36 pricing tools you need to know - privaledge

Value

Curve

Price

Waterfall

Discount

Toolbox

Price

Corridors

Discrete

Choice

Value

Segmentation

PriValEdge - Pricing Tools:

Price

Dispersion

Tool 1: Price Evolutions(Illustrative)

SK

U U

nit

Pri

ce

s (

$)

Tme Series (Weeks)

What it is:

Analyses Prices (or D&R)

evolutions over time

May be used for a single

product or a group of products,

globally or by client segments /

channel, or by account manager.

What it does:

provide visibility and insights

on evolutions to identify trends /

changes in dynamics or

correlations & opportunities &

threats that they represent

Corrective actions it may lead to:

Improved / more rational pricing on objectives.

Industry pricing actions to influence pricing dynamics

Price structure rebalancing

The stakes:

Together with other aspect of transactional analyses, typically results in bottom line improvement of up 4

% of sales in the first year

Plant Name (All)

Industry Name (All)

Custo Rev Segment Name 5_VL

Product Family Code (All)

Product Grp Code (All)

Prod Rev Segment Name (All)

1,00

2,00

4,00

8,00

16,00

32,00

64,00

nov.-07 juin-08 déc.-08 juil.-09 janv.-10 août-10 févr.-11 sept.-11

Ac1

Ac10

Ac11

Ac12

Ac13

Ac14

Ac15

Ac16

Ac17

Ac18

Pricing

Full ScreenNormal

Go to Financial Pivot

Go to Product Pivot

Go to Price Evolution

Go to SKU Elasticity

Go to Product Elasticity

Go to Customer Elasticity

Tool 2: Dynamic Price Waterfall (Illustrative)

Dynamic Waterfall Analysis

60%

70%

80%

90%

100%

Results 100% 92.7% 14.1%

Leakages 7.3% 0.9% 1.0% 4.6% 1.4% 70.6%

Series1 93% 92% 91% 86% 85%

List Price Price

Concession

Invoice

Price Options Warranty $ Financing

Prompt

Pay

Margin/

COGS

Page 3Level 2 Tools

What it is:

Detailed analyses of

leakages (by type) that take

place between List price &

Pocket Margin.

May be used at Product,

Client, Segment or Market

level

What it does:

provide visibility and control

of ‘hidden’ discounts and

costs to clarify the

contribution margin on a

given deal.


Rationalization of discount & client conditions policies.

Improved control & exceptions management on Discounts & Client Conditions

Sales force support & Monitoring

The stakes:

Together with Price dispersion analyses, typically results in 2 to 4 % ROS improvement in first year

Tool 3: Price Dispersion (Illustrative)

National

0%

10%

20%

30%

40%

0 50,000 100,000 150,000

Avg

Dis

co

un

t

Lack of control &

discipline

Large accounts put

at risk by unfair

treatment

Large discounts

given to small

accounts

/ not taken away

from reduced

Standard volume discount

Ave

rag

e d

isc

ou

nt

Size of account (Yearly revenues €)

What it is:

Analysis of discounts given as

a function of size of accounts.





What it does:

provide visibility and control of

actual logic & discipline in the

implementation of Client

conditions & discounts.


Rationalization of discount & client conditions policies.

Improved control & exceptions management on Discounts & Client Conditions

Sales force support & Monitoring

The stakes:

Together with Price dispersion analyses, typically results in bottom line improvement of up 4 % of sales

in the first year

Tool 5: Variance Analysis

What it is:

Analysis of variance in sales revenues.

Price variance

Volume variance

With additional detail on demand

May be used for a single product or a

group of products, by Sales rep or by client

segments / channel.

What it does:

provide visibility of key evolutions of

revenues and drivers for variance.

Helps monitor & manage pricing strategy

, campaigns & discounting policies


Price adjustments.

Launch of campaigns & reactive actions

Competitive actions

The stakes:

Strong monitoring of Price & volume performance at any level – key driver to discipline & change

management

Revenue Variance(UnitPrice T2 * UnitVolume T2 ) - (UnitPrice T1 * UnitVolume T2 )

Price Variance(Unit PriceT2 - Unit PriceT1) * Unit VolumeT2

Menu-Tier Variance(MenuTier(T2)_OldUnitPrice x VolumeT2) - (UnitPriceT1 x VolumeT2)

Item-Price Variance(UnitPriceT2 x VolumeT2) - (MenuTier(T2)_OldUnitPrice x VolumeT2)

Promotional Item Price Variancetbd - will be a special component of item-price

Client Conditions & Discount Variancetbd - will be a special component of item-price

Volume Variance(Unit VolumeT2 - Unit Volume T1) * Unit PriceT1

Mix Variance(Unit VolumeT2 - (Unit Mix%T1 * Total VolumeT2)) * Unit PriceT1

Quantity Variance((Unit Mix%T1 * Total VolumeT2)-Unit VolumeT1) * Unit PriceT1

Tool 5: Time Series (Illustrative)

SK

U U

nit

Pri

ce

s (

$)

Tme Series (Weeks)

What it is:

Analyses Prices (or D&R)

evolutions over time





What it does:

provide visibility and insights

on evolutions to identify trends /

changes in dynamics or

correlations & opportunities &

threats that they represent


Improved / more rational pricing onbjectives.

Industry pricing actions to influence pricing dynamics

Price structure revbalancing

The stakes:

Together with other aspect of transactional analyses, typically results in bottom line improvement of up 4

% of sales in the first year

Plant Name (All)

Industry Name (All)

Custo Rev Segment Name 5_VL



Prod Rev Segment Name (All)

1,00

2,00

4,00

8,00

16,00

32,00

64,00

nov.-07 juin-08 déc.-08 juil.-09 janv.-10 août-10 févr.-11 sept.-11

Ac1

Ac10

Ac11

Ac12

Ac13

Ac14

Ac15

Ac16

Ac17

Ac18

Pricing

Full ScreenNormal


Go to Product Pivot





Tool 6: Dynamic evolutions & elasticity (Illustrative)

Ch

an

ge

in

Pri

ce

(%

)

Change in Volume (%)

What it is:

Analysis of evolution of Price

(and – or D&R) and how they

Impact Volumes or Margins.





