Strategic use of pricing levers can have a dramatic impact on a company’s profitability. Our research indicates that companies that do not have a fully developed pricing strategy constantly under price their products and services. As a result the profitability of the company’s business units is not fully realized A small increase in the price of a product can have a dramatic impact on profitability. Some of our clients have experienced over 15% gains in profitability with a 3% increase in prices.
A strategic approach to optimum pricing
Customers do not buy products and services. They buy the promise of benefits that the products and services offer. Our approach to leveraging pricing strategies is built on a proven belief that consumers are looking for value. They will pay the right price of a product or service if it solves a problem they are trying to address. Our strategic pricing approach begins with a strong belief that price needs to be based on value, not cost. We create price benchmarks for specific product categories and industries to determine the optimum price and a premium price in the category based on price elasticity metrics. Our approach enables us to maximize the profitability of our clients businesses. Arcus has developed proprietary approaches for optimum pricing.
Buying decision matrix: We have developed a matrix that identifies the buying process linked to desired benefits in 36 industries. The approach gives us a reference point to evaluate a brands position in the market.
Pricing Scenario Planning: Our pricing elasticity model provides clients a tool to maximize the pricing potential of their products. This ensures the profitability of the clients brands are exploited to their full potential.
Price bandwidth Analysis: We analyse the price bandwidth of brands to give us an indication of how the cluster of brands in a competitive set have been priced historically. An in-depth understanding of the 15 variables that we have identified enables us to predict the evolution of pricing strategies in the market.
Our strategic approach to pricing strategies are used by clients in diverse situations such as post mergers, acquisition of a new business unit, rationalization of product portfolios or product launches. We offer a vast best practice repository of knowledge that gives our clients a substantial competitive advantage.
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