Pricing and Profitability Management: A Practical Guide for Business Leaders

An Integrated Approach to Pricing: The Six Core Competencies

To meet the pricing challenge, companies cannot rely on any single internal or external perspective. Rather, all views must be combined in a way to maximize each of their strengths and to minimize each of their weaknesses. The following six organizational competencies are needed to achieve this (see Figure 1.3).

Figure 1.3 The Integrated Pricing and Profitability Management Model (The Six Core Competencies)

1 Price Execution

Price Execution refers to all of the processes and policies by which a company delivers its prices to the marketplace. These include everything from sales policies and procedures—for example, guidelines on how big a discount a salesperson can offer without checking with a manager—to the way products are tagged for sale at a retail store. Execution is the ability to meet strategic goals efficiently, effectively, and consistently. If even one process operates poorly, then overall performance will suffer. An organization can have world-class capabilities in the remaining five competencies, but price and margin will be lost if execution fails (which is why Price Execution falls on the foundational axis of Figure 1.3). Put another way, the best salesperson can be armed with the optimal price derived from the best technology, but he or she still needs to get the price to the right customer at the right ...