Pricing Issues Impacting European Companies

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Contributed by James Marland, Business Consultant, Vendavo Europe

At the recent Vendavo European Executive Forum on Pricing in Brussels, many European companies came together to discuss how pricing issues were affecting their organisations. One theme that was prevalent at the event was that the downturn will end at different times in different regional markets.  As a result, pricing professionals need to be able to support local pricing strategies, within a global pricing framework.

For example, if country A is still in a downturn, then contract lengths work in the sellers' favour since there is still downward macro-economic pricing pressure, but if country B has already rounded the bottom of the curve and is coming out of a downturn, then contract length works against the seller, locking in a lower price in underlying inflationary conditions.

So what should the smart pricing organisation do?

First, you need sensitive capabilities to look at your different markets (geographic, industry, application) so you can receive signals when a market moves from a period of pricing pressure to one of pricing power. Signals can be picked up from tools which monitor win/loss rates and price realisation in potential hundreds of pricing segments. Second, you need pricing playbooks such that when each market turns, a standard series of pricing moves, market signals and sales strategies are executed. Finally you need an execution engine which allows you to make sure that these strategies stick.

In addition, you should look at long term approaches to make your whole pricing machine more sensitive to market conditions such as by introducing more index-based contracts, separating out the effects of foreign exchange from regional pricing and adopting more explicit segment strategies (chase competition, retain customers, drive volume, grow margin).

You can learn more about improving profits by effectively managing pricing in a global organization by accessing our OnDemand webinar on the topic.