Excellent BCG article on Pricing based on a Wealth management example, although in my opinion applicable to any industry.
What are my main conclusions:
- Pricing (in all its dimensions) is a key component of a company strategy, not just a tactic lever one should/could use;
- The top quartile pricing performers have significant better overall results
- Smart pricing has 4 main components:
- Proper client segmentation (avoid broad-based segmentation on external characteristics easy to define, but on customer behavior and required service levels) ;
- Have a clear value proposition for each segment;
- Optimize the price structure for each segment
- Constantly reassess the above, making it a process and not a 1 time yearly event
- have a clear pricing strategy;
- favor quality over quantity - start small, test, pivot (if needed) and only then deploy. Each company, division, product has its own story;
- Obtain sponsorship within the organization and buy-in (quick wins are important)
- Pricing is a core strategic competence not just a tactic one within marketing
- Embrace Data Analytics - target pricing algorithms, pricing intelligence, etc
- The Exhibit 6. is self-explanatory and is a great infographic over the key roles and responsibilities of any Pricing team.
Solving the Pricing Puzzle (aWealth management example)
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