Global Business Challenges

Professional Pricing Society Conference

2011-09-01T15:37:00.003+01:00

I am really excited that my company Stratinis (www.stratinis.com) are yet again sponsors of the Professional Pricing Conference. This year the conference will be in Barcelona, and I will also be speaking on the topic of "The Role of the Sales Force in Pricing".

Many exciting webinars about pricing

2011-08-25T11:38:00.002+01:00

Stratinis has a number of really exciting webinars about price management coming up this year. Check them out here and sign-up: www.stratinis.com/events.aspx

Interesting pricing article

2011-07-04T13:33:00.000+01:00

http://www.michaeleisen.org/blog/?p=358

2 million jobs from international trade

2011-05-25T16:25:00.000+01:00

In today’s press conference by President Obama and Prime Minister Cameron, the president gave an interesting statistic of how important international trade is: there are 1 million jobs in the UK generated by US investments and 1 million jobs in the US generated by UK investments.

Stratinis wins new customer in the chemicals industry

2011-05-21T11:33:00.001+01:00

I am really excited that Stratinis has this week won a new customer in the chemicals industry. With a European scope, Stratinis Pricing Suite will be rolled out to users around Europe, thus helping the customer manage and optimise pricing. Head over to Stratinis' website to learn more about how your company's international pricing challenges can be solved with innovative software.

Internet - the end of UK privacy injunctions?

2011-05-21T11:27:00.001+01:00

In the UK it is possible for people to get the courts to issue an injunction against newspapers writing about personal matters. It is even possible to get a “super injunction” whereby it is even prohibited to mention that is an injunction. It is currently estimated that there are 80-90 such super injunctions in place in the UK.

The Internet seems to be changing the value of such injunctions. In a series of posts on non-UK websites, such as Twitter, people can now read about these super injunctions. As a result, some celebrities are suing these non-UK media:

http://www.telegraph.co.uk/technology/twitter/8526571/Premiership-footballer-sues-Twitter-after-details-of-super-injunction-were-published.html

However, it seems unlikely that a UK court will be able to do much against a US-based media, or for that matter an Internet site elsewhere in the world, including Europe or Asia.

Software pricing

2011-05-20T10:27:00.000+01:00

Have you ever wondered why software costs more in Europe than in USA? It is the same product, same fixed development costs, but still prices can be 40,50, even 100% higher from major consumer software vendors. Yes, exchange rates do fluctuate but not enough to justify the price differences. Maybe it is just a result of pricing as high as you can?

Professional Pricing Society

2010-10-20T11:50:00.001+01:00

Next week Stratinis will be participating as a premier sponsor of Professional Pricing Society's conference in San Francisco. I am very excited about this, as it highlights our global expansion. Our business in USA is expanding with a lot of interest from companies looking for international price management software. Come and visit us at our stand if you are participating in the conference. Learn more here: http://www.pricingsociety.com/.

IT - will the economic crisis lead to more protectionism?

2009-07-23T13:23:00.002+01:00

Outsourcing of IT services has been the name of the game for many IT companies over the last decade. It is somewhat worrying to see signs of increased protectionism during the economic crisis.

http://www.computerworld.com/s/article/9135724/Clinton_in_India_says_outsourcing_is_a_concern_for_many_?source=CTWNLE_nlt_dailyam_2009-07-21

Actually, the problem is not just American or Indian. It is certainly not only the American stance of reeling back some of the legislation that has previously made it more interesting to outsource to India that creates the problem. India has a long history of protectionism and could buy more themselves from abroad too.

I see the same pattern in many different countries at the moment: the economic crisis leads politicians to turn up the protectionism, making rules to protect their domestic constituents.

Stratinis strengthens its position in the Consumer Goods industry

2009-06-11T16:48:00.004+01:00

I am very excited that my company, Stratinis, just landed another customer in the Consumer Goods industry. A global player in the fast moving consumer goods (FMCG) industry, they have chosen our solution for international price management ahead of several other competitors in the price management software market.