What it does:


actual dynamics & relationships

between price components &

performance


Improved Pricing & client conditions policies.

Earlier identification of competitive threats & changes in industry dynamics

Targeted price adjustment based on expected impact

The stakes:

Key to finer price adjustments & improved price realization

Disc. & Reb. Selection All

Unexplained Disc Selected

StdVolume Discount Selected

List to Max Price Disc. Selected Dynamic Evolution Map - Y: Net Price , X: Volume (Units)

Early Payment Discount Selected

Full truck Discount Selected

Discretionary Discount Selected 30

Rebates Selected

Unbilled Services Selected

Unbilled guarrantees Selected 100% 10000%

Client Management Costs Selected 11%

Recruiting Costs Alloc Selected 0% 10000%

Marketing Costs Alloc Selected -11%

Max to Client Price Disc. Selected 200% 1000%

5%

-90% 10000%

0%

100% 200%

-90%

a

a

a

Fiscal Year 2009 a Fiscal Year 2010

Fiscal Month (All) a Fiscal Month (All)

Industry Name (All) a Industry Name (All)

Region Name (All) aCusto Rev

Segment Region Name (All)

Acct Mngr Name (All) a 20 South 5_VL 1 708 -40,08% 56,70% 43,30% 1 513 -0,43% 54,25% 45,75% Acct Mngr Name (All)

Customer Name (All) a 15 North 5_VL 1 241 -41,13% 55,04% 44,96% 1 102 -0,34% 55,80% 44,20% Customer Name (All)

Market Name (All) a 19 South 4_L 1 808 -44,50% 57,28% 42,72% 1 580 -0,52% 56,90% 43,10% Market Name (All)

Market Segment Name (All) a 18 South 3_M 6 956 -46,67% 55,16% 44,84% 6 596 -2,57% 56,50% 43,50% Market Segment Name (All)

Customer Breath Name (All) a 14 North 4_L 2 204 -48,10% 57,27% 42,73% 1 992 -0,75% 58,24% 41,76% Customer Breath Name (All)

Custo Rev Segment Name (All) a 17 South 2_S 7 717 -49,86% 53,82% 46,18% 7 260 -2,98% 53,93% 46,07% Custo Rev Segment Name (All)

Material GrP Name (All) a 4 0 4_L 3 022 -50,53% 62,25% 37,75% 2 706 -1,04% 61,17% 38,83% Material GrP Name (All)

Product Family Name (All) a 21 West 1_VS 2 044 -51,31% 50,96% 49,04% 1 932 -0,81% 51,62% 48,38% Product Family Name (All)

Product Grp Name (All) a 9 East 4_L 1 974 -54,95% 64,78% 35,22% 1 718 -0,73% 63,79% 36,21% Product Grp Name (All)

Plant Name (All) a 1 0 1_VS 1 759 -59,30% 55,62% 44,38% 1 568 -0,77% 57,77% 42,23% Plant Name (All)

MAP

Ma

p O

pti

on

sM

an

ua

l &

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to Z

oo

m

Apply Zoom

DATA TABLE

Gro

ss S

ale

s

D&

R &

Oth

er

Mk

tg.

(% G

ro

ss

Sa

les)

CO

GS

(%

Ne

t

Sa

les)

Ma

nu

al

Gra

ph

Nº

Au

to G

rap

h N

º

Code

Change Type

of Analysis 1

Change Type of

Analysis 2

Region

South

Gro

ss S

ale

s

D&

R &

Oth

er

Mk

tg.

(% G

ro

ss

Sa

les)

CO

GS

(%

Ne

t

Sa

les)

Gro

ss P

ro

fit

(%

Ne

t S

ale

s)

Gro

ss P

ro

fit

(%

Ne

t S

ale

s)

South

North

South

North

South

West

East

-2

0

2

4

6

8

10

12

14

-1 0 1 2 3 4 5 6

Dynamic Evolution Map - Y: Net Price , X: Volume (Units)

A B Profile A Profile B

Pricing

Manual Y MAX

Manual Y MIN

X MAX

X MIN

Y MAX

Detected

X MIN

Detected

Y MIN

X MAXDetected

Detected

Apply

Speed

Apply

Speed

Speed

Speed

Apply

Apply

FULL SCREEN

USUAL SCREEN

Dynamic Evolution MapY: Net Price

X: Volume (Units)Bubbles: Gross Profit

Top TenGross Sales D&R & Other Mktg. (% GroCOGS (% Net Sales)Gross Profit (% Net Sales)Gross Sales D&R & Other Mktg. (% GroCOGS (% Net SalesGross Profit

ADJUST AXESAUTO AXES

Y: Net Price

Client Value

– “Rational”• Financial Value Measurement (FVM) /

Expected value in use (EVIU)

• Cost to customer without product minus cost to customer with product

– “Emotional”• Price elasticity

• Perceived value of ‘qualitative’ attributes

FVM/EVIU

Simulation of client level impact

Transactional analysis / observed elasticities

Win / Loss analyses Key Buying Factors

Choice based conjoint/ Perceived price/value

Discount / Rebates elasticities

Analysis / ToolsLogic / Approach

Tool 7: Economic Value to Clients (Illustrative)

What it is:

Objective evaluation of

economic value to client of our

offering versus next best

competitive alternative.

Developed by target segment

and or for individual clients.

Can be adapted to supply an

interactive sales support tool

What it does:

Analyses & visualizes the

Value of our offering

Actions it may lead to:

Development of targeted offers (focusing on attributes that create value for clients)

Can provide a very effective support tool for Sales force

Targeted communication & marketing

The stakes:

In period of High pricing turbulence (such as now), typically results in bottom line improvement of up to 4

% through better ability to communicate value to clients

If used in the context pf a new product launch (or revamp), it often results in bottom line improvement of

10% or more through value based pricing

Increased

Efficiency

Total

Benefit

€ 123

€ 2260

€ 2137

Longer Life Incr

MaintCost

Conversion

Costs

Total

Costs€ 300

€ 200 € 500

Total

Prem.

€1760

€369 Best Alternative

Total

Value

€2029 !

