Innovation and pricing seen as most important in
the Chemical industry today!
The chemical industry in Europe is facing various economic problems:
long life-cycles result in margin decays, Asian competitors bring heavy
price-pressure into the market and costs saving measures seem to be exhausted.
However, various methods and possibilities still do exist in order to increase
company's profitability – the most important being value pricing. The central
idea of value pricing is to measure the customers perceived value (i.e. “his
willingness to pay up to X”) and to set the price accordingly. However
investigation on this topic proofed that most companies in the chemical industry
have no or limited professional pricing methods since pricing seems to be
perceived as not manageable. This is an amazing finding, as value pricing is
the most powerful lever for profitability increases.
Arthur D. Little, jointly with Warwick Business School, conducted a pricing
survey with the participation of managers from all chemical industry segments
in which measures for profitability increases were investigated.
The results show that managers believe innovation to be important for market success
with the latest and promising trend being value based pricing. The majority of
interviewees indicate that in the future customer specific contribution margins
will play a more significant role. Among other interesting insights of the
survey is the finding that it is not sufficient to introduce professional price
finding methods in the company. The key success factor is the commitment and
alignment of the top-management that will translate into sales force's pricing
rules. Overall intuitive negotiating should be avoided and a systematic and
structured approach be introduced.
Innovation and pricing are the topics most discussed in the chemical industry
today. Survey results give evidence for the positive sensitivity effect of
professional pricing. Price increases of 1 % lever the profit (EBIT) by 8 %.
Variable costs and sales volumes - being considered key performance indicators
by top management - have a lesser effect: changes of 1 % lever profit (EBIT) by
4 % on average.
Bearing this in mind, it is particularly interesting that for roughly half of
the interviewees pricing is not considered as a top management issue, although optimized pricing could offer attractive opportunities.
The European Pricing Platform (EPP) together with
premium sponsor PROS and corporate sponsor Microsoft will host its first
Pricing and Profit Optimization forum on chemicals on the 26th &
27th of June at the Radisson Stockholm Waterfront Congress
center****. This high-profile, two-day event will bring together leaders from
finance, sales, marketing, pricing and all those involved in pricing decision
making to address current operational and strategic challenges companies in the
chemical industry are facing today.
Day one treats topics which learn you how to manage
your value and commodity portfolio, how to avoid value dilution, how to ensure
your reactivity in execution in a volatile market, how to use new value capturing models, how to
prepare the off-patent life cycle and many more. Practitioners faced daily with
these challenges will share their knowledge. On day one these will be
representatives from Dupont, Preem AB, GEMS and MarketAbility, DowCorning
etcetera.
Day two will learn you how you can make it happen.
What you need to do to change the pricing maturity of your organization. Day
two speakers include representatives from Bayer CropScience OMV Group and BASF.
(Source: http://www.businesschemistry.org/article/?article=59)
About EPP
European Pricing Platform is a
‘Not-for-Profit’ knowledge sharing place focused to support business
management, pricing and profit optimization professionals and CxO-level
executives in Europe over a variety of industries and sectors. Our target is to
update the pricing and Profit Optimization know-how of the business manager.
Our mission is to be the on- and offline pricing media for international
decision makers in a wide range of industries. The interactive sharing,
collecting and development of pricing and profit optimization knowledge are the
key elements of our platform. To learn more visit: www.pricingplatform.eu
About PROS
PROS Holdings, Inc. PRO -0.11% is
a leading provider of prescriptive pricing and revenue management software for
companies in the manufacturing, distribution, services and travel industries.
PROS gives customers far greater confidence and agility in their pricing
strategies by providing data-driven insights into transaction profitability,
forecasting demand, recommending optimal prices for each product and deal, and
streamlining pricing processes with enhanced controls and compliance. With more
than $465 billion in revenues under management, PROS has implemented more than
500 solutions in more than 50 countries. The PROS team comprises more than 500
professionals, including 100 with advanced degrees and 25 with Ph.D.s. To learn
more, visit www.prospricing.com.
About Microsoft
At Microsoft we are motivated and
inspired every day by our customers who use our software to find creative
solutions to business problems, develop breakthrough ideas, and stay connected
to what's most important to them. Founded in 1975, Microsoft (Nasdaq
"MSFT") is the worldwide leader in software, services and Internet
technologies for personal and business computing. Microsoft offers a wide range
of innovative products and services designed to help individuals and
organizations realize their full potential. Microsoft's philosophy is to help
developers achieve success with a comprehensive, integrated platform. Whatever
your dreams, passions or profession, Microsoft creates software that helps you
reach your potential. To learn more, visit www.microsoft.com.
European Pricing Platform
Leen
Dhaens
+32 51 32 03 72
leen.dhaens@pricingplatform.eu
www.pricingplatform.eu
