Pricing and Profitability Management: A Practical Guide for Business Leaders

Bringing it All Together: A Case Study

The first year is an achievement. The second year's a duty.

An executive with a global beverage distributor during an author's interview.

The following case history, while fictionalized, nevertheless reflects the typical experiences of various global companies that have successfully implemented holistic pricing transformations. Finding itself faced with new stresses on its business, Chocolate Delight, a global confectioner, invested millions of dollars to strengthen its pricing capabilities. The company had been facing increasingly aggressive tactics from rivals as well as rising cocoa, production, and distribution costs. Management believed that optimized pricing would offer the confectioner its best chance to improve profitability in the current environment.

To accomplish this, Chocolate Delight would need to address some complex issues. To start with, the sheer size and diversity of the company's functional units (predominantly located in Europe and North America) posed challenges. In addition, the company, which sold to customers around the world, had to factor in widely varying global market dynamics. The preferences for chocolate differed drastically between Europe and North America; so, too, did willingness to pay and quality standards, which forced Chocolate Delight to establish drastically different pricing strategies in the two markets. For example, in some European countries the firm had established a leading position for a line ...