Tool 8: Segmented Competitive Value Maps

Customer Value Map

0.50

1.50

0.50 1.00 1.50

Relative Perceived Value

Rela

tiv

e P

ric

e

Dell

Compaq/HP

Clone

Toshiba

Fair Value Line

Value

Disadvantaged

Value

Advantaged

Relative Value (Perceived /measured)

Competitor 1

Competitor 2Competitor 3

Competitor 4

Segmented Competitive Value Maps(Segment X, Market B, 2008)

What it is:

Analysis & mapping of competitive.

Prices

Value (perceived or measured)

May be used for a single product or a group of

products, globally or by client segments /

channel.

What it does:

provide visibility and control of Value & Price

positioning of Products by segment.

Helps define effective Value / Pricing

segmentationtegic


Price adjustments.

Improved proved targeting of Price & Value proposition &segmentation

Support to Sales force in Value Selling

The stakes:

Varies considerably. Repositioning/ Retargeting of Value Proposition may often result in double digit price

increases or Volume increases

Tool 9: CBC / Perception Analysis (Illustrative)

What it is:

T he most effective methodology

for measuring ‘Qualitative’ Value

perception & willingness to pay &

developing Price response /

elasticity models

Attributes elasticity not limited to

price but can include other key

factors affecting WTP

What it does:

Identifies & quantifies key

decision drivers

Model the impact of changes in

price or performance on key

‘attributes’Actions it may lead to:

More accurate & effective price & value positioning.

Identification & improvement of other levers that influence clients decisions

Improved competitive tactics & positioning

The stakes:

Performant approach to price optimization in many markets / industries.Typically results in bottom line

improvement of up to 10 %

Tool 10: Win / Loss Analysis (Illustrative)

What it is:

Systematic & regular evaluation

of reasons of Wins & losses (or

significant changes in Share of

Accounts at clients).

Criteria will include our &

competitive prices but also

conditions & buyer profile to

identify drivers

What it does:

Help identify & quantify key

decision drivers

Helps optimize price positioning


More accurate & effective price positioning.

Identification & improvement of other levers that influence clients decisions


The stakes:

Performant approach to price optimization in deal driven B2B environment.Typically results in bottom line

improvement of up to 4 %

Tool 11: Price Points Analysis (Illustrative)

What it is:

Identification of Psychological

price points from a customers’

perspective & their impact on

demand

Criteria will include our &

competitive prices but also

conditions & buyer profile to

identify impact

What it does:

Identification & measurement of

price points

Estimated impact of potential

price realignments / price points

optimizationActions it may lead to:

More accurate & effective price points positioning.

Improve price alignments along the product range & vis a vis competition


The stakes:

Performant approach to price optimization impulse / image driven product ranges or industries with high

pricing rivalry

0

1

2

3

4

5

6

7

8

9

80 85 90 95 100 105 110 115

Product price occurence (in comparable sales situation)

Occurrences

Marketing & Sales Support Tools

14

Key Tools

Share & competitive

performance monitoring

Peer Pricing & Value selling

support

Portfolio analyses

Analyses of performance on

key Value attributes

Campaign effectivenes

measurement & modeling

Competitive & Pricing

Intelligence tools

Tools to help support Strategic Marketing

& Sales with a value focus & Marketing

effectiveness improvements

Tool 13: Portfolio Pricing Dashboard (Illustrative)

What it is:

Systematic & regular

Dashboard providing

indication of performance &

guidance on Client portfolio.

Criteria used may vary by

sector and based on

strategic priorities

What it does:

Monitoring tool

Support to sales force in

execution of Pricing strategy


Better targeting of pricing actions by sales force.

Identification of Price increase opportunities or imminent price threats

Improved monitoring of portfolio performance

The stakes:

Higher effectiveness in Pricing execution. Typically results in bottom line improvement of up to 2%

Client Conditions Monthly Monitoring

Report

AM: John Smith –

Client Portfolio

Total

Previous.year

Client Margin (YTD)

Vol.Band (Ann.)

Disc.Vol.

Band

Except.(N/Y &Auth)

Curr.Disc(%)

Disc.Ok’d(%)

Renego.(previous)

Client Rev. (YTD)

Renego.(next)

Growth(%)

IncentiveScore

(Sales Rep) Client

ABC

ACB

BAC

BCA

1.2M€

8.1M€

0.2M€

3.2M€

6%

32%

1%

-12%

31%

28%

29%

21%

L1

XL1

M1

L2

YTL

14%

17%

18%

25%

14%

18%

11%

18%

09/07

02/07

06/07

08/07

25

75

1

-20

L2

XL1

M2

L2

09/08

02/08

06/08

01/08

3.2M€ -2% 29% 17% 18% 354On Time6

Control 3Exception Handling

Monitoring 4Renegociations

Monitoring 5Calculation of

Salesman’s incentive

Control 2Net Price Check

Control 1Volume Band

Tool 14: Peer Pricing (Illustrative)

What it is:

Support to sales force by

providing contextual information

on similar offers (price

conditions, features & outcome).

Key is identification of

comparable deals & collection of

relevant information

What it does:

provide visibility on what is

feasible / reasonable

Provides reassurance & peer

pressure to perform


More effective pricing by sales force (better margins).

Stronger emulation amongst sales force

Elimination of ‘way over-/under- priced offers’

The stakes:

Similar to Win/Loss - approach to price optimization in deal driven B2B environment. Typically results in

bottom line improvement of up to 4 %

Tool 15: Portfolio Analysis / Price Structure Mapping (Illustrative)

Product Performance (Protection index)

Product 3

Product 2

Product 3

Product4

Segmented Price Structure Maps(Segment X, Market B, 2008) What it is:

Analysis & mapping of segmented Product

range.

Prices

Product performance

May be used for a group of products, globally or

by client segments / channel.

What it does:

provide visibility and control of coherence of

product Price & Performance positioning.

Can be used competitively to identify

competitive opportunities / threats


Price adjustments.

Improved proved positioning of Products

Rationalization of product range

The stakes:

Depending on initial state 1 to 3 % improvement in average realized price

Fu

ll P

ric

e /

Ha

(€

)

Tool 16: Rating Performance / Value Curves

What it is:

Analysis & mapping of competitive.

Value performance

Performance on attributes

May be used for a single product or a group of

products, globally or by client segments /

channel.

