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Industrial Sales Leadership
Inventory Management
Improving Profitability
Pricing Optimization
Optimizing Distributor Profitability
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Pricing Optimization
Scientific Pricing Framework: New Methods, Tools, and Techniques to Increase Profitability.
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Testimonials
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More testimonials
| "This program seems to be a detailed examination of the world of pricing. It has been developed from real data that forms theories, develops strategies, and arrives at practical ways to improve profitability. This should be part of the future of distribution"
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Charlie Henry, Manager of Pricing,Kirby Risk Electrical Supply
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| "Given the complexity of pricing, the Texas A&M Pricing Optimization program has gone a long way to specifying all the relevant elements and more importantly putting them in terms that can be quantified and managed. A&M can help you understand the variables and the math of distribution pricing. Don’t get on the phone without them"
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Lawrence Mohr, Ph. D., Senior Vice President, F.W. Webb Company
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| "We recognize that pricing is critical to our customers…participating in this consortium has given us additional insight into these challenges. This firsthand look at current pricing research has the potential to help both us and our customers"
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Felisha Elmore, Product Manager, Customer Relations & Core Product Initiatives, Intuit Eclipse
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Program Overview
Pricing is the gross margin inverse of asset management and procurement procedures. While the latter are designed to decrease cost (the lower margin boundary) the former is designed to raise revenues (the upper boundary). Pricing is typically market-based but pricing decisions are very complex and, when made in an information vacuum, will sub-optimize gross margins for the firm.
The pricing/discounting decision is an information exercise and determines at least half of a firm’s profitability equation. Even though most distributors understand to some extent other external drivers of pricing such as competition and market structure, understanding and implementing a holistic approach to pricing has always been difficult. This course will address practical methods to set and manage prices using existing information in order to maximize profitability.
Learning Objectives
This program will address:
- How to effectively classify / segment the customer base?
- Elements of the 'cost to serve' variable
- How to systematically maximize margins?
- Why and how to link inventory and customer classifications?
- How to scientifically leverage on existing readily available information?
Program Outline
Pricing Overview
- Multi-Criteria Decision Making
- Optimization vs. Heuristics Approach
- Texas A&M Scientific Pricing Framework
- Pricing Educational Game
Scientific (& Practical) Approach
- The 4 pillars of Pricing - Item, Customer, Geography, Time
- Scientific & Practical Pricing Framework - Addressing Critical Drivers & Variables
- Role of Inventory Stratification in Pricing
Customer Differentiation
- Key Dimensions - Revenue, Margins, Service Cost, Loyalty
- Customer Quadrants - Moving Customers to the 'Profit Zone'
- Relating ‘Product Visibility’ from Seller’s and Customer's Perspective
Pricing Strategy / Rules for Profitability
- Prioritizing Targets / Opportunity Areas
- Risk-Reward Proposition (Funnel Effect)
- Sales Force Dashboard - Information for Better Negotiation
- Customer SPEED Matrix - Shelve, Protect, Evaluate, Eliminate, Develop
Pricing Challenges & Solutions
- Calculating the 'Cost to Serve'
- Information Vacuum - New Customers / Items, Bidding, etc
- 'Price Locks' - Redefining Long Established Margins
Key Takeaways
- Understanding true cost of doing business
- Effective strategies / policies on pricing and customer management
- Setting prices based on "Item - Customer - Geography - Time" Combination
- Real-world implementation benchmarks
Benefits
- Leveraging on existing system information
- Structured easy-to-understand approach
- Optimal resource allocation of sales force
- Higher ROI through increased margins
Who should attend
- Sales Managers
- Branch & Regional Managers
- Pricing Professionals
- Purchasing Professionals
- Distribution Management Professionals
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(137 KB)
