Client: A $500 million international manufacturer of building products
The company competes in an industry where products are commoditized and difficult to differentiate from competitor to competitor.
The client had invested in and brought to market a premium product solution but had been unable to gain extra margin for the new product line.
With Profit2 assistance, the client has formulated a new pricing strategy and developed a system to ensure consistent pricing for national customers served by multiple company sales groups. The new product line is selling well and is producing a +15% premium sale price vs. the base line.
A drop in building starts and intense competition had driven prices on the commodity product line down to unprofitable levels. The company had excess production capacity due to the economic downturn. The new product line extension had been introduced but was being priced by the sales organization at parity with existing products.
Client’s corporate pricing and marketing teams were unable to influence sales force pricing decisions and therefore had not made progress in gaining margin on the new line.
We have been able to increase margin on the new premium line by:
- Establishing pricing protocols and margin goals by item based on industry research
- Persuading company executives to adopt goals for 2009 business plans
- Creating new by-market list pricing for the line
- Centralizing management of any deviations from list pricing
- Developing dynamic reporting to enable corporate pricing leaders to review pricing and make adjustments as market conditions change