What it does:

provide visibility and control of Value positioning

of Products by segment.

Identifies key attributes by segment

Helps define effective Value segmentation


Value proposition adjustments

Improved targeting of Price & Value proposition &segmentation

Support to Marketing force in product development / Product attributes

The stakes:

Varies considerably. Repositioning/ Retargeting of Value Proposition may often result in double digit price

increases or Volume increases

Weight 56 1 1 10 13 19

Ship

Complete

Defects Range Service Shipment

Date

Price

Region: Central

Segment: Price Driven

Competitors Value Graphs

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

ACME

Comp 1

Comp 2

Tool 17: Promotional Performance analysis (Illustrative)

Dis

co

un

t O

ffe

red

c (

% L

ist

pri

ce

)

Sales Impact (% LT Lift)

What it is:

Analysis or profit & volume

impact of promotions.

can be used any type of

promotional / sales animation

action to evaluate ROI of action.

What it does:


actual performance of action,

including stock effects &

cannibalization, to provide

improved vision of actual &

relative performance


Re-adust marketing budget to support most effective actions.

Best practice transfer (Test, Learn & generalize)

Improved targeting of promotions

The stakes:

20 to 40% improvement in Marketing ROI

Month (All)Region Code (All)Market Name (All)Industry Name (All)Custo Rev Segment Name (All)Product Family Code (All)Product Grp Code (All)Prod Rev Segment Name (All)

Column Labels

2009

Avg Price

2008

Avg Price

2009 Rev 2009 Prod Hier Vol Gr Pr Gr

Apparent

elastRow Labels Product Code Vol #VALUE! #VALUE! Gross Rev Product Code

Ac1 Ac1 1 695 2,63 2,63 4 181 Ac1 -6% 0% 43,02

Ac1 Ac13 1 572 34,10 34,14 44 413 Ac13 -17% 0% 159,98

Ac1 Ac15 1 170 39,45 39,42 57 360 Ac15 24% 0% 342,24

Ac1 Ac16 1 363 42,16 42,17 56 952 Ac16 -1% 0% 159,69

Ac1 Ac17 1 460 44,70 44,66 53 414 Ac17 -18% 0% -226,76

Ac1 Ac18 1 331 47,18 47,31 73 339 Ac18 16% 0% -62,23

Ac1 Ac19 1 534 50,00 49,85 66 983 Ac19 -12% 0% -42,85

Ac2 Ac2 1 408 5,24 5,26 7 604 Ac2 3% 0% -8,74

Ac2 Ac21 1 248 55,33 55,24 74 468 Ac21 8% 0% 48,24

Ac2 Ac23 1 479 60,46 60,42 84 845 Ac23 -5% 0% -66,91

Ac2 Ac24 1 375 63,08 62,90 88 276 Ac24 2% 0% 7,52

Ac2 Ac27 1 416 70,99 70,84 108 300 Ac27 8% 0% 36,16

Ac3 Ac30 1 406 78,91 78,88 119 755 Ac30 8% 0% 207,86

Ac3 Ac31 1 181 81,35 81,36 120 448 Ac31 25% 0% -1861,22

Ac3 Ac32 1 375 84,15 84,17 119 143 Ac32 3% 0% -216,68

Ac3 Ac33 1 652 87,07 86,69 100 272 Ac33 -30% 0% -68,35

Ac3 Ac34 1 547 89,32 89,10 119 633 Ac34 -13% 0% -53,16

Ac3 Ac35 1 332 92,10 91,75 127 072 Ac35 4% 0% 10,27

Ac3 Ac36 1 312 94,75 94,53 125 885 Ac36 2% 0% 6,56

Ac3 Ac37 1 499 97,37 97,11 135 000 Ac37 -7% 0% -27,14

Ac3 Ac38 1 256 99,62 100,07 124 493 Ac38 -1% 0% 2,07

Ac3 Ac39 1 472 102,62 102,63 149 513 Ac39 -1% 0% 79,69

Ac1Ac13

Ac15Ac16

Ac18

Ac19

Ac2

-1%

-1%

0%

1%

1%

-40% -30% -20% -10% 0% 10% 20% 30% 40%

Price change (y) vs Volume Change (x) (2008-2009 - by Product )

Pricing

Full ScreenNormal Screen


Go to Product Pivot





++

--

2011 – Promotional Performance analysis

Tool 18: Benchmarking & Competitive Intelligence

What it is:


monitoring & benchmarking of

competitors ‘Sell-In’ & ‘Sell-out’

prices at relevant levels

Key ingredient of Pricing

Intelligence

What it does:

provide ability to react faster &

smarter to competitive price

movements

0

10

20

30

40

50

60

70

80

90

1 3 5 7 9 11 13 15

Avis

Hertz

Europcar

Easy Rentacar

ADA

eSixt

Budget

RentaCar

Category xxx - Average Daily Rate Comparison(as function of rental duration)


Better anticipation / faster reaction to changes in competitive prices


Stronger sales pitch

The stakes:


% through better anticipation of - / faster reaction to - price movements

Tool 19: Pricing BSC & Dashboards (Illustrative)

What it is:

Balanced scorecard – used to

monitor globally performance &

development of pricing strategy.


sector and level of analysis

What it does:

provide visibility & control of

implementation of Pricing

strategy


Better anticipation / faster reaction to changes in Industry Pricing Dynamics.

Better & balanced monitoring & control of performance, faster ability to react

Improved ability to manage change & performance improvement over the longer term

The stakes:

Strong monitoring of Price Strategy performance & change management at any level – key driver to

Global performance

Tool 20: Pricing Diagnostic & Roadmap (Illustrative)

What it is:

Diagnostic– evaluates current

level of performance vs Best

practices on all aspects of

Pricing management.

Roadmap : identifies key levers

for improvement of pricing

performance improvement &

provides concrete

recommendations & actions

plans to follow to get there

What it does:

Key tool to support sustainable

performance improvement


Clarifies where we are and where we need to go.

Aligns & organizes the company around the required change management effort to achieve improvement

Helps prioritize & organize action for optimal effectiveness

The stakes:

Best approach to achievable sustainable’ performance improvement

Tool 21: Pricing Proccess RACI (Illustrative)

What it is:

Defines & organizes participant

roles & responsibilities in all

pricing processes.

