Use Value Based Pricing to Increase Profits

Do you take a strategic approach to pricing your products? Do you make pricing decisions in reaction to competitors or are price levels carefully determined to take advantage of  strategic opportunities in the marketplace?  Are prices based on customer value or on internal cost?

Use value based pricing to increase your profits

Pricing not only impacts short-term profitability, but you also need to consider the longer term effects of the reactions of customers as well as competitors to price changes. Pricing is a ‘marketing tool’ and impacts your branding and positioning.

Few companies are strategic and proactive about price setting. As a result, they see lower profits and do not fully take advantage of pricing as an important element of their branding and positioning efforts.
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Why You Should Hire a Strategic Planning Consultant

Successful companies do not hesitate to use Strategic Planning consultants to help them build and improve their competitive advantages. These companies understand the importance of making smart strategic decisions and are not afraid to challenge the status quo.

A Strategic Planning consultant adds value to the planning processFortune 500 companies have the managerial resources and expertise to put a Strategic Planning group together that is devoted to developing and implementing smart growth strategies for the organization.

However, small companies are in quite a different position. They lack the resources and expertise a larger company would have and the management team cannot be solely focused on strategic planning, at the risk of neglecting to take care of the day-to-day requirements of the business.

This does not mean that a small company should not do strategic planning to set a course for the future. On the contrary, especially small companies need to be careful about where and how to deploy their limited resources to get the best ROI. It’s a matter of ‘brains’ over ‘brawn’.

A Strategic Planning consultant can provide the expertise and manpower to a small company, guiding the planning process to be more thorough, objective and rational.

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Marketing Research – Find Out What Your Customers Want

Whether you’re selling to businesses or consumers, your company’s success depends on your understanding of what customers are looking for, what they’re buying and why. Marketing Research can provide the answers to the questions that are critically important.

You have to ask some important questions before considering developing a product or service and entering a market: [Read more…]

Are You Ready for Strategic Planning?

A carefully thought-out strategy should be at the foundation of your company’s road map to sustainable, profitable growth. However, to make the strategic planning effort pay off you need to have a company culture that’s open to exploration and reasoned debate, and the executives need to have the right mindset. Are you ready for Strategic Planning?

Creating a sound Strategic Plan takes time, a lot of hard work and an open mind.  Gathering market intelligence, analyzing this information, figuring out what it all means, evaluating your options, and so on.  These are all important components of the planning process.

The key obstacles to successful Strategic Planning have little to do with market data or analysis.  The main roadblocks to creating your company’s road map to the future are corporate culture, and people’s attitudes and mindsets. [Read more…]

What Companies Get Wrong In Recessions

from the McKinsey Classics Newsletter:

What Companies Get Wrong In Recessions

Every business wants additional earnings. It can find them in two ways: improving its current operations or developing new capabilities that could enhance its long-term corporate performance. Top managers traditionally bore down on operations in recessions and mounted transformational initiatives only in good times. Many still do. But as a 2003 McKinsey Quarterly article noted, “extreme operating pressures force line managers to make do with existing capabilities despite the need to adapt businesses to a relentlessly changing marketplace”—an adaptation that usually calls for basic, long-term change. That point is even more relevant today.

February issue of the McKinsey Newsletter with links to more articles related to the topic.

Don’t Wait for Better Times, Make It Happen

According to leading economists the recession ended in June of 2009.  Has your company noticed any improvement yet?

These are tough times, in particular here in the Midwest.  To get your business back on track you can’t afford to sit back hoping for good old times to return.  You have to take charge and start working on the future of your business.  Expecting different results from the same old approach to business does not work.  You have to embrace change, fundamentally rethink your business, and set a new course.

Too many companies dependent on the automotive industry failed to see the fundamental, structural changes taking place in their industry.  GM’s market share has been declining for more than twenty years.  Suppliers that are only now beginning to think about diversification and reducing their dependence on the automotive industry are far behind the curve.  Why couldn’t they see the trend earlier?  Why didn’t they change before it was too late? [Read more…]

What is Strategy, Anyway?

The term ‘strategy’ is often misused, in particular in business.  Someone may say “What’s our strategy for solving that problem?”, or “Let’s strategize to win that account.”  In reality, these are tactical, operational issues, not strategic.  The term ‘Strategy’ is often applied to any kind of planning activity, whether it’s really strategic or not.

A company that does not understand the essence of strategy and that has not adopted a strategic mindset is most likely a laggard in their market.  Companies that fail to embrace strategic thinking are narrowly focused on the short-term and are reactionary in their actions.  These firms neglect to take a longer-term perspective of the business.  They find themselves at the mercy of the competition, customers and the economy, rather than taking the initiative and creating their own path. [Read more…]

Services Marketing Is Different From Product Marketing

Services play an increasingly important role in the US economy and in what companies offer to their customers.  Services are particularly relevant in sectors where manufacturers are looking for ways to differentiate themselves from the competition.  However, the approach to marketing of services is quite different from how you would go about marketing tangible products. [Read more…]

Company Culture Determines the Success of Strategic Planning – Part 2

This is the sequel to an earlier blog post about how company culture can impact not only management’s attitudes about Strategic Planning, the effort that goes into creating the strategic plan, and ultimately, whether they’ll be successful.

Here are a few more examples of different company cultures and their effect on Strategic Planning:

Group Think

In a company where Group Think is the norm decisions are made with an uncritical acceptance of the common point of view.  Different opinions or concerns are not considered or downplayed.  Challenging the status-quo and asking tough questions are frowned upon.

Group Think happens when people of similar experiences work together on developing a company’s strategy. They tend to agree quickly, avoiding conflict and downplaying dissent.  The result is a weak, poorly thought-out strategic plan that will likely fail to be successful. [Read more…]

Setting Prices: Customer Value, Not Cost Plus

Too often, companies set the prices for their products and services based on a “cost plus” approach, rather than on a real understanding of the customers’ perception of value and their willingness and ability to pay.

The prices you charge have a direct impact on the bottom line.  The often-used cost-plus approach is far too simple and does not recognize the strategic importance of pricing setting.

Pricing has to align with your business goals.  Are you trying to maximize profits? Or do you want to quickly gain market share with a new product?  Two different goals, each requiring their own approach to pricing.

Here are some thoughts and suggestions about price setting that may help improve your business results. [Read more…]