If your company works in the consumer goods industry please contact us to learn more about how we can also help you when it comes to price management.

Do your prices vary across countries?

2009-06-09T10:48:00.006+01:00

A Danish travel company (Spies) recently made a list of how much a basket of daily goods would cost in some of their travel destinations. While they are not in the pricing business, they use it to show to their customers who stay in self-cater apartments how attractive it is to be on holiday in another country. Here a few samples:

The price in Danish Kroner (1 DKK is app 0.13 Euro or 0.19 US Dollar) for a basket of day-to-day foods and drinks:

- Denmark: 300.80 DKK
- Tenerife: 150.76 DKK
- Mallorca: 169.75 DKK
- Turkey: 117.75 DKK
- Madeira: 128.41 DKK
- Rome: 146.81 DKK
- Cyprus: 143,86 DKK
- Crete: 154,95 DKK
- Croatia: 133,28 DKK
- France: 146,60 DKK

Now this is for food you could argue, and bread or milk or locally produced goods can be cheaper due to differences in labour costs or easy access agricultural production. True. However, part of the basket consists of internationally branded goods, such as 250g of Nescafe or 1/2 litre of Coca Cola. Their prices differ considerably as well, in the case of the 250g Nescafe from the equivalent of 71.95 DKK to 14.18 DKK, with all kinds of price points in between.

This is for consumers. Now imagine that it was no longer a Danish tourist looking at prices but rather an international supermarket chain. With this kind of price differences, surely some supermarket chains could exploit the price differences, either by buying cheaply and selling in their other markets, or simply by pushing the suppliers to lower their prices in some of the high priced markets.

At Stratinis we specialise in this kind of price management and help manufacturers manage the price differences

Target costing / Target pricing on the Apprentice

2009-06-08T07:04:00.002+01:00

Did you see the final episode of the the UK Apprentice on BBC last night? If so, you witnessed a classic problem in many industries: mismatch between costs and the price charged in the market. Kate, the runner up, had to price a box of chocolates at £13 (app 20USD/15EUR), which is an upmarket price despite a brief of a mainstream distribution. She probably didn't win the competition because of this.

With Stratinis Pricing Suite she could have quickly identified 1) a target cost if she had defined a target price (main stream in the UK chocolate market is probably not much more than £8) or quickly built scenarios of the consumer price based on options of production costs. Stratinis Pricing Suite supports both target costing, target pricing and also has several opportunities for setting new prices optimally, according to segments.

Expansion of retailers: good or bad for manufacturers?

2009-06-05T17:22:00.004+01:00

Yet again another retailer confirming that they want to continue to expand abroad, this time Walmart: http://news.yahoo.com/s/ap/20090604/ap_on_bi_ge/wal_mart_meeting_1

What does this mean for their suppliers? Well, for the ones supplying such retailers in more than one country, it means that prices, terms and conditions get compared across those countries. A couple of years ago Lego got threatened with de-listing because of price differences between Walmart USA and Walmart Canada for certain Lego products. If you are a manufacturer, do you know where your prices and rebates are with all your international customers? Do you know which differences are exploitable and which are defensible?

At Stratinis we specialise in international price management, and with Stratinis Pricing Suite our customers can manage price differences across countries, simulate fluctuations in exchange rates, coordinate promotional efforts and much more.

Why discounting in hard times is not good for profits

2009-06-04T14:43:00.004+01:00

Companies facing economic hardship have a tendency to try to discount themselves back to more sales. Sadly, this is often a direct route to profit erosion.

It is a little known fact but most companies actually need to improve volumes by 10% just to break even on a 5% discount. In many industries, this is not possible, and especially not during economically hard times where consumers may look to just buy what they absolutely need. So the manufacturer loses money in the process.

On top of that is that increased discounting means that consumers change their fair price perception of the brand, making it more difficult to stop that discounting once the crisis is over.

International pricing and exchange rates

2009-06-03T09:14:00.003+01:00

What do you do if you are a UK manufacturer and you set a price in USD for your American customers in those days that the exchange rate was 1 Pound to 2USD? Today it is 1 to 1.5... Do you take the loss of not getting so many Pounds in for your US business or do you increase prices sharply?