Defines calendar & organizes

to ensure effective collaboration

& consensus building

What it does:

provide visibility, coordination

& control of all key pricing

processes


Improved coordination of stakeholders.

Conflict reduction, improved consensus building

Improved prioritization / more rational arbitrage between alternative plans

The stakes:

Effective management of Pricing & Value across the company

Tool 22: Pricing Thought Process (Illustrative)

What it is:

A ‘qualitative’ process to

support more rational / effective

Pricing decision making – when

data availability is insufficient.

A tool to capitalize on

managers collective expertise to

improve decisions & develop

consensus

What it does:

Provide a strong logical

framework to help focus

discussion, rationalize them &

facilitate consensus


Better Decision making.

Improved consistency across divisions and time

Improved consensus

Development of Pricing & Value culture

The stakes:

Improved Pricing management & consensus

Tool 23: Pricing Alignment

What it is:

Visualization of positioning &

attractiveness if alternative

packages as a function of nt

usage

Key ingredient of Pricing

coherence management

What it does:

provide ability to improve

pricing coherence & better

position offers to meet client

usage characteristics


Better positioning of packages & prices

Identification of Price increase opportunities

Stronger sales pitch better fit to needs

The stakes:

In segmented markets – with high price visibility, typically results in volume increases improvement of up

to 10 % through better fit of offer to needs

100 200 300 400 500 600 700 800

70 100 130 160 190 220 250 280

60 85 110 135 160 185 210 235

90 90 90 110 130 150 170 190

150 150 150 150 150 150 150 150

0

50

100

150

200

250

300

0 100 200 300 400 500 600 700 800

Variable

Short Trip

Long Trip

Illimité

Category xxx – 1 Day Rental package comparison(as function of Km driven)

Tool 24: Industry Pricing Dynamics Assessment (Illustrative)

What it is:


assessment of Industry pricing

Dynamics.


sector and for Commodities vs

specialty

What it does:

provide visibility and

anticipation of industry level

pricing movements




Improved monitoring of industry level indicators

The stakes:


% through better anticipation of price movements

Tool 25: Pricing Simulator (Illustrative)

What it is:


assessment of Industry pricing

Dynamics.


sector and for Commodities vs

specialty

What it does:



pricing movements




Improved monitoring of industry level indicators

The stakes:


% through better anticipation of price movements

Tool 26: Portfolio Pricing Simulator (Illustrative)

What it is:

Decision support tools to

simulate / optimize pricing

across a porfolio of Products or

countries, taking into

consideration elasticities, price

corridors & potential competition

between ranges

What it does:

Optimization & coordination of

pricing across the portfolio


Implementation of price corridors.

Differentiating offers to better serve different markets / optimoize value capture

Targeted Price increases / decreases

The stakes:


% through better optimization & coordination of prices

Check / Uncheck All

Accuspray Accuspray barrel

Hyp BSCF/BCF Stopper

Hyp NSCF/NCF Stopper

Hyp TSCF/TCF Stopper

Hypak Comp SCF Other

Hyp Bulk Barrel Luer

Hyp Bulk Barrels Ndl

Hyp Bulk Ndl Shield

Hyp Bulk Plast Comps

Hyp Bulk PRTC

Hyp Bulk RNS

Hyp Bulk Stp/Byp Stp

Hyp Bulk Tip Caps

Hyp SCF Barrel Luer

Hyp SCF Barrel Ndl

Hyp SCF Barrel Ndl Physiolis

Hypak Plunger Rods Hypak Plunger Rods

Hypoint Needles Hypoint Needles

Monovial Stopper

Monovial Vials

TS Needle Guard

Preventis

Preventis Other

Rdf Bulk Stopper

Rdf RTS Barrels Luer

Rdf RTS Barrels Ndl

Rdf RTS Stopper

Rdf SCF Barrel Luer

Rdf SCF Barrels Ndl

Rdf Components Rdf Comp Others

Rdf Olunger Rods Rdf Plunger Rods

Uniject Reservoir

Sterifill Barrels S-fill SCF Brrl Luer

Sterifill Plungr Rod

Sterifill Stppr

Preventis

Readifill Barrel

Sterifill Components

Product Selection for analysis

Hypak Bulk Barrels

Hypak Componets

Bulk

Hypak SCF Barrels

Hypak Components

SCF

Monovial

FULL SCREEN

USUAL SCREEN

Go to Product Synthesis

Go to Impact Analysis

Go to Product Hypotheses

Go to Prodiuct Client Detail

Go to ImpactMenu

Go to MainMenu

Run Impact

Analysis

Tool 27: Retail Network Pricing Simulator (Illustrative)

What it is:

Systematic Daily price

optimization in highly price

competitive environments

Can be used to optimize

pricing in a network, taking inti

consideration local competition &

demand

What it does:

Simulates / optimizes pricing

based on specific competitive

conditions & capitalizing on

historically measured elasticities


Improved daily pricing to support overall marketing strategy & objectives

Faster reaction / anticipation of competitive moves

The stakes:

1 to 3% improvement in pricing realization… may be key in markets subject to very intense price

competition

Brand Teboil Criteria Weight Constr. (>) Profit ROS % SoC %

TypFuel 98E ROS 50% 0,10% Optim. 6 397 € 2,4% 31,9%

Date 04/01/2010 SoC 50% 18,00% Initial 4 509 € 2,3% 28%

Row Labels Nb Comp Prev PrcRev Prev Marg VarCost / LtrGr Profit Min Pr MaxPr Price

Gross

Profit Station Price

Mod

Revenue SoC ROS %

Gross

ProfitAura 3 ##### 6 682 € 388 € 1,542 € 94 € 1,605 € 1,739 € 1,661 € 118 € Aura 1,661 € 5 743 € 46,0% 2,1% 118 €

Espoo 6 ##### 37 978 € 2 654 € 1,462 € 1 320 € 1,538 € 1,666 € 1,551 € 1 494 € Espoo 1,551 € 49 623 € 28,5% 3,0% 1 494 €

Hämeenkyrö 3 ##### 6 434 € 455 € 1,471 € 147 € 1,540 € 1,668 € 1,579 € 151 € Hämeenkyrö 1,579 € 6 719 € 39,6% 2,2% 151 €

