Product / Service Pricing

A major lever for market share and mass margin growth

Context

A price war is occurring in most markets:

  • Purchasing power is under great pressure;
  • Online and offline competition is very strong, with all players communicating heavily on prices; 
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  • Price comparison is becoming increasingly common at points of sale (almost 40% of smartphone users access the internet in store on their smartphone).

Consequently, distributors are being forced to continually improve their selling price management methods for related products and services. This poses major challenges in terms of: 

  • Gross margin
  • Market share (via price image and traffic)

Challenges

Our experience has demonstrated that pricing revision can improve the margin by 1 or 2 points without harming price image, provided that the basics are respected, including:

  • A clear pricing strategy, which is completely aligned with the brand's global strategy: conquering or defending market share, Everyday Low Price or promotional, alignment or non-alignment with prices of online and offline competitors 
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  • An effective pricing model that integrates the role of categories (traffic, destination, profit, etc.), the sensitivity and elasticity of products, rules of chaining/cloning, rounding up and consistency between channels
  • Effective collection by teams of the competition’s selling prices, combining specialized companies and in-store surveys for the most sensitive products
  • A management level and frequency of updates suitable for the market (very sensitive products at local selling prices/once-a-week, average sensitivity products in price categories/once-a-month, etc.) 
  • A clearly defined pricing function in the organization, which is closely linked to Merchandising, Operations and Finance

How can Argon Consulting help you?

Argon Consulting assists distributors in optimizing their pricing, from defining to implementing their pricing strategy:

  • Defining the pricing strategy and performing a performance diagnosis of current price calculation methods
  • Developing the target pricing model and elaborating the various potential scenarios;
  • Determining the optimum pricing scenario, including the price image and margin
  • Industrializing the new price calculation method, by supporting its development in an application and introducing its continuous improvement (degree of in-store application, update frequency, automated collection of the competition’s selling price, etc.)