Share some insights for you...

“Let’s be honest. We all claim to be going for
profit, but heads start rolling as soon as the market share drops by 0.1%. When
profit goes down by 20%, nothing happens.”


So, how we enhance our business performance without forgetting the profit? Here some lessons...



Lesson 1
Despite enormous cost
cutting efforts, the profit situation of most companies remains dismal. “Manage
for profit, not for share” must become the new paradigm.
A change in attitude
is necessary!

Lesson 2
Price is an extremelyeffective profit driver – in both directions. Price can generate huge profitsor devastate profitability. If possible, avoid price cuts. They may bring youmarket share, but they often destroy profits.
Do the math before
you touch the price!

Lesson 3
Value-to customer isthe essential determinant of price. Therefore, understanding and quantifyingthe value is critical for pricing and profit maximization.
Make sure you fully
understand the value-to-customer!

Lesson 4
Fundamentally speaking, it is possible to be successful with low costs
and prices. But only a few companies rise to this challenge. If you want to
make money with low prices you must trim your entire strategy chain
(production, marketing, culture) to frugality. Aggressive pricing requires not
only cost efficiency, but also a high marketing intelligence.

Lesson 5
The improvement of
pricing processes typically leads to margin increases of 2 percentage points.
The cases show that quick wins and high profit increases were achieved. Pricing
processes are industry and company-specific. A very thorough analysis and a
profound understanding of a business are necessary.
Improve and strive
for a deep understanding of your pricing processes!

Lesson 6
The re-organisation of
pricing processes must involve the entire strategy chain, including
controlling. Every step has to be checked for profit potential. There may be
hundreds of small improvements, the sum of which has a big effect.
Start with a pricing
audit!



Summary:

A radical profit improvement is required.

The first step: Change your attitude towards “Manage for profit, not for
share”!

Before you touch the price, do your math.

Adopt value pricing. This requires full understanding of the
value-to-customer.

An improvement of pricing processes increases margin by two percentage
points.

Quick wins/short amortisation is certain.

Roy Nelson
Business and General
Management Consultant
Nelson_roy@prosval.consulting