Hämeenlinna 6 ##### 2 772 € 271 € 1,465 € -37 € 1,535 € 1,663 € 1,543 € 340 € Hämeenlinna 1,543 € 12 690 € 24,5% 2,7% 340 €

Heinola 3 ##### 3 233 € 229 € 1,516 € -22 € 1,569 € 1,700 € 1,602 € 27 € Heinola 1,602 € 5 196 € 30,0% 0,5% 27 €

Helsinki 6 ##### 11 852 € 924 € 1,475 € -1 € 1,532 € 1,660 € 1,543 € 723 € Helsinki 1,543 € 37 160 € 21,0% 1,9% 723 €

Huittinen 2 ##### 5 972 € 426 € 1,448 € 143 € 1,584 € 1,629 € 1,584 € 144 € Huittinen 1,584 € 4 982 € 51,6% 2,9% 144 €

Hyvinkää 3 ##### 11 792 € 767 € 1,412 € 397 € 1,491 € 1,616 € 1,544 € 491 € Hyvinkää 1,544 € 10 063 € 54,2% 4,9% 491 €

Ilomantsi 3 ##### 5 897 € 414 € 1,512 € 172 € 1,581 € 1,713 € 1,626 € 170 € Ilomantsi 1,626 € 5 883 € 42,5% 2,9% 170 €

Jämsä 2 ##### 5 095 € 330 € 1,509 € 91 € 1,564 € 1,694 € 1,628 € 95 € Jämsä 1,628 € 4 571 € 46,7% 2,1% 95 €

Janakkala 4 ##### 6 578 € 548 € 1,478 € 205 € 1,552 € 1,681 € 1,594 € 205 € Janakkala 1,594 € 7 532 € 36,8% 2,7% 205 €

Juva 3 ##### 3 472 € 274 € 1,493 € 54 € 1,547 € 1,676 € 1,591 € 91 € Juva 1,591 € 5 045 € 36,8% 1,8% 91 €

Kaavi 4 ##### 5 179 € 401 € 1,506 € 101 € 1,579 € 1,710 € 1,612 € 117 € Kaavi 1,612 € 6 316 € 36,2% 1,9% 117 €

Kankaanpää 2 ##### 4 914 € 334 € 1,518 € 110 € 1,573 € 1,704 € 1,639 € 113 € Kankaanpää 1,639 € 4 560 € 50,5% 2,5% 113 €

Kärsämäki 4 ##### 1 722 € 149 € 1,463 € 75 € 1,535 € 1,663 € 1,545 € 134 € Kärsämäki 1,545 € 3 919 € 25,7% 3,4% 134 €

Kauniainen 2 ##### 3 636 € 304 € 1,481 € 91 € 1,538 € 1,666 € 1,592 € 107 € Kauniainen 1,592 € 4 591 € 45,1% 2,3% 107 €

Kaustinen 4 ##### 4 202 € 413 € 1,494 € 101 € 1,571 € 1,702 € 1,610 € 124 € Kaustinen 1,610 € 6 056 € 35,3% 2,1% 124 €

Kempele 2 ##### 5 526 € 385 € 1,517 € 139 € 1,573 € 1,704 € 1,639 € 144 € Kempele 1,639 € 5 239 € 51,3% 2,7% 144 €

Kerimäki 3 ##### 1 678 € 154 € 1,519 € 4 € 1,571 € 1,702 € 1,636 € 29 € Kerimäki 1,636 € 2 495 € 19,6% 1,2% 29 €

Kiiminki 2 ##### 1 590 € 286 € 0,546 € 35 € 0,639 € 0,692 € 0,666 € 33 € Kiiminki 0,666 € 1 584 € 44,7% 2,1% 33 €

Kokkola 5 ##### 12 538 € 979 € 1,487 € 388 € 1,561 € 1,691 € 1,626 € 307 € Kokkola 1,626 € 10 536 € 17,7% 2,9% 307 €

Brand: Teboil Fuel: 98E - ROS vs Share of Choice, by

station (bubble size proportional to revenues)

Station level Data

Optimization PerformanceOptimization Parameters

Aura

Espoo

HämeenkyröHeinola

Helsinki

HuittinenHyvinkää

Jämsä

IlomantsiJanakkala

JuvaKaavi

Kärsämäki

KauniainenKaustinen

Kerimäki

Kiiminki

Kokkola

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

0% 10% 20% 30% 40% 50% 60%

Optimize Multi-Stations pricing

ROS %

SoC %

Quality

Station Level Price Impact

Price Share

Station Level Optimization

Station Level Decision

Station Profile Database

Competitive Pricing DB

Navig

atio

n

Network Optimization

Tool 28: D & R Savings model (Illustrative)

What it is:

Interactive simulation of

potential impact of changes in

D&R policies

Who is affected?

How much?

Potential impact on

demand & volumes.

Support to sales force in

explaining / implementing price

changes on their portfolio

What it does:



pricing movementsCorrective actions it may lead to:

Better planning / evaluation & selection of D&R changes.

Improved & faster implementation

Improved fairness

The stakes:

40 to 8 month delay in Implementation

20 to 60% fewer ‘exceptions’

Tool 29: Segmentation & Clustering

What it is:

Segmentation of Clients / Consumers,

based on.

Attributes sought

Potential & willingness to pay

May be used for a single product or a

group of products, globally or by channel.

What it does:

Helps define effective Value / Pricing

segmentation

Help visualize weights / stakes &

priorities by segment.


Development of targeted offers.

Support to targeting by sales force

Targeted communication & marketing

The stakes:

Varies considerably. Segmentation & adaptation of Value Propositions may often result in double digit

price increases or Volume increases

0

10 000 000

20 000 000

30 000 000

40 000 000

50 000 000

60 000 000

70 000 000

80 000 000

90 000 000

Value Driven

Price Driven

Delivery Driven

Service driven

Speed Driven

Quality driven

1 2 3 4 5 6

Comp2

Comp1

ACME

Tool 30: Statistics & Regression Tools (Illustrative)

What it is:

Statistical tools to support in

depth analysis & modeling of

Pricing & Value

Clustering

CBC / Discrete choice

Logit Regressions

..

