposes some early special deal registration such as buy three get one free).


4. Take your best costing or financial analyst and give him or her responsibility to apply the basic techniques you will have learned in the book and at the conference. Cash Expense: $0 incremental (already part of your fixed cost).


5. Join your regional/local Professional Pricing Group. These groups gather pricing and marketing professionals from your region. We meet twice a year, share best practices, and have fun. Cash Expense: $100 in gas and food.


6. Join all pricing groups on Linked In and leverage the expertise online experts and practitioners. Cash Expense = $0.


7. Register to free webinars from pricing software firms, consulting firms or register to the PPS Core Pricing Skills online Course. Cash Expense = $400.


8. Search the web using Google document. There is a gold mine of information out there from PowerPoint presentation to YouTube videos to case studies. Read, read and read more! Cash Expense = $0.

There you have it. You are at Level 1 of the pricing-maturity process. You have spent $3,000 in total to get started. You are already doing much more than that average small- to mid-sized firm out there. You are on the road to your pricing transformation. The critical thing in this beginning step is to keep it simple, to not overwhelm teams with heavy-duty analytics and to pursue some quick wins. Do not yet engage the conversation on pricing orientation and the difficult subject of value-based pricing. Establish basic process and programs that get pricing activities off the ground: pricing cockpit, pricing cloud, waterfall analysis, customer profit analysis, cost to serve analysis, price deviation analysis, etc. Again, keep it simple!

We, at ARDEX Americas, stand between Level 3 and Level 4 of our maturity model. Complexity and cost increase with each level. What you want to do is to find the level that suits you, your industry and your goals. Our 2010 qualitative research with 15 small and medium industrial firms showed that 11 out of 15 firms did not have a pricing function, did not manage pricing formally and applied "bricolage" when dealing with pricing issues. There is still a belief in numerous firms that pricing can be managed by being fragmented, reviewed once and a while, left to the sales force to manage or that market set the prices. A staggering fact!

Be bold! Join the pricing revolution and embark on the journey to pricing excellence! Price = $3,000, Value = Priceless!

Stephan Liozu is President & CEO of Ardex America Inc, an innovative and high-performance building-materials mid-sized company located in Pittsburgh, PA. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu.

Last Chance! Early Bird Offer ENDS This Friday! PPS Spring Pricing Conference Chicago May 8-11 2012

Drive Results! Learn How to Motivate Your Pricing Department to Drive Excellent Results,with Laura Preslan from Microsoft.

Save!Bring a 3rd person at NO EXTRA COST! When you and another pricing colleague book your attendance.

Join us in Chicago and learn The Art & The Science of Pricing, all in one place, all from the World's most trusted resource in Pricing: The Professional Pricing Society.

Increasing Consumer Prices: Proceed with Care

Business leaders don’t have to look very far to see consumer outrage at companies like Netflix and Bank of America for inadvisably boosting prices and adding new fees. Before increasing prices, companies would be well served by taking the time and care needed to understand which customers value which products and services, their price sensitivity especially given the current economic conditions, and the competitive landscape.
The Netflix strategy to raise prices – to the tune of 20 to 60 percent across the board – was under the guise of continuing its DVD delivery service while it invested in building its media library and delivery services. In the company’s explanation of its new business model – separating streaming content (Netflix) and DVD delivery (Qwikster) – it proposed that customers would prefer to buy services a la carte.
So rather than continuing to charge an extra $2 per-month add-on for DVD delivery, Netflix opted to charge for the delivery methods separately. Outside observers believe that insufficient research was done to determine perceived customer value and valid price points for service offerings.
The outcry over the price increase and the division of the services resulted in a mea culpa from Netflix’s co-founder and CEO Reed Hastings – he sent an email to the customer base apologizing for the company’s perceived lack of humility and respect in announcing the new business model. But many customers weren’t appeased, and despite the reunification of the streaming and DVD services under the Netflix name, more than 800,000 subscribers left the service, and stock prices have plummeted by two thirds in the wake of the news. Some pricing experts argue that losing an estimated three percent of a customer base in exchange for the remaining 97 percent paying 20 to 60 percent more is a profitable decision.
But, as the company’s decline in stock price and dreary forecast for Q4 2011 performance proves, Netflix pricing strategy appears to have backfired, regardless of the justification behind it. With the benefit of 20/20 hindsight, what could Netflix have done to more effectively increase its prices? What can your company do as it contemplates a similar move:

1. Conduct an in-depth pricing analysis. Take a multi-dimensional deep dive into past transactions and use market response models to determine which services drive revenue, which customer segments value which services the most/least, and how much they would be willing to pay.
2. Incorporate market intelligence. Today’s consumers are constantly changing what they value, how they buy, and their relationships with their vendors. Invest in external market research to better understand consumer behavior, competitive pricing trends and market surveys.
3. Fine tune market segmentation strategy. Leverage the intelligence gained from internal pricing analysis (e.g. price elasticity models) and external market intelligence to iteratively develop more granular market segments. Determine goals for each segment that factor in revenue, profitability and market share.
4. Strengthen the pricing strategy. Combine internal and external intelligence with refreshed market segment strategies to develop value based pricing. Create special offers or bundles and promotions that are better aligned with customer thinking.
5. Test pricing changes with multiple ‘what-if’ scenarios. Incorporate potential pricing change options into several ‘what if’ scenario plans. Test each scenario by varying sales and cost results; analyze and compare the results of each to segment goals.
6. Limit price increases to test market segment. Select one or more likely scenarios and test market price increases and communications strategies in small target segments. Be prepared to incorporate customer feedback prior to implementing across the board.
7. Continue to monitor customer transactions and market intelligence. Conduct analysis on a regular basis and/or ad hoc as conditions change. Remain connected to the customer and anticipate competitive moves.

