Page 117 - MYM 2016

Pricing and the ceo
We are observing an increasing involvement of CEOs in pricing, which has a signi cant impact on pro t performance. The CEO’s role is threefold: strategic, cultural, and custodial.
If a company chooses a premium price positioning, all aspects of strategy, culture and implementation have to be di erent from those of a company that aims for a low price position. While the CEO should not get involved in the details of pricing or price negotiations, he or she must make sure that all e orts are aligned according to the necessities of the selected position.
bY herMann SiMon
In the global pricing studies which Simon-Kucher & Partners con- ducts every two years, we have observed an increasing involve- ment of CEOs in pricing.
We found that companies whose top managers took a strong, personal interest in pricing stood out compared to companies whose senior executives did not take on such an active role, as the following results show.
For companies with strong CEO
involvement:
• the pricing power was 35% higher. • the success rate for implementing
price increases was 18% higher.
• Twenty-six percent more achieved
higher margins a er the price increases, which means they were not just passing on higher costs to their customers.
• irty percent had a special pricing department, which in turn had an additional positive e ect on pro ts.
MarketiNg strategY