Creating a pricing strategy and an implementation plan for a case company
Neuvonen, Niko (2019)
2019
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2019091318459
https://urn.fi/URN:NBN:fi:amk-2019091318459
Tiivistelmä
The purpose of this study was to create a new pricing strategy for a case company. Additionally, the case company requested an implementation plan for the new pricing strategy. The case company operates in a large and competitive industry. The company has multiple different customer groups to serve, and the different customer groups also do business with each other. Pricing strategy is rarely discussed at the company, and the company has unwillingly shifted to apply customer-driven pricing. This has led to pricing practices that do not support the overall strategy of the business.
The research begun by conducting literature review on the topic of pricing. The purpose of the literature review was first to find out how should the current situation in the company be assessed, and then to look for best practices in pricing. The purpose was to understand what kind of problems different strategies have and which strategies have proven to generate most profit.
The current situation in the case company was analysed by conducting some simple interviews with sales. Then the company strategy was analysed to see how well the current pricing practices support the company strategy. Additionally, company reports and data from the ERP system were analysed to understand how well pricing strategy and rules convert into actual prices received from different customer groups.
In the strategy creation phase, market development had to be considered. Extensive market research and research conducted by the case company were studied to ensure the new pricing strategy would be in line with market trends.
The new pricing strategy created is a value-based pricing strategy that supports the overall strategy of the company and considers the predicted market development in the industry. The new pricing strategy grants the case company a good chance to increase its profitability.
An implementation plan was created to support the change from customer-driven pricing to value-based pricing. The implementation plan was created for a three-year period that should grant the company enough time to complete the changes and gather the information required. The company should start implementing the new strategy as soon as possible and ensure the implementation plan is adjusted along the process.
The research begun by conducting literature review on the topic of pricing. The purpose of the literature review was first to find out how should the current situation in the company be assessed, and then to look for best practices in pricing. The purpose was to understand what kind of problems different strategies have and which strategies have proven to generate most profit.
The current situation in the case company was analysed by conducting some simple interviews with sales. Then the company strategy was analysed to see how well the current pricing practices support the company strategy. Additionally, company reports and data from the ERP system were analysed to understand how well pricing strategy and rules convert into actual prices received from different customer groups.
In the strategy creation phase, market development had to be considered. Extensive market research and research conducted by the case company were studied to ensure the new pricing strategy would be in line with market trends.
The new pricing strategy created is a value-based pricing strategy that supports the overall strategy of the company and considers the predicted market development in the industry. The new pricing strategy grants the case company a good chance to increase its profitability.
An implementation plan was created to support the change from customer-driven pricing to value-based pricing. The implementation plan was created for a three-year period that should grant the company enough time to complete the changes and gather the information required. The company should start implementing the new strategy as soon as possible and ensure the implementation plan is adjusted along the process.