Project Experience

Wins and Losses - Manufacturing…Pricing to Win

Client Situation
Often, manufacturing companies have relied on their products for the bulk of their revenues. In today's market, services and the bundling of those services with the product have set these companies apart from their rivals. One particular client came to us asking looking for an analysis of its top competitor's "price to win" strategies. In this particular industry, the products are very low volume, high margin products. Product prices are very similar across competitors. It is therefore necessary to build effective strategies that encompass various services and benefits into the price. In commodity markets, price breaks help to win business, but in the low volume high margin market proper packaging of the product and services in the only way. Specifically, our client wanted to know what bundled services and attached pricing was allowing the competitor to win key accounts and campaigns.

Fuld Approach
We believe the sales forces and the financial services areas of the target company would be the key to answering these questions. We interviewed customers, competitor salespeople, and target company financial people on the structure of deals and how regions affected the structure of these deals including that of government subsidies. In addition, we analyzed the differences between our client's service offering and that of its competitor. Most importantly, we derived projected costs and pricing based upon the competitor's cost structure and what we learned about past pricing structures.

Benefits and Implications
As a result, we could give our client company information that would help them effectively price their program against the competition and to offer value added programs that they could take to market. For more information on "price to win" strategies and pricing strategies for various channels of distribution in the manufacturing industry, contactnbulger@fuld.com