Strategic pricing in the engineering industry
Savukoski, Jesse (2015)
Savukoski, Jesse
Haaga-Helia ammattikorkeakoulu
2015
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2015110916135
https://urn.fi/URN:NBN:fi:amk-2015110916135
Tiivistelmä
In today’s challenging market environment, pricing is one of the most crucial elements in a company’s marketing plan. By identifying the best pricing practices in various situations, a firm can succeed and evolve in accordance with its long-term strategy.
In this respect, this thesis is a case study with the aim of providing a comprehensive framework for the target company under which it can operate. More specifically, the framework handles strategic aspects of product pricing and business planning under different circumstances. The commissioning organization of the research is a known subcontractor for the engineering industry. The firm operates in the heavy equipment business serving its OEM customers in various product segments.
The research is delimitated to cover three main pricing approaches, which are cost-based, competition-based and value-based pricing methods. These strategies are studied from high-quality marketing and pricing handbooks as well as from certain academic publications. The material for the empirical part is collected by four different interviews conducted in the target company.
The interviews enabled a solid foundation to present the current processes used in the target company. Hereafter, discussion part goes through a number of diverse operating environments, including high and low capacity utilization and different product groups and market segments. The purpose is to provide strategic aspects to be taken into account in each business case, especially from pricing point of view.
As a result of this research, some meaningful recommendations can be provided. For instance, an understanding of customer preferences and underlying market environment plays a crucial role when making a pricing decision. As the market environment changes rapidly, companies operating in the industry must adapt their pricing practices to remain competitive in the market. Moreover, the company should have extensive pricing tools to be able to respond to changing demand.
The research process started at the beginning of 2015 and all the interviews took place in June or July 2015. The assignment on this subject was discussed and agreed with the target company. All in all, the research provides some beneficial information to support the target company’s operations.
In this respect, this thesis is a case study with the aim of providing a comprehensive framework for the target company under which it can operate. More specifically, the framework handles strategic aspects of product pricing and business planning under different circumstances. The commissioning organization of the research is a known subcontractor for the engineering industry. The firm operates in the heavy equipment business serving its OEM customers in various product segments.
The research is delimitated to cover three main pricing approaches, which are cost-based, competition-based and value-based pricing methods. These strategies are studied from high-quality marketing and pricing handbooks as well as from certain academic publications. The material for the empirical part is collected by four different interviews conducted in the target company.
The interviews enabled a solid foundation to present the current processes used in the target company. Hereafter, discussion part goes through a number of diverse operating environments, including high and low capacity utilization and different product groups and market segments. The purpose is to provide strategic aspects to be taken into account in each business case, especially from pricing point of view.
As a result of this research, some meaningful recommendations can be provided. For instance, an understanding of customer preferences and underlying market environment plays a crucial role when making a pricing decision. As the market environment changes rapidly, companies operating in the industry must adapt their pricing practices to remain competitive in the market. Moreover, the company should have extensive pricing tools to be able to respond to changing demand.
The research process started at the beginning of 2015 and all the interviews took place in June or July 2015. The assignment on this subject was discussed and agreed with the target company. All in all, the research provides some beneficial information to support the target company’s operations.