Pricing and Profitability Management: A Practical Guide for Business Leaders

Lessons Learned: Getting Pricing on the Executive Agenda

Companies face a marketplace, today, where the pace of change is accelerating, where competitors can easily gather intelligence on their pricing and product strategies, and where consumer expectations are steadily increasing. Companies must factor all of these considerations into their planning. If they don't, then they will simply not be able to compete effectively. A U.K. publisher may seek to milk hardcover sales of a bestseller by delaying the release of the paperback edition in the U.S. Yet a customer in Dallas can simply go online to a virtual U.K. store to order the paperback edition and be happily enjoying her purchase days later. Though market dynamics are clearly changing, companies still show surprising resistance to adjusting their traditional sales and pricing strategies. Obviously, this is not a formula for success.

The same dynamic shows up in the way firms deal with new competitors. Daily newspapers, for example, have long been aware of the competition they receive from television news, but they realized too late the threat posed by the explosion of free content on the Internet. Now, because their leaders were slow to respond, many are struggling to remain profitable, while others have simply folded. Companies must find ways to respond to fluid market conditions, so they can better position themselves against competitors while still fulfilling customer needs.

To meet these challenges, businesses must strengthen ...