Case Studies

Packaged Goods

Problem: A market leader in Do-It-Yourself Home Improvement products was investigating opportunities to enhance their profitability and believed that they could increase prices on key products in some markets. Their channel partners, on the contrary, did not share this view and feared that a price increase would dampen sales in their stores. In an effort to test their hypothesis, the client was interested in measuring price elasticity for itself and key competitors in key regions.

Solution: Quantitative brand equity and price elasticity measurements indicated that the client’s hunch was correct. Not only could their key products sustain an increase, but the higher price actually reinforced its “market leader” product positioning. A dynamic pricing model was developed, incorporating key competitors by region, which allowed the client to test different pricing strategies, identify key competitive threats and develop regional market plans to support its channel partners. By presenting the research to the channel partners, the client was able to minimize resistance to the increase and enhance profits in a win-win opportunity. Two years later, as the market hit a downturn, the client and their channel partners were able to hold price and remain profitable while competitors drastically discounted to keep market share.

Local Telecom Services

A Local Telecom Service Provider was experiencing pricing level erosion due to heavy competition. In an effort to stimulate strategic discussions among key business managers, the client requested a training seminar. The seminar focused on helping managers price more profitably through selectively identifying key customer segments and opportunities for premium pricing, assessing segment value drivers, benchmarking competitive strengths and weaknesses against the value drivers and establishing targeted value-based selling plans to each desirable segment. After the session, managers were able to review their initial market plans and augment them with more specific targets and tactics, based on what they learned in the session. A number of the business units were able to identify and capitalize on their opportunities and enhance profitability.

Pricing Strategy – (Retail)

Problem: Over a five year period, an independent retailer of construction materials experienced steady revenue growth in line with new account growth. Recently, management had noticed that the growth in the number of new accounts appeared to be reaching a plateau and they were interested in identifying ways to continue to generate revenue and profit growth under these conditions. They sought consulting assistance to help them identify revenue and profit generating opportunities through pricing.

Solution: An analysis of past account activity indicated that the client enjoyed relatively high levels of customer loyalty. Nearly three-quarters of the customer accounts were active for more than 7 years and customer satisfaction research identified that accounts valued the high service levels, on-time delivery and relationships with key staff. By analyzing accounts’ perceptions around pricing and the role it played in their buying decision, it was determined that the client could raise prices by 5% with little customer resistance.

A test trial on 25 of the most frequently purchased items confirmed the hypothesis. Following the test, the client increased prices without incident and continued to enjoy strong revenue and profit growth, despite a slowdown in account growth.

Energy Services

In anticipation of deregulation, the incumbent regional energy company requested a training seminar to prepare key account executives to defend pricing under new competitive conditions. Because the firm operated as a monopoly since its inception, account executives were unaccustomed to discussions requiring them to defend price.

The seminar focused on building account managers’ skills in identifying, selling and defending value with their accounts. A price war simulation was also undertaken to help account managers envision the effects and manage their actions relative to the competition in order to defend profits. Post deregulation, the incumbent firm maintained a vast share of the market and was able to do so with lower discounts than originally anticipated.

Price Coaching – (Media Marketing)

Problem: A start up media service organization was experiencing difficulty in establishing a value-based pricing strategy that would both allow it to penetrate the market, as well as position it as a respectable market contender. Their initial inclination was to enter at the average market price as a test, however it was immediately clear to them that there was no market basis for this decision. To help them build confidence in making a pricing decision-making, they sought price coaching.

Solution: By walking the principals through a systematic approach to pricing, it became apparent that the equity carried by the chief principal, differentiated them from their key customers. This individual had a strong track record and had built numerous relationships in a vertical industry segment that added an immediate credibility to the firm. By placing this principal front and centre with prospects and focusing their activities in this vertical industry segment, the client was able to quickly develop a name for themselves and charge a premium to the average market price with little resistance.