Paying a High Price for Discount Management Methods?

U.S. retailers reported a 2.7% sales increase this holiday season despite succumbing to consumer pressure for deep discounts well before Black Friday. Proof that a discount pricing strategy is useful for driving traffic and short term sales – but is good for long term profit margins?

Tim Smith, Ph.D., CPP,
Founder and Managing
Principal of Wiglaf Pricing

How can discounting increase your profit margin long term?

Does discounting damage your market position and brand loyalty?

Discounting isn’t something most executives like to do since it can consume resources and cause organizational strife.  Yet, when properly managed, this form of price segmentation improves profitability. When not properly managed, discounts wreak havoc on profits.

Using in class exercises, Tim J. Smith, Ph.D., CPP, will apply quantitative approaches to monitoring discounts, enabling participants to use these techniques on their own company’s datasets. Pricing executives and analysts who attend can expect to discuss:

• How discounting can improve profitability, lower market entrance prices, and increase volumes
• Quantitative methods for measuring and monitoring discounting policy
• Managerial and quantitative tools for restraining discounts
• The influences of Prospect Theory and competition on discounting policy

Dr. Smith will be leading the workshop Advanced Quantitative Methods in Discount Management at the PPS 2nd Annual Asia-Pacific Pricing Workshops and Conference in Singapore this April.

How to Increase Prices Without Affecting Sales Volume

Pricing has a direct impact on a company’s bottom line.

So why is pricing often not considered an executive management task? 

Can a company develop an affective overall strategy and not take into account buyer’s perception of value, let alone pricing?

All good pricing decisions must involve managing price differentials. Buyers have certain behavioral and cognitive boundaries, and it is critical you understand these boundaries to maximize profit. You can increase prices and not affect your sales volume if the pricing is right.

Determining the Right Price:

At what point does a customer decide the price is too high for your product? In discussing this turning point, we must understand that buyers do not see pricing as absolute. We need to de-termine the tipping point between the customer purchasing your product and your customers deciding the price is too high. It is important to remember that just because you change prices, doesn’t mean you change the customer’s purchasing behavior.  Pricing is seen as a reflection of quality and product/service.

During the PPS 2nd Annual Asia-Pacific Pricing Workshops and Conference in Singapore, you can attend a full-day workshop entitled Managing Price Differentials: An Executive Perspective, Dr. Kent B. Monroe and Lillian Cheng give an executive summary of price differentials, examining how consumers respond to various differential thresholds.

Who Should Attend this Workshop:

This workshop is ideal for those who have a broad range of questions regarding the importance of pricing differentials. Specific topics such as understanding how pricing strategies define pricing tactics,  the role of the executive in pricing, and how to increase prices without affecting sales volume, among others topics, are discussed.

Dr. Monroe is the founding editor of Pricing Practice and Strategy and is J.M. Jones Professor of Marketing Emeritus, University of Illinois at Urbana - Champaign. Ms. Cheng is a partner at Cheng, Monroe, and Associates and co-author of An Appraisal of Behavioral Price Research (Part 1)  and  An Appraisal of Behavioral Research (Part 1).

Introducing our new Pricing Channel on YouTube!

The Professional Pricing Society is delighted to introduce our new Pricing Channel on YouTube! The Pricing Channel will be brimming with:

• Free educational videos from the pricing profession’s top experts.
• A digital library filled with pricing tactics and topics from the world’s best pricing experts and software innovators.
• Practical insights on the expanding roles of pricing in C-Level decision-making.

Our first wave of 16 Pricing Videos are now uploaded so SUBSCRIBE to the Pricing Channel right away at

www.youtube.com/pricingsociety   

It is easy to Subscribe:

First, click on the blue “Sign In” button on the top right and use your YouTube credentials to login...

Then, click on the red button that says “Subscribe”, and that's all!

You’ll have a vast array of free pricing resources and expertise available 24 hours/7 days a week!  And by subscribing, you’ll immediately receive an email notification each time PPS posts a new and insightful pricing video.

Click on the image to see our latest video, Who Controls Pricing?

 

ACT NOW and subscribe to the Pricing Channel, and don’t be left out of this exciting feature! 

Berlin Pricing Conference Recap – Day 3

Thursday, December 5th,
Day Three, Keynotes & Breakout Tracks

Our keynote speakers are best way to harness the energy and momentum building on the third conference day in Berlin.

Keynote Session during Pricing Conference in Berlin 2014

In the leading keynote Enrico Trevisan, Partner at Simon-Kucher & Partners, shared his vision of ‘behavioral pricing’ and demonstrated the importance of recognizing the psychological predictability of irrational customer behavior. Always fascinating to hear about what we only sometimes acknowledge are our own human foibles.

