The Price Advantage / Edition 2

The Price Advantage / Edition 2

by Walter L. Baker, Michael V. Marn, Craig C. Zawada
     
 

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ISBN-10: 0470481773

ISBN-13: 9780470481776

Pub. Date: 06/08/2010

Publisher: Wiley

A comprehensive look at creating pricing strategies that work in both good economic times and bad

Written by three preeminent pricing experts at McKinsey & Company, the Second Edition of The Price Advantage is a practical pricing guide for the executive or pricing practitioner who wants to identify, capture, and sustain substantial pricing gains in

Overview

A comprehensive look at creating pricing strategies that work in both good economic times and bad

Written by three preeminent pricing experts at McKinsey & Company, the Second Edition of The Price Advantage is a practical pricing guide for the executive or pricing practitioner who wants to identify, capture, and sustain substantial pricing gains in their business.

Pricing is by far the most powerful profit lever that managers can influence. Yet few companies approach pricing in a way that fully capitalizes on its value. This Second Edition, a major revision and extension of the first book, shows you what it takes to achieve the price advantage in today's competitive and complex business environments. Based on in-depth, first-hand experience with thousands of companies, this book provides managers with a pragmatic guide through the maze of pricing issues. It reinforces why pricing excellence is more critical than ever today and then explains state-of-the-art approaches to analyzing and improving your own pricing strategy and execution.

  • Explores the fundamental role of pricing infrastructure in achieving the price advantage
  • Includes new topics such as software and information products pricing, lifecycle pricing, custom-configured products pricing, pricing of high-count product lines, pricing in distributed sales environments, "razor/razor blades" pricing, and tiered products and services pricing
  • Revisits the full range of classic McKinsey pricing tools, including the pocket price waterfall and value maps

Engaging and informative, the Second Edition of The Price Advantage will put this essential discipline in perspective.

Product Details

ISBN-13:
9780470481776
Publisher:
Wiley
Publication date:
06/08/2010
Series:
Wiley Finance Series, #535
Pages:
384
Sales rank:
632,298
Product dimensions:
6.30(w) x 9.10(h) x 0.90(d)

Table of Contents

Preface xiii

Acknowledgments xvii

Part 1 Pricing Fundamentals 1

Chapter 1 Introduction 3

The Power of 1 Percent 3

The Price/Volume Tradeoff 6

Market Forces Add Pressure 7

The Nobility of Pricing Excellence 10

Why the Price Advantage Is So Rare 10

Chapter 2 Components of Pricing Excellence 13

An Integrated Approach 15

An Interdependent Hierarchy 18

Applying to Your Company-Pinpointing the Opportunity 19

Part 2 Exploring the Levels 23

Chapter 3 Transactions 25

The Pocket Price Waterfall 26

The Pocket Price Band 29

The Soundco Radio Company Case 32

Pocket Margin Waterfall and Band 39

Alen Glass Company Case 40

Chapter 4 Customer Value 45

Mapping Value 46

Creating a Value Map 46

Making Moves on the Value Map 57

Putting Customers on the Value Map 67

Value Profiling 69

Chapter 5 Market Strategy 75

Profiting from Better Price Predictions 77

Planning for an Expected Price Change 78

Maintaining Optimal Production and Capacity 79

Improving Pricing Conduct 80

Influencing the Elements of Pricing Conduct 82

A Word on Followership 89

Chapter 6 Pricing Infrastructure 93

Processes-What Are the Most Critical Types of Pricing Decisions for Your Business? 95

Organization-Who Is Running the Pricing Profit Center? 99

Performance Management-How Should We Recognize and Reward Pricing Performance? 103

Systems and Tools-No Magic Bullet Exists 107

Part 3 Unique Events 113

Chapter 7 Postmerger Pricing 115

A Temporary Window of Opportunity 116

Tremendous Opportunities at Each Pricing Level 119

Avoiding Common Postmerger Traps 127

Antitrust Laws 130

Chapter 8 Price Wars 133

Why Price Wars Should Be Avoided 133

What Really Causes Price Wars 136

Staying Out of Price Wars 141

Getting Out of Price Wars 144

When a Price War Might Make Sense 145

Part 4 Expanding the Boundaries 149

Chapter 9 Legal Degrees of Freedom 151

Pricing Decisions That Raise Red Flags 153

Minimizing Risks While Meeting Pricing Objectives 156

Calling in the Attorneys 162

Chapter 10 Lifecycle Pricing 165

What Makes Lifecycle Pricing Tough 166

The Three Phases of Product Lifecycle Pricing 168

Sustaining Returns Across the Lifecycle 179

Chapter 11 Pricing Architecture 183

Managing Price Perception 183

Influencing Customer Behavior 185

Price Architecture Based on Supplier Role 191

Part 5 Advanced Topics 197

Chapter 12 Complexity Management 199

Section 1 Custom-Configured Products 199

Section 2 High-Count Product Lines 207

Section 3 Distributed Sales Models 212

Chapter 13 Tailored Value 221

Section 1 Price Segmentation 221

Section 2 Tiered Products and Services 226

Section 3 New Products 230

Section 4 "Razor/Razor Blades" Offerings 236

Section 5 Solutions 240

Chapter 14 Software and Information Products 247

Unique Characteristics That Impact Pricing 247

Exploring the Elements of Pricing 250

Part 6 Making Change Happen 265

Chapter 15 Pricing Transformation 267

Designing a Clear Change Program 268

Accelerating and Embedding Change 276

Chapter 16 The Monnarch Battery Case 287

The Monnarch Battery Company 287

Transactions 289

Customer Value 293

Market Strategy 296

Capturing the Monnarch Pricing Opportunity 298

Hard-Wiring the Change 302

Epilogue 305

Appendix 1 Pocket Price and Pocket Margin Waterfalls 307

Appendix 2 Antitrust Issues 327

U.S. Pricing Law 327

EU Pricing Law 335

Antitrust Information Sources 342

Appendix 3 List of Acronyms and Abbreviations 353

Appendix 4 About the Web-Based Tool: Periscope 355

About the Authors 357

Index 359

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