Despite the current economic environment, companies may well need to increase their prices across the board. The learning here is to develop a market-oriented plan, take advantage of industry best pricing practices - and potentially information technology solutions - to fully assess the situation, communicate well and proceed with care.
Article by: Jane Biddle - Industry Consultant Vistaar

PPS Conferences Post Record Attendance Numbers in 2011, Notably Among Young Professionals and Female Pricing Executives

PPS Conferences Post Record Attendance Numbers in 2011, Notably Among Young Professionals and Female Pricing Executives



The Professional Pricing Society (PPS), the world's only professional society dedicated to pricing education and training, is proud to announce that the 2011 Pricing Conferences, held in Chicago, Las Vegas and Barcelona, cumulatively posted record attendance.
Each conference was among the largest events of its kind in PPS history. Significantly, attendance was notably high amongst young pricing professionals and female pricing executives.
These numbers reinforce the rapidly growing influence of the pricing profession worldwide and the demand for the relevant, timely pricing education and training provided by PPS.

PPS ANNOUNCES THE 23RD ANNUAL SPRING PRICING WORKSHOPS & CONFERENCE MAY 8-11, 2012

Join us in Chicago and learn The Art & The Science of Pricing.

After several months of preparation, planning and discussions we are proud to announce the official agenda for the 23rd Annual Spring Pricing Workshops & Conference in Chicago - May 8-11 2012.

This is our largest and most complete Pricing Training offering ever. We have a total of 10 Workshops for you to choose from, 5 world-renowned Keynote Speakers and 18 Specialized Sessions divided in 4 different Tracks.

World-Class Training

Networking

Pricing Resources

www.pricingsociety.com/chicago2012

Guest Post: Pricing Skills Today & Tomorrow

by Stephan Liozu of Ardex America

In a recent published paper, I reported that only 9% of business schools in the United States offer a dedicated elective in pricing. Only a few reputable business schools also offer an executive education program dedicated to pricing strategy and tactics. The lack of adoption of pricing science in the business curriculum represents a strong barrier to the proliferation of pricing knowledge in the executive suite. A less-reported topic, though, is the changing skills required for tomorrow’s pricing professionals in the face of rapidly changing technology. When schools do offer a pricing elective, the focus of the curriculum is heavily geared towards analytics, tactics, economic models and sometimes pricing strategies. Missing from the curriculum are important aspects of pricing in the areas of organizational theory, behavioral science and the psychology of pricing.

In November 2011, I was invited to be the moderator for a pricing panel held at the University of Rochester’s Simon School of Business. This panel was held for members of the Pricing Club, students of the Pricing MBA, university faculty and anybody desiring to attend. Most of the discussion that day focused on analytics, tools and models used to optimize pricing decisions. I was able to move the conversation to the topic of the balanced skill set required from tomorrow’s pricing professionals. My point was that rapid and breakthrough technological changes (cloud-based software, integrated systems and predictive analytics) would "take over" a significant portion of the analytical work, allowing pricing professionals to pay much more attention to other critical aspects of value and pricing management(See Figure 1: Pricing Today & Tomorrow).

Therefore, the skill set of tomorrow’s pricing professionals will require pricing "geeks" to become sleeker in the areas of organizational transformation, change management, and psychology of pricing. In the figure below, I propose a list of "left brain" skills versus "right brain" skills that will be required in the future (See Figure 2: Left Brain & Right Brain Skills).

Many consultants, practitioners and scholars report the organizational journey that is required to bring firms along the pricing maturity model. Pricing professionals need to act as change agents who can influence internal stakeholders to support pricing projects. They need to be able to adapt their language to their audience and significantly influence the level of organizational buy-in. When in positions of leadership, pricing professionals need to share vision, act with confidence, demonstrate mindful scanning and problem solving, and create a strong teamwork environment. As the complexity of data increases along with environmental uncertainty, pricing professional must be able to mindfully manage complexity and propose simple solutions. Most important of all, pricing professionals must be able to tell stories and create conversations with sales representatives, customers, and other relevant stakeholders. This particular skill is highly relevant during the process of economic value estimation when subjective value drivers are discussed and debated and when the goal of the conversation is consensus on what value means. We experienced that firsthand during the building of our first value model using the LeveragePoint value-based pricing platform. The conversation was led by our Pricing Manager and included regional sales managers, business managers and myself. This was a very useful exercise for all of us, as it uncovered differences in language, meaning and expectations. Working in a collaborative manner on the LeveragePoint platform removed barriers, forced a common language and allowed us to reach consensus faster.

The prevalence of skills leading to superior emotional intelligence will force a change not only in the pricing curriculum in business schools but also in training programs inside corporations. I recommend greater emphasis on these “right brain” skills in MBA courses, in the Professional Pricing Society certification process and also in consultants’ training modules. Tomorrow’s pricing professionals will rely on advanced technologies and at the same time will act as mindful organizational actors to lead firms through their transformational journeys.

Follow me on Twitter (@StephanLiozu) and on LinkedIn to continue the discussion. Price well!

Stephan Liozu is President & CEO of Ardex America Inc (www.ardexamericas.com), an innovative and high-performance building-materials company located in Pittsburgh, PA. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu.

23rd Annual Spring Pricing Workshops & Conference

SAVE THE DATE------MAKE PLANS TO ATTEND

PPS 23rd Annual Spring Pricing Workshops & Conference

Join your peers for 4 days packed with the latest pricing trends!

May 8-11, 2012 Intercontinental Chicago O'Hare Airport Hotel Chicago, Illinois