The ever-affable Paul Hunt took the audience on a “Journey to World Class Pricing.” An icon of the pricing world, Paul shared some wit, expertise and insights from his new book, as well as his 20-plus-year vision and experience of the evolving pricing landscape.

Ernst-Jan Bouter explored archetypes of successful entrepreneurship that included “the inventor” and “the salesman.” To these types he adds “the pricer” and goes on to posit that the pricing function will never share the same self-interest of sales, marketing and finance. Therefore he concludes pricers in organizations must be held apart from these other functions to be able to remain clear, unbiased and effective. Pricing, thus, is “The Third Business Skill” which was the title of his presentation.

Last, and certainly a real treat for attendees, was Graeme Ingham, Vice President, Price Management for Schneider Electric. Graeme started by demonstrating how to increase testosterone by 20% and decrease the stress inducing hormones by 25% by "power posing" or standing in a posture of confidence; quite an interesting way to start his keynote titled “Pricing and the Overall Marketing Mix: More Opportunities Than Challenges?”

Julie Martin and Kevin Mitchell from PPS and
Sophie Marion from BD the winner of a 2014 PPS Conference Pass.

He explained how digitization (now called the third industrial revolution) is empowering consumers anywhere and everywhere in the world, allowing them to compare prices and demand high levels of service, these new scenarios bring opportunities and challenges to pricing.

Then he described how Curiosity, Agility and Discipline are the 3 core elements needed to capitalize on the opportunities and overcome the challenges faced by pricers when it comes to digitalization. 

The afternoon rolled out smoothly with three concurrent tracks with a total of 12 sessions. This format allows attendees to select the subjects that will cover their interests or challenges they are facing.

We thank all our speakers for sharing such incredible and valuable pricing knowledge during this 3-day event.

We have had a fantastic time in Berlin. It truly was a meeting of minds – a time of energized learning and opportunity, delivering the type skills and knowledge that increase salaries, validate promotions and increases profitability for corporations.

2014 looks like another amazing year in the expanding world of pricing. During the first half of the year we will host conferences in Singapore and Chicago in the Spring, and Brazil in the Summer, we at the Pricing Society have plenty to look forward to and much to be thankful for.

As we move into the New Year we remain amazed, grateful and indebted to our members, speakers, sponsors and staff for making our conferences the successes they are.

Gute Reise! And here’s to our meeting again in 2014!

Berlin Pricing Conference Recap – Day 2

Wednesday, December 4th, Day Two:
CPP Workshops and Executive Summit

Day two went extremely well, the 2-day workshop participants finished their second day of advanced pricing effectiveness skills. We then welcomed a large group of practitioners that were eager to show their leadership by delivering great questions to their peers and instructors.

During his workshop “Advanced Quantitative Methods in Discount Management” Tim J. Smith, Ph.D., CPP, made the difficult subject of applying quantitative approaches to monitoring discounts, more accessible though his own brand of humor and by working with a series of powerful techniques enabled by the power of the modern spreadsheet.

Around the holiday gifting season, Leigh Caldwell conducted a timely and relevant session

The crowd is beggining to gather at the Post-Workshop
Reception Sponsored by PROS

on a subject of brand value and behavioral economics called “Pricing the Intangible.” In this workshop Leigh illustrated how the powerful psychological weapon of pricing works to support the customer perceptions about leading products. Interestingly for some products and brands price increases are actually the best way to confirm the product’s value to customers most inclined to buy.

This year, our Global Pricing for Executives Summit reached new heights with the largest attendance in its 4 year history and a superb level of speakers and participants. It is such a pleasure seeing scores of pricing executives gather together and share industry knowledge and lessons learned. At today’s Summit participants walked away with practical, practitioner-proven examples of improved pricing strategies, like: 

• What are the common barriers to implementing Value Based Pricing
• How to include pricing in organizational structure and management setup
• When do brands, products and costs impact pricing in new geographical markets
• Why most companies that start to focus on pricing excellence fail at the execution stage, and how to avoid the common mistakes

Our sponsors are ready to interact with participants, anyone looking for expert advice or technology solutions will have many options to choose from.

And after all the hard work, the end of the day looks very promising with a Post-Workshop Reception sponsored by PROS, good food and some drinks always go well with networking and meeting new friends in the world of pricing.

Check back with us tomorrow to read about the four great keynotes we have lined up for Day Three of our Conference. It’s going to be a great day!

