pricing maturity report_machinery and equipment industry
DESCRIPTION
This industry is the most realistic, the perceived and actual value is almost a perfect match. Interestingly, they have also the most ambitions. Where do you stand with your ambitions and are they realistic? Discover it here!TRANSCRIPT
European Pricing Maturity2013Results and key findings - Machinery & Equipment Industry
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Results and key findings - Machinery & Equipment Industry
This is the most represented industry in the Q2 2013 survey of Pricing Maturity in European Organisations, with 28% of respondents classifying themselves in the machinery & equipment industry.
This is also the most realistic industry. Their perceived and actual pricing maturity is almost a perfect match at 2,06 vs. 2,08. Interestingly, they are also the most ambitions, with their desired end state after 12 months being 3,24.
5,88% of these respondents are already operating on level 3 of pricing maturity. They score quite high on price and policy setting, discount strategy, price execution and monitoring. Nonetheless, they are still striving to improve their operations across the scope of pricing activities in their organisations.
Half of all respondents in this sector, have global pricing departments with more than 8 persons.
56% of respondents have more than 3 years of experience in pricing, leaving a rather big portion of respondents with 2 years or less of pricing experience.
Perceived pricing maturity 2,06 = LEVEL 2
Actual pricing maturity 2,08 = LEVEL 2
Ambition within 12 months3,24 = LEVEL 3
Machinery & Equipment industry – observations
Most realistic industry and most ambitious
Figure 1: Distribution of respondents within the Machinery & Equipment industry
Figure 2: Distribution of respondents within the Machinery & Equipment industry
Source : EPP European Pricing Maturity Study – 2013
Source : EPP European Pricing Maturity Study – 2013
Perception Reality Ambition
Level 1: Price list maintenance
29,41% 41,18% 5,88%
Level 2: Transactional control
35,29% 52,94% 23,53%
Level 3: Full value capturing
35,29% 5,88% 70,59%
Level 4: Full profit optimisation
0% 0% 0%
perception reality ambition
29%
41%
Level 1:Price List Maintenance
You try to sell anything to anyone at all prices
35%
53%
24%
Level 2:Gain transactional control
and optimize
You sell the right products to the right cutomers at the
right prices
35%
6%
71 %
Level 3:Full Value Capturing
You sell segmented solutions at value based
prices
0% 0% 0%
Level 4:Profit Optimisation
You develop end-user solutions with different
revenue models
CHASM6%
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Results and key findings - Machinery & Equipment Industry
26% of respondents still work in Excel sheets with pricing know-how dispersed in the organisation, while 53% have moved to more centralised price and discount grids, linked to the ERP system which means that specific price reports can be generated in addition to financial reports. All these respondents feel that a move towards a pricing software solution, fully integrated in ERP and CRM is a step forward. The pricing software needs to be managed by the pricing team and used by whole organisation for effective reporting, monitoring, price guidance and deal making.
Similar to the Automotive industry, their biggest and most immediate challenge is to develop a system for their sales force to capture competitor intelligence effectively. In addition to that, they need to consistently measure effectiveness of price promotions. Ultimately their goal is to move away from price promotions towards value promotions to enhance value perception.
Pay attention to understanding the value components per segment and use it to determine willingness to pay. Better manage unconditional discounts by moving to a performance based system, preferably with off-invoice discounts. Perform price elasticity analysis, even if only via transactional price data analysis, it is better than not doing this important exercise at all, as the case is now with 58,8% of respondents.
Monitoring
Tools & Systems
Price setting
Machinery & Equipment industry – gap analysis
Source : EPP European Pricing Maturity Study – 2013
Source : EPP European Pricing Maturity Study – 2013
Reality Ambition
Price Strategy 2,23 3,40
Price Policy & Setting 1,98 3,16
Discounting strategy 2,12 3,26
Price Execution 1,99 3,16
Monitoring 2,06 3,28
System & Tools 1,91 3,32
Governance & Org. 2,14 3,29
Tendering 2,24 3,27
Figure 3: Gap analysis: Machinery & Equipment industry
Figure 4: Distribution of maturity scores across components of the pricing framework
TenderingGovernance & Org.
System & ToolsMonitoring
Price ExecutionDiscount Strategy
Price Policy SettingPrice Strategy
Actual PMI score
0.00 1.00 2.00 3.00 4.00
Gap with Ambition
1.031.15
1.411.22
1.171.15
1.191.17
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Results and key findings - Machinery & Equipment Industry
55,88% of respondents make use of tendering. These are the main areas identified by them for improvement during the coming 12 months.
Like most other respondents in this survey, very little attention is paid to the life time value of a tender customer. 47% of respondents do not measure life time value at all.
In most cases (53% of respondents), item selection is based on an exact match with what the customer asks. Sometimes (21% of respondents), alternatives with better margin are available and known by the person selecting items, but not always offered. One of the goals within the next 12 months according to respondents is to make sure that these margin improvement alternatives are always offered when possible.
If you would like more information or to arrange an informal discussion on the issues raised in the EPP European Pricing Benchmark Study and how they affect your organisation, please contact:
Project Manager:Nicolene [email protected]
President & Founder of EPP:Pol [email protected]
Life time value
Margin improvement alternatives
Machinery & Equipment industry – Tendering