What it does:

Enables true insights &

sophisticated modeling


Understanding causalities / Identififying trends

Ability to model / predict

Continous improvement based on historical data

The stakes:

Insights / price response modeling is at the root of Price optimization

Tool 31: Flexible P&L Reporting (Illustrative)

What it is:

Regular reports ensuring

coherence with Finance &

enabling insights on impact of

pricing on overall financial

performance

Ability to zoom or group flexibly

by product / segment / regions

What it does:

provide visibility accountability

for Pricing performance

Provides early warning of

threats & improved visibility for

opportunities


Better anticipation / faster reaction to changes.


Improved monitoring & control of performance

The stakes:

Improved control & faster reaction

Month (All)

Region Code (All)

Market Name (All)

Industry Name (All)

Custo Rev Segment Name (All)



2007 2008 2009 2010 % Gr (10/09)

Theoretical Revenues 1) 94 832 963 92 711 698 117 583 738 113 518 393 -3,5%

Unexplained Discount -2 986 736 -2 790 767 -2 990 030 -2 789 994 -6,7%

Gross Sales 91 846 227 89 920 931 114 593 708 110 728 399 -3,4%

Total Discounts -13 692 016 -12 291 691 -17 870 605 -15 830 026 -11,4%

Invoice Revenues 78 154 211 77 629 239 96 723 104 94 898 374 -1,9%

Total Rebates & freebees -10 396 467 -10 114 566 -13 041 436 -12 537 011 -3,9%

Net Revenues 67 757 744 67 514 674 83 681 667 82 361 362 -1,6%

COGS -37 778 327 -38 043 193 -45 991 374 -45 737 252 -0,6%

Total Client & Mktg costs -21 873 956 -22 296 836 -27 826 188 -28 026 613 0,7%

Other Logistical Costs

Net Margin -13 768 496 -15 122 192 -17 962 084 -19 429 116 8,2%

Net Margin % -15% -17% -16% -18% 11,9%

D&R as Pct of Theo Sales 29% 27% 29% 27% -4,8%

Pricing

Full ScreenNormal

Go to Financial

Go to Product

Go to Price

Go to SKU

Go to Product

Go to Customer

Tool 32: Pricing Traffic Lights (Illustrative)

What it is:

Systematic & regular review of

pricing performance at detailed

with indicators / early warning

system to identify opportunities &

threats & know where

management attention should

focus.

What it does:

Saves management times by

providing key synthetic info &

warning systems


Better anticipation / faster reaction to opportunities & tgreats

Management attention better focused on real issues

Faster &eralier issue resolution

The stakes:

Agility & competitive leadership

Performance Touring Handling AS

PRODUCT LEVEL PRICING TRAFFIC LIGHTS Price

Change

Discount

Change

Share

Growth

% Rel Share

vs Ref.

Comp

% Premium

vs Ref.

Comp

Value

Positioning

Win / Loss

Indicator

Elasticity

Measure GM % Fullfilment Overall

Action

Required

BRIDGEST ONE 100 13% 0 1 8% 9 13% 1,5 60% 94% 0,6 60%

BRIDGEST ONE POT ENZA RE92A AS 115 14% 0 0 8% 9 19% 1,6 58% 101% 0,6 58%

215/45R18 BW W BRIDGESTONE POTENZA RE92A AS #E440 98 21% 0 0 8% 9 22% 1,7 58% 89% 0,6 59%

BRIDGEST ONE T URANZA EL400-02 88 27% 0 0 8% 9 33% 1,0 58% 87% 0,6 60%

215/45R17 BW Z BRIDGESTONE TURANZA EL400-02 #E402 69 26% 0 0 8% 9 48% 0,9 45% 85% 0,5 46%

215/45R17 BW Z BRIDGESTONE TURANZA EL400-02 #E329 83 23% 0 0 8% 8 49% 1,3 37% 99% 0,4 38% X

P215/45R17 BW W BRIDGESTONE TURANZA EL400-02 #G432 103 30% 0 0 8% 8 24% 1,9 50% 84% 0,5 51%

BRIDGEST ONE T URANZA EL42 98 41% 0 0 8% 7 31% 1,1 58% 99% 0,6 57%

P235/45R17 BW W BRIDGESTONE TURANZA EL42 #C193 115 49% 0 0 8% 9 29% 1,0 60% 102% 0,6 60%

P235/50R18 BW V BRIDGESTONE TURANZA EL42 #E445 125 58% 0 0 8% 7 18% 0,8 60% 84% 0,6 58% Y

P235/60R18 BW H BRIDGESTONE TURANZA EL42 #C010 83 39% 0 0 8% 7 15% 0,9 58% 95% 0,6 59%

P245/45R19 BW V BRIDGESTONE TURANZA EL42 #G447 127 32% 0 0 10% 7 14% 1,0 59% 85% 0,6 60% X

BRIDGEST ONE T URANZA EL42 RFT 96 25% 0 0 8% 9 18% 0,9 39% 101% 0,4 38%

205/55R16 BW H BRIDGESTONE TURANZA EL42 RFT #7334 100 21% 0 0 8% 7 10% 0,5 37% 102% 0,4 37%

225/45R17 BW H BRIDGESTONE TURANZA EL42 RFT #E446 111 31% 0 0 8% 9 7% 0,4 46% 100% 0,5 47%

225/45R17 BW H BRIDGESTONE TURANZA EL42 RFT #7335 112 42% 0 0 8% 9 7% 0,4 51% 86% 0,5 51%

225/45R17 BW H BRIDGESTONE TURANZA EL42 RFT #E330 85 53% 0 0 8% 8 4% 0,4 59% 98% 0,6 58%

BRIDGEST ONE T URANZA ER30 84 29% 0 0 8% 7 5% 0,5 59% 83% 0,6 58% Y

205/45R16 BW W BRIDGESTONE TURANZA ER30 #7271 101 26% 0 0 8% 7 6% 0,7 45% 98% 0,5 46%




255/50R19 BW W BRIDGESTONE TURANZA ER30 #7275 107 25% 0 0 8% 8 14% 1,0 47% 93% 0,5 46% Y

255/55R18 BW W BRIDGESTONE TURANZA ER30 #C195 122 20% 0 0 8% 7 18% 1,5 59% 99% 0,6 60%

255/55R18XL BW Y BRIDGESTONE TURANZA ER30 #7269 120 18% 0 0 8% 8 23% 1,1 42% 99% 0,4 43% X


BRIDGEST ONE T URANZA ER300 88 20% 0 0 8% 7 20% 0,9 39% 100% 0,4 40% X

235/55R17 BW W BRIDGESTONE TURANZA ER300 #F355 126 23% 0 0 8% 9 21% 1,0 58% 102% 0,6 59%

BRIDGEST ONE T URANZA ER33 83 13% 0 0 8% 7 16% 1,0 59% 101% 0,6 58% Y

Pricing

Tool 33: Pricing Objectives vs Realized(Illustrative)