 

Berlin Pricing Conference Recap – Day 1

Tuesday, December 3rd, Day One: Workshops

We began the first day of our Berlin Conference with four information-packed workshops led by senior pricing experts. Hailing from Germany, Spain, the United States and United Kingdom, this grouping of world-class talent demonstrates the best way to open our 9th Annual Global Conference.

The full-day sessions covered both the broad fundamentals of pricing strategies, and provided an in-depth study of more advanced topics. Workshops were full of eager-to-learn professionals; and our presenter’s expertise engaged participants with real life examples and actionable knowledge.  

Fernando Ventureira and Christian Winter opened with the two-day advanced interactive workshop on how to ‘Measure & Manage Pricing Effectiveness.’ The benchmarking methods and focus presented in this workshop delivered attendees the tools and techniques to enhance their crucial pricing skills.

At that same time, Dimitris Hiotis and Bjoern Dahmen walked pricers through a full-day Core Pricing Skills workshop. Always a preferred program for those just being exposed to pricing or others taking a back-to-basics to approach to new pricing challenges, the two experts informed and energized a full class of pricing learners.

Marc Abels and Ernst Hoffmann from Deloitte shared their knowledge on how a holistic approach to revenue is essential for successful implementation of the levers that drive and fund profitable growth for businesses.

Florian Bauer, Ph.D., conducted a workshop titled “Applying Behavioural Economics to B2B and B2C Pricing.” In this workshop participants learned how to identify the different buyer behaviors to develop more efficient pricing structures applicable to each group’s specific characteristics.

We’re looking forward to Day Two including the continuation of the 2-day workshop, the new 1-day workshops and especially the presentations that will be shared during our Pricing for Executives Summit.

Stay tuned!

Berlin Breakouts: A Wealth of Knowledge for You!

The Breakouts rounding out the 9th Annual European & Global Conference and Workshops in Berlin offer a more intimate setting for attendees to learn important skills.  Take advantage of these pricing experts’ knowledge on a variety of top of mind topics! 

On Thursday 5th of December, attendees will have the following options at these times :

14:00 Breakouts

Emotional Intelligence is Part of Pricing Science
Speaker: Jennifer Brown, CPP, Pricing Manager, Medtronic

Successful Pricing Implementation – Realising Pricing Power in Your OrganisationSpeaker: Mark-Daniel Rentschler, Director, Simon-Kucher & Partners

Measuring Pricing Performance in Your Organisation
Speaker: Mrinal Gurbaxani, Strategic Pricing Services Lead, EMEA, PROS

14:45 Breakouts

Simple Pricing: From Textbooks to Real-World Tactical ExecutionSpeaker: Daniel Golik, Vice President of Pricing, DHL Express of Europe
Customer Life Time Value and Yield Management: Execution and Best Practices
Speaker: Frederico Zornig, Managing Partner, Quantiz Pricing Solutions  
Pricing at Your Service: Avoiding the Commodity Price Trap by Introducing Value Adding Services
Speaker: Thomas Donck, Director, Deloitte Belgium

16:00 Breakouts

A Strategic Approach to Annual Price Increments for the Information Services IndustrySpeaker: Nupur Sharma, Manager, Strategic Pricing, Thomson Reuters’ Legal Business Unit

Getting Sales into the Pricing Game Speaker: Björn Willemsens, Director, Deloitte Belgium

Commercial Policy and Pricing Excellence
Speaker: Andreas von der Gathen, Ph.D., Executive Vice President, Simon-Kucher & Partners

16:45 Breakouts

Pricing Process: The Next Step to Sustain Pricing Initiatives
Speaker: Roberto Bedotto, Pricing Director, Honeywell Process Solutions

Pricing and Selling is Like Surfing
Speaker: Olaf Lange, Managing Partner, Team Steffenhagen Consulting

Pricing and Big Data: Managing Millions of Prices and Discounts
Speaker: Finn Hansen, CEO, Stratinis


There's still time to register! We hope to se yout here...

http://www.pricingsociety.com/2013berlin


http://www.pricingsociety.com/2013berlin

In the Driver’s Seat: Getting Pricing to Fire On All Cylinders.

Who should be in control of pricing?  Sales, Marketing, or Finance?

Ernst-Jan Bouter
CEO, FirstPrice

If you ask professional pricers this question, you should expect a wide difference of opinion!

 

Many believe that effective pricing cannot be achieved within these departments because they lack focus, and don’t make pricing a priority. Pricing often takes the backseat to other issues, when it should be the driving force of a company.

