Initial situation

A medium-sized machine tool manufacturer is caught between the pricing pressures of its various sales channels. Highly specialized technology dealers and tool retailers for end users are demanding ever better prices and terms. This is leading to ongoing profit erosion for the company.

Task/Objectives:

The company aims to counter this development effectively and strengthen its position in the market. At the same time, measures are to be developed to ensure sustainable profitability.

Implementation:

After the core problem, namely the current price and conditions policy, has been defined, an extensive internal analysis takes place. Article structure, customer base, market segmentation, and strengths and success factors are put to the test. In the second step, the pricing flexibility is clarified. With the help of an in-depth market and opportunity analysis (360° external perspective analysis), the company’s current market positioning is developed and competitive profile comparisons are created. Based on this, step three involves the development of the future pricing strategy, the basic system of conditions and the service modules. This is followed by securing the new system through discussions with strategically important dealers in order to obtain critical feedback before implementation. The launch to market is done through a multi-stage process: internal sales meeting, dealer meeting and personal visits to key dealers.

Results:

After nine months of strategic work and a further three months of implementation work on the market, the new pricing and conditions system was put into effect.
After one year of the new system being in place, there was a 1.2% improvement in returns. 0.5% had been planned.