Case Study - Consumer Goods Pricing Strategy

Client Situation

In 2003 Pacific Strategy Partners assisted a client to develop a new pricing structure for a specific product line that removed significant complexity and provided incentives to drive preferred customer behaviour. Subsequent to the introduction of the revised pricing structure, our client expanded their product range with the acquisition of a new range of related product.

Both product ranges had significantly different pricing structures:

1. List prices with trading terms and standard price positioning
2. Net / Contract pricing, no trading terms, high price positioning

Pacific Strategy Partners was engaged to integrate each of these product ranges into a holistic pricing structure under the one brand and to develop a plan to systematically introduce this structure for each customer segment.

Approach

A three step approach was taken:

• Assess Alternative Pricing Structures:
  • Profiled current pricing structures for respective product ranges (a factbase)
  • Identified and assessed new pricing structures to transition to a holistic framework. The phase assessed the high level financial impact of each option
• Detailed Design of Preferred Option
  • Agreed upon preferred approach
  • Detailed each lever of the preferred pricing structure and assessed the implications for each product range and customer / segment
• Implementation Planning
  • Defined each requirement to introduce the preferred pricing model for respective channels and customer segments
  • Prepared customer communication material

Impact

Our client implemented its new pricing structure and trading terms under the one brand.  Management feedback was positive and it is understood that the new structure and its implementation has been a success

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