Ernst-Jan Bouter makes the case for an independent pricing function that puts companies back in the driver’s seat.  In his keynote speech Pricing: The Third Business Skill, Bouter argues that there’s a need for an independent pricing team who will remain neutral and objective.  

Only by creating the ability to formulate sound pricing will a company be able to fire on all cylinders!  He will be sharing tips to achieve this and best practice strategies, and attendees can expect to hear:

• What it takes to set-up a pricing function
• The key elements of a successful change approach towards a strong pricing function
• What a realistic and feasible path for change is

Ernst-Jan Bouter will be speaking at the 9th Annual European & Global Pricing Conference and Workshops on December 5th in Berlin, Germany. 
 

On the Hunt for World Class Pricing - Berlin 2013

Paul Hunt
President, Pricing Solutions

Navigating through the world of pricing in a complex global environment can be tricky for anyone, but Paul Hunt is ready to guide you through these troubled waters.

Drawing on his 20 years of pricing strategy, Paul will give examples of proven success tactics from his book World Class Pricing: The Journey (2013). His emphasis on helping companies with cultural changes in pricing is seemingly ubiquitous, but is unique to his own experiences. 

Ultimately, he will help you to consider where you are, where you want to get to, and how you are going to get there? 

Attendees can expect to hear:

• What the journey looks like and what roadblocks to expect at each stage.
• The dynamic between the art and science of pricing and how they are both critical elements of the journey.
• How to keep the gains made and why some companies slip backwards, and the payoffs and pitfalls to expect along the way.

Paul Hunt will be leading the keynote The Journey to World Class Pricing on December 5 at the PPS 9th Annual European & Global Conference and Workshop in Berlin, Germany. 

 

 

Our Gift of Pricing Experience to You: Enjoy the Peak of Knowledge in a One Day Summit!

If you had the opportunity to peek into the minds of your mentors, would you take it?
 
What if you could spend the day acquiring best practices and tips for the present, and the future? 

The Global Pricing for Executives Summit on December 4th in Berlin is our gift to you, tied up with a bow. To be given the gift of accumulating so much knowledge in one day is a rarity, to find it so readily available is another.

All attendees will explore:

• Barriers to Implementing Value Based Pricing-overcoming pricing barriers with specific strategies from DuPont’s Victoria Mascaray Marti.
• Running Successful Pricing Projects: Lesson’s Learned-how to include pricing in an organizational setup and management structure in fast growing business by Marten Hedberg of Assa Abloy Entrance Systems. 
• Unlocking the Power of Pack Price: An Occasion Centric Approach-utilizing pack price at ideation stage with Ricardo Cuellar of Pepsico MEA. 
• The Rules Behind Pricing Effectiveness-identifying the 3 Pricing Rules: Set+Connect+Learn with Manu Carricano of EADA Pricing Center
• The Application of Pricing Within a Global Matrix Environment-how your brand, product, and costs impact pricing into new markets with Anthony Mak of Telstra Global. 

This exciting day will complete with a Q & A opportunity at the Executive Summit Presenters Panel. 

It’s not too late to register! 

http://www.pricingsociety.com/Berlin2013

 

 

On the Cutting Edge: Pricing 3.0 and the Effects of Behavioral Psychology

If pricing is the science of numbers, then Behavioral Pricing certainly illustrates the humanistic element of unpredictability in the equation. 

The future of pricing has evolved past the 1.0 and 2.0 stages, Enrico Trevisan of Simon-Kucher & Partners will share some cutting edge thinking from Pricing 3.0.  Drawing on Nobel-prize winning research, attendees will learn:

Enrico Trevisan, Ph.D., Partner,
Simon-Kucher & Partners

• Behavioral pricing theory builds on many ways of predictably irrational consumer behavior, but what does this mean for practitioners who create products and services, make pricing decisions, and define marketing plans?
• How can we leverage customer psychology through the anchoring effect, the endowment effect, product framing, value plus vs. value minus, risk aversion, and decoy tactics?
• How a framework around brand identity, positioning, and related pricing tactics can help to identify the best behavioral tactics. 

Enrico Trevisan will be leading the keynote sessions with Behavioral Pricing-Practical Implications of Pricing 3.0 on December 5, 2013 at the PPS 9th Annual European & Global Conference and Workshops in Berlin, Germany. 

Making Sense Of and Assigning Value to Intangible Goods

Today, Apple’s stock is $520 per share, and Google’s is $1,018 per share; two similar companies that have similar services and products.  Yet, they are worth drastically different amounts. 
 
How do you put a price on something that you can’t see or touch? 

