Our executive sponsor at a long-time client used to start off every Grassroots Strategy session by telling the teams to put a jar in the middle of their table and every time someone mentioned the word ‘product’ they had to put $5 in it. She told them that she was sure that every team would be able to throw a pretty good party by the end of the week with the money they collected. Her point was that they needed to focus on the customer and the problems that they could solve for customers rather than on their product. Professor Theodore Levitt said it best decades ago when he said, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
Pricing is one of the most important levers your organization has, therefore pricing decisions are some of the most important it will make. Set the price too high, and you won’t sell anything. Worse yet, set the price too low and you are leaving money on the table.
That leads to the question, what department or function within your organization is in the best position to set the price in order to maximize earnings?
Rethinking your plans in light of the unthinkable To call these times turbulent is an understatement. Obviously reducing the risk to lives is paramount, but the unprecedented threat of the Covid-19 virus and the necessary response are already wreaking havoc across the economy, with some second and third order effects that may be felt for… Continue reading This is a Time for Thoughtful Re-Planning
In 1759, Arthur Guinness leased a disused brewery in Dublin and began producing beer for the local market. Like most brewers of his time, he produced a variety of beers to meet a variety of tastes. But by the late 1770’s, Guinness was becoming known for his porter. The dark beer that used roasted barley to produce a deep brown color and rich complex aroma had become quite popular, especially among the dockhands in Dublin. In 1799, faced with a shortage of capacity, Guinness made the bold decision to discontinue production of his various other ales and focus exclusively on the porter – the beer we know today as Guinness Stout.
This historical tale underscores one of the most powerful and difficult challenges of strategy – focus.
Frequently, we are asked to tailor our ‘Grassroots Strategy’ workshops to serve as training for product managers. Typically, the identified need is a lack of strategic thinking and/or tools for analyzing markets in a company’s product manager group. Beneath the surface, however, we believe that the problem may run deeper. The problem may be grounded in the very definition of what a product manager is and therefore what the rest of the organization expects from them.
Now is the time that you can settle into running your business. You have a set of sales targets, budget requirements and maybe product launches or geographic expansions that you have planned for and committed to for 2020. But independent of all of this, do you really know what you need to focus on to win in 2020 and set yourself up to win going forward?
Bottom line, effective value pricing relies on first having a good segmentation that is based on customer needs. Or, as we often say in our workshops, “value and segmentation always go hand in hand.”
If you are like many of our clients, you may have thought about strategy and long-term goals sometime in the late summer/early fall and probably presented something to your leadership and/or your board at that time.
Although customer relationships are important, do they really create value for the customer?