Well, it is a tough challenge for many international companies. After all, the US customers are not going to like a 33% price hike, if the manufacturer in the above example wanted to keep the same amount in Pounds for his US business.

Some companies choose to leave prices alone when currencies fluctuate but that can also bring them into trouble. One published case was Lego two years ago, who sold to Walmart in the US and Canada, originally at the same price, but with the changes in the exchange rates between the two countries, suddenly Walmart could buy cheaper in Canada than in the USA. Walmart threatened de-listing Lego as a result.

Another approach, as recently exampled by Adobe, goes the other way: http://www.guardian.co.uk/technology/blog/2009/jun/01/adobe-price-rises-pound-dollar-exchange

They are getting some bad press from adjusting prices when exchanges rates put them worse off, but not to adjust prices when exchanges rates make them better off.

As usually in business, there is not one single answer to all situations. The first topic to address though is to get transparency of international prices and discounts, and the second step is to start simulating what happens if exchange rates move, in particular in relation to international flows of goods and international customers, such as Walmart or Carrefour, exploiting the differences.

At Stratinis, we specialise in Price Management software. With Stratinis Pricing Suite Enterprise Edition, customers can manage cross-border pricing, including simulation of exchange rates, international key account management and much more.

Pricing and promotions

2009-03-10T21:39:00.003Z

In some industries, e.g. consumer goods, there is a close relationship between pricing and promotions. As international pricing experts, it is something we work intensively with at Stratinis.

Therefore, I am also very excited about our upcoming Trade Promotion Management solution that we announced today. With it, companies can much better manage their promotions, from planning over execution to post-event analysis. If you are interested in learning more, please visit the dedicated promotion section on our homepage and contact us for further information.

GotoMeeting: really useful software

2009-03-10T08:57:00.002Z

At Stratinis we use GotoMeeting (www.gotomeeting.com) almost every day to hold meetings over the Internet. It is a really nice online meeting solution that allows us to do much more business internationally. Apart from the costs savings of not having to fly around the globe, it is also more efficient use of time to hold quick meetings rather than spending time in an airport and airplane.

That said, for some meetings the old fashioned face-to-face meeting is still superior. Maybe more about this in another blog post.

Internationalisation of boards?

2009-03-09T15:06:00.003Z

I read over the weekend that from less than 10% a few years back now 24% of the largest listed companies in Denmark have foreigners in them. Well, 24% is far from enough! I know it is probably the same in many countries but it is not an excuse. If a large company working in many areas of the world has no foreign board members, well then the board is not properly composed. Boards should seek new inputs and people who can challenge local wisdom; otherwise they will never be able to grasp the full potential of the globalisation.

Pricing Conference in Brussels

2008-11-06T13:19:00.002Z

Next week I am going to Brussels to speak at the Professional Pricing Society's conference (website). My topic will be how to manage the pricing of International Key Accounts, that are becoming stronger and more powerful all the time. A special challenge is when selling the same product to different subsidiaries of these key accounts in different countries, often at different prices and discount levels.

My company, Stratinis, is also a sponsor of the conference and will be hosting a stand where attendees can come and learn more.

Professional Pricing Society conference in Miami

2008-10-28T22:52:00.002Z

I am currently in Miami for what is probably the foremost pricing conference in the world, organised by Professional Pricing Society. PPS is a great way to learn more about price management. Check out their website here.

Price Management in an Economic Downturn

2008-10-28T22:27:00.002Z

Below is a recent article in Stratinis' monthly newsletter. You can sign up for future issues about price management here.

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At the moment the looming worldwide economic downturn seems unavoidable and companies are bracing themselves for the worst possible scenarios. The falling stock markets, declining consumer confidence and high energy and raw material costs make it a difficult environment for companies to make a profit. For some it will even mean the fight for survival.

