Marketing And Business Planning

1. The Price's Perspective
Maximum Profit Now
Orlando Moreno
omoreno@hotmail.com
408.656.2498

2. Agenda
 Introduction
 The Pricing Manager’s Goals
 What’s Stayed the Same
 What’s Changed
 Why Things are Tougher Now
 The Case for Improved Analytics
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3. The Problem
Demand Planning
Systems X Supply Planning
Systems
X
Price Planning
Decisions not united,
not optimized for profit
Systems
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4. Why I Am Here
 Ran Intel’s MMBP for four years
 Not perfect, but pretty good
 Personal interest in advancing the art & science of
pricing
 Therefore became investor in & friend of Rapt
 Enjoy discussing the whole pricing process
 Even without being able to use Intel’s data
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5. The Pricing Manager’s Goals
Maximize profit while meeting
the company’s short-term
commitments and long-term
strategic objectives
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6. “Tools” Have Changed Mostly in
Appearance…
…and in Complexity
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7. Basic Strategies Remain the Same
 Methods
 Value
 Penetration
 Skim
 Follower
 Cost
Different pricing methods available to remain
consistent with brand and competitive positioning
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8. As Do Basic Pricing Frustrations
“Well, I just talked
to customer X, and
they said…”
Sales VP
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9. However….
Much has changed
...Leaving Less Time To
“Get It Right”...
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10. Product Lifecycles Are Getting Shorter ...
Sales
Time
386 486 Pentium® Pentium II
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11. ...Thereby Pressuring All Marketing
Functions
 Product management
 Communication
 Positioning
 Line item strategy
 Channel relations
 Development
 And of course...pricing
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12. Dealing with a Globalized Economy
As Well
Originally, Enter “Dell” and
mostly other direct
corporate, sellers…
mostly
US/Europe,
mostly While Asia
personal explodes as a
account producing AND
sales consuming region,
Then consumer with enormous
buyers, thru retail number of small
channels dealers
All This With Standardized Products and Prices
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13. And Finally…
 Product complexity – bundles, “solutions”,
configurations
 Uncertain demand across boundaries and
segment
 Factory execution risk given reduced inventories
 Increasing earnings pressure
 Distributed ownership of the marketing “4 P’s”
 More diverse customer expectations and behavior
 More complex laws (e.g. antitrust)
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14. What All This Add Means
Results? Smarter customers, shorter
pipelines
Implication? Need for more pricing
precision
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15. Meeting the Challenges
 Requirements
 Good, real-time data
 Good processes
 Good people
 Good tools
 Implications
 Automate (across the chain)
 Optimize (the pricing decision)
 Automation will likely NOT be driven by pricing
teams
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16. Therefore, for the Pricer…
Exquisite Focus on Data and
Analysis
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17. Find the Curve
Get a quantitative handle
on how your markets will
Volume
respond to price.
Be relentless is finding this
data
Price
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18. Fill the Curve
Offer as many products
as the factory can deliver
V and as the customer can
o understand*
l
u
m
e
*Airline problem
Price
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19. Move the Curve
Evaluate new
products, or
product
V features, to
o
l change the
u customer’s
m
e perception of
value
Price
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20. Getting from Here to There
 Technology for data capture is
critical
 Integrate, automate analytical
business processes
 Consider experiments with the
4P’s
 Take advantage of recent
advances in pricing intelligence
software
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21. Imperative to Focus on TOOLS
 Intelligent pricing software can now
 Uncover (then optimize) price / demand relationships
 Deal with complex product offerings, lifecycles
 Factor in the competition
 Connect pricing and supply
 Must and can work with people and business
processes, but choose…
Market math and decision science
versus simple arithmetic
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22. There is Upside for Those Who
“Get It”
 Created Intel’s system
integrating supply, demand and
pricing
 Retained oversight of this for ten
years, regardless of his job
Uncertainty, rapid change and complexity => a
great time to manage pricing
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23. 23
Questions ?
Orlando Moreno
omoreno@hotmail.com
408.656.2498
omoreno@hotmail.com 408.656.2498