What is the psychological implication of assigning value to an intangible product or service? 

The answers to these questions will be revealed in Leigh Caldwell’s workshop Pricing the Intangible, focusing on behavioral economics and consumer decision making. 
 
In this workshop, Leigh will help attendees to determine how to calculate the right pricing for intangible goods across all industries, and in both B2B and B2C scenarios. Participants can expect to discuss:

• The principles of behavioral economics and psychological pricing, and how to apply them at an advanced level, to create intangible products,
• The twelve sources of intangible value and the formula for calculating the right price,
• How to add invisible benefits to your existing products and services to create demand and increase willingness to pay,
• The secret of how intangible products give meaning to your customers’ lives.

Leigh Caldwell will be leading the workshop Pricing the Intangible at the PPS 9th Annual European & Global Conference and Workshops in Berlin, Germany in December. 

 
 

Friend or Foe? Making Discount Management Profitable for You

Tim J. Smith, Ph.D., CPP,
Managing Principal of Wiglaf Pricing
Adjunct Professor of Marketing
at DePaul University

“Discount.”  It seems like such a dirty word, like something you would find at a Walmart near you.  Most executives would like to eliminate all discounts from pricing, but if used correctly, discounting in pricing can actually improve profitability. 

By not allowing discounting to wreak havoc and consume resources in an organization, it becomes a useful form of price segmentation.

Tim J. Smith will help you use the discount method differently, by applying quantitative approaches to the datasets of your own company. 

Attendees will need to bring a laptop with Microsoft Excel, and will look at three tools for firm-specific discounting practices, and four commonly used tools executives use to restrain them. 

Attendees will also study:

• How discounting can simultaneously lower market entrance prices, increase volumes and improve profitability,
• Quantitative methods for measuring and monitoring discounting policy,
• Quantitative and managerial tools for restraining discounts,
• Implications of Prospect Theory and the Nash Equilibrium on discounting policy.

Dr. Tim J. Smith will be leading the workshop Advanced Quantitative Methods in Discount Management at the PPS 9th Annual European & Global Conference and Workshops in Berlin, Germany in December. 

  

Human Behavior and The Art of Psychological Pricing: Looking Into the Mind of the Buyer

Peering into the depths of the human psyche can be an enlightening or disturbing path, depending on how you approach it. 

Everyone is trying to crack into the “mind  of the buyer,” to establish habits and decision making processes to enhance bottom line growth.  Dr. Florian Bauer may be closest to figuring it out. 

In his workshop The Art of Psychological Pricing: Applying Behavioral Economics in B2B and B2C Pricing, Dr. Bauer will take you through the science of pricing research and strategy from a psychological standpoint, drawing on a validated and award-winning framework of his design. 

He will move beyond the classical assumptions and educate attendees on real life decision processes, including:

Recent research insights on human decision making for deriving successful pricing strategies,
A conceptual framework that will better leverage behavioral economics in a pricing strategy,
The pros and cons of pricing tools such as Price Sensitivity Meter or Conjoint Analysis and how to modify and complement these methods to avoid risks and pitfalls,
How to convert insights into optimizing price level, structure, dynamics, and communication. 

Dr. Florian Bauer will be teaching the workshop The Art of Psychological Pricing: Applying Behavioral Economics in B2B and B2C Pricing at the PPS 9th Annual European & Global Conference and Workshops in Berlin, Germany in December. 

 

Hitting the Big 3: An Analytical Approach to Revenue Management

Marc Abels, Partner

Deloitte Belgium

 

Revenue management is much like playing the slot machines in Vegas.  You’ve got to hit three of the same: (1) selling the right capacity to (2) The right customer (3) at the right price…to hit the jackpot. 

What’s the big payout?  Driving and funding profitable growth for your business. 

Marc Abels and Ernst Hoffmann will help you take the odds out of the equation at their workshop The Analytical Approach to Revenue Management: From Cost-to-Serve to Price Optimization. 

Learn how applying analytics and taking Price-Volume trade-offs and price elasticity will help to shape price setting decisions, successful implementations, and further overall profitability. 


Ernst Hoffmann, Partner
Deloitte Germany

This workshop offers a holistic approach to Revenue Management, and attendees will study:

• The fundamentals of Revenue Management and how to set your price using the difference in customers’ value of your products
• The importance of cost-to-serve for customer profitability management
• How to create the necessary price gaps when setting the price and to optimize your discounts and rebates

Marc Abels and Ernst Hoffman will be attending the PPS 9th Annual European & Global Conference and Workshops in Berlin, Germany in December.