The company margins, especially the margins of manufacturers, are hit by higher input costs. All members of the supply chain are tempted to pass their cost increases down along the chain to offset their profitably decreases. Currently many companies in various industries are increasing their list prices by 5-10%. Unfortunately this often leads to unsustainable pricing in comparison to the end-user prices and to grievance among customers.

At Stratinis we have seen several examples already of price lists increases been forced through by HQ/the finance department only to then be negotiated away in additional rebates by the sales people who have no tools to counter the customers’ pressure. The result: net prices after all rebates stay the same but the customers are more upset by the “hostile” list price increase.
The temptation to increase prices can be successfully resisted if companies opt for a different approach, namely to actively manage their prices and rebates and identify areas of optimisation, without necessarily increasing the list price.

Complexity is a very important tool in this process. Imagine in which of the following two scenarios it is easier to change the net price: list price is 100 and you give one rebate of 10% compared with another scenario where list price is 100 with 10 different rebates for different purposes, each at 1% of the list price. In most situations it will be more difficult to change the single rebate the customer works with than to remove one of the rebates in the second scenario, especially if the customer doesn’t deliver what is required to earn that rebate.

Companies should thus increase and not decrease their pricing complexity. This may sound counterintuitive as in many business areas a reduction in complexity is regarded as beneficial as it leads to lower costs and increased efficiency. In pricing however, the best in class companies are the ones who manage their complexity well and not the ones who don’t have any complexity at all.

But how to increase complexity? By adding more discount types, for instance. The more discount types a company has the more it can choose to grant or not to grant them which gives them back some bargaining power. Depending on the industry, such additional discount types could be additional on-invoice promotions, marketing allowances and additional end of year rebates.
With the right type of price management systems in place, complexity in pricing structures works for companies as they can use it to regain some lost bargaining power.

Adding complexity is also a good way to get list price increases through when the economy starts to improve. Again in the case of ten different rebates compared to one rebate, it is easier not to have all ten rebates follow the same increase as the list price, thus effectively increasing the net price.

In times of economic downturn companies must also ask their clients for real counter-performance when discounts are given. During an economic boom many sales people do not question the reason behind discounts very much but in more difficult times a certain reassessment of existing discounts and their underlying counter performances by the customer should take place. Certain discounts might have to be cut altogether as they will not be sustainable anymore. Again, this is all much easier to sell to the customer, if there are ten different types of rebates rather than just one.

While economic downturns are never easy to manage, companies do have more viable ways of restoring profitability than simply increasing list prices. At Stratinis we specialise in the field of price management software and have several tools in our price management solution for how to handle this process.

A good source of price management information

2008-09-22T10:59:00.002+01:00

At Stratinis we specialise in price management software. If you are looking for a good source of pricing information, it might be useful to also have a look at Professional Pricing Society. They have both a website and a blog.

Pricing in an economic downturn

2008-09-08T08:46:00.003+01:00

What is happening to your pricing during the economic downturn? Are you standing firm on your prices and discounts? Have you had to lower prices to stay competitive? Or, is pricing an area where you reap improvement potentials and thus help you to weather the macro economic storm?

"Nothing" would be the worst answer. Actually, any economic downturn is actually a good occasion to ask of your customers to offer some counter-performances for the discounts they receive - something which many companies neglect during the upturn. At Stratinis we see many cases where companies simply don't ask "if you give me X then I can give you this discount". The economic downturn is a great opportunity to enhance your price management.

At Stratinis we specialise in price management software and would keen to share more of our experience with you.

New Stratinis homepage

2008-09-03T10:49:00.003+01:00

I am very excited about our new homepage at Stratinis. The design has been updated and contents added to better convey the messages about price management software.

My team at Stratinis has worked together with London-based designers from Lehrmann London to create the new site.

Are you planning a new price management project?

2008-08-04T09:56:00.000+01:00

In a recent study more than 50% of all larger companies in USA and Europe said they were looking at projects to improve prices.

At Stratinis we similarly see a great interest for how companies can better manage their rebates across channels, sales forces and countries. To learn more about Stratinis Pricing Suite, please visit http://www.stratinis.com/