Now That The Economy Is Picking Up, What�s To Do?

With good news on the economic front (GNP growth of 2.5% last quarter), plus learning that growth is actually present and consumers are spending � many are asking, �Now what?� How will I capitalize on this news, assuming it continues in 2012?

First, be sure your price is right. Because when the issue of pricing arises, anticipation often follows that the topic will bring bad news. Avoiding the subject until the last minute makes that outcome even more likely for firms that are sitting on a pricing bulls-eye, targeted by their competitors and their customers� supply chain managers.

While it is a daunting topic, firms that proactively manage pricing strategy with the right tools in place can produce significant top- and bottom-line results. Even a point gain in realized prices can yield a many-fold improvement in profits.

George Brown, and his team at Blue Canyon Partners, have seen four lessons emerge from their work with national and international clients:

Understand that not every price challenge is real. We use a graphic of a bulls-eye with arrows missing the target to illustrate the fact that many of your customers make their purchase decisions because of superior products, services, or relationships rather than price. Remembering � and, more importantly, reinforcing � the non-price advantages that won your firm business in the first place can allow you to avoid unnecessary participation in the vicious cycle of price-based competition.

Build a strong analytics foundation to assess the business environment. Knowing where and when pricing pressures are likely to be intense can enable you to make the correct decisions on price increases and determine the right responses to competitive challenges. A �one size fits all� pricing strategy is likely to be correct on average, but wrong in every application.

Use best practice approaches to pricing strategy. We recently heard a case study about a company that successfully introduced a premium price product into a challenging market by implementing a strategy that �gave customers an option that they could refuse.� This, and other best practice initiatives, can yield some major gains for your company.

Create value to capture value. While this message applies more to 2013 and beyond than to 2012, it underlies all successful pricing strategies. If you are delivering value to your customers, you can be rewarded for it, through a price premium or otherwise. If you aren�t, any success you can achieve is likely to be short-lived. Asking the question, �How can I deliver more value to my customers?� in 2012, and taking action consistent with the answers, can make the discussion of pricing much more pleasant in future years.

Blue Canyon Partners will be hosting a free webinar on pricing and the competitive environment on Thursday, December 8, 2011. For more information click here.