Pricing Locally, Harmonizing Globally
Posted by Tapan Bhatt on Fri, Jul 24, 2009 @ 02:01 PM
Global manufacturers today face a host of challenges to remain competitive and agile in the volatile market. Effectively pricing products and services can be a tremendous competitive weapon if done well, or a liability if poorly executed. Consider the current dynamics for today's global manufacturers: rapidly-fluctuating prices, tougher negotiations with customers, high levels of outsourcing and increased complexity in the channel.
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These forces combined make strategic pricing a business imperative. When you consider the potential to quickly capture significant ROI, it's no wonder more companies are focusing on pricing now.
As a point of reference, pricing opportunities for a typical organization range from roughly 1% to 3% of sales -- it amounts to $10-$30 million in profits for every $1.0 billion in sales.
Pricing locally and harmonizing globally is about striking the right balance, but what is the best balance between local and global pricing? Pricing locally can negatively impact neighboring markets, while a one-size-fits-all approach to global pricing can leave local opportunities on the table. To use pricing as a competitive advantage, especially during uncertain economic times, manufacturing companies need to focus on pricing strategies. Most importantly, organizations must consider how global prices affect specific local markets and vice versa.