What it is:

Detailed monitoring & control

of performance vs objectives

Earlier identification &

resolution of potential issues /

slippages

What it does:


anticipation of evolving

performance & possible

corrective actions required


Better anticipation / faster reaction to changes in performance

Performance measurement & incentives management

The stakes:

Key to achieving level 2 of performance

More proactive management of performance

(All) Objective vs. Realized Top Invoice Sales Objectives Year (All)

Cust. Name Cust. Number Objective Realized

1692 521650 0 144864

1968 555379 0 136822

1695 506527 0 117699

1974 526000 0 109570

1727 555376 0 98046

1946 521607 0 97007

1946 521607 0 97007

2076 553933 21000 109593

1819 520119 0 85737

1995 500730 0 85496

1700 521606 0 83158

2007 523324 0 76190

1711 555377 0 70765

2160 506610 0 66531

1968 506711 0 65709

1968 506711 0 65709

1916 507987 0 62994

1700 520133 23000 83158

2009 525928 30000 88030

1830 521633 0 56727

1960 525894 0 54548

1670 521651 0 53791

1671 520134 0 53240

1726 523335 0 52366

2047 520136 0 51722

Year 2008

Acct Mgr (All)

Region (All)

Segt (All)

Size Seg (All)

-20 000

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

-20 000 0 20 000 40 000 60 000 80 000 100 000 120 000 140 000 160 000

Objective vs. Realized Performance Rebate by Customer

Realized (RUB)

Ob

jecti

ve

s (R

UB

)

Under Objective

Over Objective

Full ScreenNormal Pricing

Tool 34: Financial Performance reporting (Illustrative)

Month (All)Region Code (All)Market Name (All)Industry Name (All)Custo Rev Segment Name (All)Product Family Code (All)Product Grp Code (All)Prod Rev Segment Name (All)

Column Labels2009

Row Labels Product Family Name Vol

Avg Price

2008

Avg Price

2009 Rev 2009 Prod Hier Vol Gr Pr Gr

Apparent

elastAc1 Access Control 15 852 34,15 34,31 542 959 Access Control 0% 0% 0,37

Ac2 Access Control 15 563 59,34 59,18 945 212 Access Control 3% 0% 9,70

Ac2 Supplies 10 66,24 Supplies

Ac3 Access Control 15 425 83,30 82,10 1 253 386 Access Control -1% -1% -0,72

Ac4 Access Control 7 005 91,72 92,00 578 539 Access Control -10% 0% 32,75

Ac5 Access Control 1 518 13,17 13,14 15 395 Access Control -23% 0% -109,76


Ac7 Access Control 1 337 18,37 18,42 23 146 Access Control -6% 0% 22,33


Ac9 Access Control 1 573 23,68 23,65 34 561 Access Control -7% 0% -47,18

Ba1 Barriers 144 443 3,60 3,68 517 506 Barriers -3% 2% 1,25


Ba2 Security / Protection 171 7,16 Security / Protection

Ba3 Barriers 147 459 8,59 8,65 1 286 061 Barriers 1% 1% -1,28

Ba4 Barriers 71 809 9,37 9,09 636 824 Barriers -2% -3% -0,80




Ba8 Barriers 13 341 2,18 2,17 32 928 Barriers 14% 0% 35,46

Ba9 Barriers 11 783 2,44 2,44 32 647 Barriers 14% 0% 57,90

Co1 Consulting / Advice 564 4359,80 4282,87 2 428 385 Consulting / Advice 1% -2% 0,30

Co2 Consulting / Advice 595 7624,84 7302,13 4 556 528 Consulting / Advice 5% -4% 1,15

Co3 Consulting / Advice 597 10555,82 10586,90 6 235 685 Consulting / Advice -1% 0% 4,55-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

-60% -40% -20% 0% 20% 40%

Price change (y) vs Volume Change (x) (2008-2009 - by Product )

Pricing

Full ScreenNormal Screen


Go to Product Pivot






Go to Product Pivot





What it is:


of financial performance &

impact of price changes

Earlier identification &

resolution of potential issues /

slippages

What it does:


anticipation of impact of policy

changes & possible corrective

actions required


Better monitoring / faster feedback to impact of new policies

Improved planning & faster readjustments when required

The stakes:



Tool 35: Pricing Corridors Management (Illustrative)

European Price Corridor Market AA (€/Litre)

Prod A

Prod BProd C

Prod DProd E

Prod F Prod GProd H

Prod I

Prod J

Prod A

Prod BProd C

Prod DProd E

Prod F Prod GProd H

Prod I

Prod J

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

50.00

0 2 4 6 8 10 12

Product Range

Sell

-In

Pri

ce

Haut corridor

Prix Mini

Validés 2007

What it is:

Implementation of maximum

price differences to ensure

pricing coherence across

neighboring countries of client

segments

Prevention of parallel trade

What it does:

provide visibility to relative

price levels to ensure coherence

& avoid risk of disruption to

distribution channelsCorrective actions it may lead to:

Better coherence / fairness of pricing

Facilitates channel management

The stakes:



Tool 36: Pricing Exceptions Management (Illustrative)

What it is:


of ‘pricing exceptions’ granted &

of the fair process of exceptions

management

Improves pricing fairness &

coherence

Saves time in management of

exceptions

What it does:


accountability for exceptions é

ensures that they are used

effectively


Better / fairer / more effective management of prices & client conditions

Performance measurement & incentives management

The stakes:

