Case Studies

PRODUCT & PRICING MANAGEMENT

Development of Effective Customer Pricing Models

In a medium-sized company in the health care sector, a historically grown variety of customer pricing models and special customer prices existed.
These were to be streamlined, systematized and managed in such a way that manual effort was minimized and target profitability was achieved.
Together with the managers responsible, I developed the relevant criteria:

  • Criteria for “Product”: Availability I Margin I Competitive behavior
  • Criteria for “Customer”: Customer assignment to appropriate clusters I Customer ordering behavior according to the RFM method
  • Criterion “ACTUAL price logic”
The analysis of product data revealed, among other things, that some of the special customer prices were no longer profitable and this had gone unnoticed.

Customer and product data were linked to form a matrix that displayed the actual overall profitability. To achieve the defined target, the following tools and measures were used:

  • System-supported surcharge and discount logics as well as quantity-based special prices
  • System-supported introduction of temporary price lists
  • Negotiation of multi-year contracts with key accounts, including temporary price lists
  • Systematic implementation of a warning system in the case of negative margins
  • Use of data cleansing for sales, marketing and purchasing, e.g. processing inactive customers and assortment optimization

Thanks to thorough preparation by the team and myself, the sometimes-complex contract negotiations with key accounts as well as end customers could be conducted successfully. As a result, the target margin was exceeded.
In addition to minimizing manual effort and reducing complexity in pricing, the sales department utilized the new logic in customer acquisition.

Product Range Design with Margin Growth

In a medium-sized trading company in the Health Care sector, the aim was to develop revenue with high-margin products. The set objectives were gross profit growth and tapping into new customer groups. Following an internal brainstorming session, we defined six building blocks to achieve these targets:
  • Formulation of a margin target for private label products
  • Expansion of the existing private label product range
  • Margin-enhancing supplier changes for existing private label products
  • Multichannel marketing of private label products
  • Conduct campaigns for high-margin product groups with industry partners
  • Increase in innovation and margin through the development of another own label

These building blocks were implemented successively, partly in parallel.
Within one year, the revenue volume of private label products increased by 16%, and gross profit rose by 33%.