1. July 15-16, 2013 Napa Valley Marriott11
Pricing Systems
for the
Wine Industry:
Best Practices, Models and
Tools
2. Panelists
• Chris Spear, Vice President, Business Solutions,
TradePulse
• Steven S. Cuellar, PhD., Professor and Chair,
Department of Economics, Sonoma State
• Mark Barichievich, Director Sales Admin., Trinchero
Family Estates
• Manoj Menon, Vice President, Product
Management, Vistaar
3. What is Pricing?
• What is Pricing to a
• Supplier?
• Wholesaler?
• Retailer?
• Cost-based Pricing (business driven) vs. Value
Pricing (consumer driven)?
4. Why is Pricing important?
• Executive: Strategic tool for both planning and
execution
• Marketing: Pricing is key to protecting brand equity
• Sales: Direct connection to profitability and sales
volumes
• Change Management Key: a transparent model will create
agreement (buy-in)
5. What is the Pricing Problem?
• What is the best price for my product?
• To meet corporate objectives
• To enhance or maintain brand equity and value with the
Consumer
• How do I know what will happen if I change price?
• Impact on our sales volume or profitability
• Impact on trading partners
• Impact on other products in our portfolio
• Competitive response
• Consumer response
6. What is the State of the Industry for
Pricing?
• Excel is generally our current solution and System of
Record; often contained in hundreds or thousands of
disparate spreadsheets
• The pricing chain (create, edit, analyze, authorize, publish,
execute) is intensely manual with many points of failure
and potential error
• Analysis is often limited by the Excel skills of the end user
and is almost always limited to a local-market scope
• Lack of accurate pricing models contributes to a
perception of “margin winners vs. margin losers”
7. Pricing Best Practices
• Centralize pricing data in a common repository or database
• Maintain full traceability to all pricing changes
• Model all pricing throughout the supply chain (supplier,
wholesaler, retailer, consumer)
• Price backwards from the Consumer (value pricing)
• Price to each market (more complex in beverage alcohol)
• Monitor Price Execution
• Create a Pricing Roadmap to improve your pricing models
over time
8. • Companies that have not yet implemented a formal price optimization
initiative, or that have relied on ad hoc analysis tools or internal
spreadsheets, should examine price optimization as one of the few
investment areas that can impact revenue, margin and customer
experience.
Price Optimization Technology Impact & Trends
• Increased revenue and profitability
• Consistent customer experience
• Market development
* Beverage Alcohol across Beer,
wine & spirits is identified as
heavy impact industry vertical
9. Pricing Solutions
Build vs. Buy* Pro Con
In-House
•Can be precisely customized
to company needs
•Can be built with unique
competitive advantages
•Can become a strategic
corporate asset
•Developing custom software
can be a significant distraction
from core business
•You shoulder all costs to
develop, maintain, support,
and improve the system
•Custom systems can be
prone to errors and omissions
Vendor
•Benefit from best practices
from across the customer base
•Software development and
support is a core competence
•Often more feature-rich than
custom solutions
•Lower adoption risk; easier to
use because of broader user
base
•May be difficult to find a
solution that “fits” your
business needs
•Concerns about being “locked
in” to a particular solution
•You are one of many
customers
•Business Continuity risk
*Change Management Key: Include Stakeholders in solution!
10. Pricing system benefits
• Productivity
• Reduces data entry and repeated manual inputs
• Increases capability to add automation
• More efficient Production planning
• Data Integrity
• Price Planning and Execution
• Revenue and Profit management
• Key component of Supply Chain Management
(SCM)
11. Pricing Roadmap
1. Pricing Management
a. Common interface and centralized pricing repository
2. Pricing Analytics
a. Basic insights to margin impact of pricing changes based
on volume and price inputs
3. Price Modeling and Optimization
a. Predict pricing outcomes based on statistical models
b. Optimize pricing for volume and/or profit to meet
business objectives
12. Technology Roadmap
1. Centralize Data
2. Data Hygiene
3. Monitoring (basic analysis/insights)
4. Information distribution/access
5. Enhance data (third-party)
6. Modeling Tools
Key question: Does your Resource Plan match
your Roadmap?
13. Pricing manifesto for Beverage Alcohol
• We will add Professional Development funding to our budgets for our
Pricing staff
• Our pricing will be fully integrated with other parts of the business
(sales, marketing, finance, executive)
• We will execute pricing with our trading partners in a manner that is
compliant, consistent, accurate, timely and scalable
• We will optimize pricing from models that:
• Include the Economy
• Take into account our competitors
• Understand human behavior (consumer, retailer, wholesaler)
• Support our strategic and tactical objectives
• Deliver value to our customers
• Our pricing models will allow us to predict sales with increasing
accuracy
16. Appendix – Speaker Bio
• Name:
• Mark Barichievich
• Company:
• Trinchero Family Estates
• Title/Position:
• Director, Sales Administration
• Mark has 14 years of Sales Administration experience in the Wine
Industry. He joined R.H. Phillips Winery in 1999, and through many
acquisitions, has worked for Vincor Int., and Constellation Brands
in various Sales Administration and Finance roles. He has managed
the Pricing Department at Trinchero Family Estates for 4 years,
where he managed the development and implementation of an “In
House” built pricing system. Mark holds a BS in Agricultural and
Managerial Economics from UC Davis. In his free time, he runs
ultra-marathons.
17. Appendix – Speaker Bio
• Name:
• Steve Cuellar, PhD
• Company:
• Sonoma State University
• Title/Position:
• Professor of Economics
• Dr. Steven Cuellar is Professor of Economics at Sonoma State
University where he teaches courses in Microeconomic Theory,
Labor Economics, Public Economics, Econometrics and Wine
Economics. His research interests are in the fields of consumer
behavior especially as it relates to pricing and marketing. Other
research interests include issues relating to labor markets, public
policy and wine. Dr. Cuellar has presented his research at local,
national and international conferences and his research has been
published in academic journals, trade publications and professional
journals. He received his Ph.D. from Texas A&M University.
18. Appendix – Speaker Bio
• Name:
• Manoj Menon
• Company:
• Vistaar
• Title/Position:
• VP, Product Management
• Manoj is software professional with more than 13 years of
experience in enterprise software development, sales & strategy.
Manoj began his career in product development and has
experience in deploying pricing solutions in a number of Fortune
500 companies across many industries like Hi-tech,
manufacturing, etc. Over the last 5 years he has deployed pricing
systems across spirits, wines and beverage alcohol distributors.
He is a Certified pricing professional and as the vice president of
beverage alcohol solutions, Manoj is responsible for the solution
footprint and product roadmap for the industry vertical.
19. Appendix – Speaker Bio
• Name:
• Chris Spear
• Company:
• TradePulse
• Title/Position:
• Vice President, Business Solutions
• Mr. Spear manages the TradePulse product portfolio, works with
Customers on custom solutions, and leads the creation of solutions
that result from our Continuous Improvement processes. As the IT
Manager for a growing national wine brand Chris led the
development and implementation of leading edge solutions for a
wine sales enterprise that considered its use of technology a
competitive advantage. In addition, Chris was a partner in a wine
industry software startup. He holds a BA in Psychology from the
University of Washington with emphasis on Organizational
Leadership.
Notas del editor
Pricing under supplier control (FOB, Discounts to Wholesale)
Vs.
Pricing where suppliers are only a stakeholder (PTR, Shelf)