How to price a new and innovative product across different markets? Key benefits By aligning the pricing structure across markets but keeping a market specific consumer price, the company was able to maximize its margin control and achieved its gross margin objectives within 2 years after launch. Summary A premium pricing strategy was set out to launch the new product based on cost plus price setting and tailored price execution, using: • structured trade terms with a price waterfall structure, • pay-for-performance principle regarding discounts and rebates, • engagement of sales and specific training of the sales force.
Background As its core business was under pressure and an urgent need for product portfolio broadening was identified, a global player in the food industry embarked on a new strategy of FMCG product launches in different markets. By exploiting its strong, world-wide recognized brand name, the company launched several innovative products. A new pricing strategy was developed for the product group and price setting and execution needed to be adapted and made market specific.
The Challenge In order to make the new business a success, following challenges were to be tackled. • Innovations were launched within a niche segment of FMCG business in which the company had no prior experience. Therefore, limited possibilities towards economies of scale existed and the pricing structure of the existing core business could not be leveraged. • As the company aimed to be the first global player with an innovative product, the window of opportunity was limited.
The Business plan on Augustine Medical Inc Product Price Market
Introduction (Background and Situation) Augustine Medical, Inc. was founded by Dr. Scott Augustine, an anesthesiologist from Minnesota, in 1987. The company was created to develop and market products for hospital operating rooms and postoperative recovery rooms. The company provides innovative solutions to combat postoperative conditions such as hypothermia. Medical research indicates that 60 to ...
Time to market needed to be short and the launch and roll-out of the new business needed to be fast and thorough in order to outsmart competitors who might be preparing similar launches themselves. Therefore, significant market penetration was targeted within the first year. • Launching a new and innovative product implied that little competitive information was available and that consumers needed to be informed about the product and its benefits. Only after this was reached, customer behaviour could be investigated and knowledge gained. The Solution
The strategy that was set-out in order to be the first global player consisted out of four pillars: a premium pricing strategy, a tailored price execution, making time to market as short as possible by optimizing production and logistics and an extensive marketing campaign to present the product to the consumer. Premium Pricing Strategy With different market situations and various price settings for existing products in the same product group, product positioning and pricing was not straight forward. A tailored price by market was concluded to be the best option.
As a starting base, existing local competitor’s consumer prices and prices of other products in the same product group were compared to determine the best consumer price per country. Being a strongly branded product, the price setting needed to be premium. On top of that, a cost-plus pricing strategy was selected. Although cost price was difficult to monitor at the introduction and roll-out stage, an average cost price was successfully calculated and a mark-up was added according to the country specific consumer price. In the end, a tailored list price by country was achieved. Tailored Price Execution
The Essay on Product, Price, Promotion & Placement
Product, Price, Promotion & Placement Now that we have analyzed our marketing research and we have identified our potential target markets ... we will need to entice our targeted consumers to come to the store fronts or ... we target these markets is a series of techniques known as product, pricing, promotion and placement. ... bracket it is time to develop our plans to reach into these markets and grow ...
Since the pricing structure of the existing core business could not be leveraged, price execution for the new products was adapted and made market specific as well. A new trade term model was introduced, following a price waterfall structure. The company focused on pay-for-performance discounts and rebates, which ensured that every given discount was backed up by a tangible benefit to the company. In this way the trade term structure was also made more transparent: by being able to explain the pay-for-performance system to the customers, different price agreements amongst competitors could be justified.
Main criterion for a successful implementation of the new pricing structure was training the sales force. Sales experts were trained to bring the pricing structure into practice and to negotiate the first contracts with global retailers. Afterwards, the experts trained the existing sales force on how to use and explain the pay-for performance system at their clients. Also, workshops and trainings with sales people from different countries were organized to explain the new guidelines and processes, to share insights and to demonstrate management support and commitment. Short Time to Market
As time to market needed to be short, production was outsourced to a producer who already held technology, equipment and experience within the same product group. On the logistic side, the company decided to look for partnerships with more experienced players in other market segments. In this way, the company hoped to benefit from experience, knowledge and infrastructure. However, it was hard to find appropriate partnerships as many of the targets were preparing similar product launches themselves or the desired benefits appeared hard to cultivate. Extensive Marketing Campaign
In order to present the innovative product and its benefits to the targeted consumers, an extensive marketing campaign was set up across the different markets. The campaign was tailored to the specifications of each market and different channels were used so that optimal awareness was created. What was achieved? Achievements • First global player on the market with the innovative product and opportunities to further expand the business • More accurate margin analysis and achieved margin optimization • Clear processes and procedures eased applying the product positioning and pricing strategy in newly entered markets
The Research paper on Emirates Dates And How To Market The Product In (Sweden)
There are various strategies of expanding one’s business. The decision of which strategic move to choose is generally depends on internal conditions of the business in discussion. There are companies that manage to stay in their local markets and continue to harness growth from it, while others discover potential markets in foreign countries that drive them to expand. In the case of business ...
Lessons Learned • Time to market was key: desired market penetration was not fully achieved. The company experienced that the time to market of their product launch was too long while the learning period to catch up on their lack of FMCG experience was not long enough. • Lack of experience was hard to compensate: even though the company was pioneer, competitors launched similar products within a shorter timeframe due to the fact that they did have the necessary knowledge, experience and solutions in-house. What next?
With more local and global competitors present in the different markets, the company will need to fortify its position by further leveraging on its strong brand name and the quality perception of the consumer. Based on a comparison of consumer prices of the competition, it will need to be investigated if the company’s market specific consumer prices are still sustainable. Local amendments might be necessary in order to further expand market penetration. Next to that, entering new markets is still of strategic importance.
