Profit Margin Improvement – Channel Pricing

One of the easiest ways to improve margin performance for you company is to evaluate your existing pricing strategy. When designing a Strategy for Sales Perfection, one of the most consistently overlooked aspects is a comprehensive pricing and product management evaluation, both of which are comparable and essentially one in the same. A pricing appraisal of your business may involve some knowledge of competitive market intelligence supplied to you through customer communication, trade organizations, or internally obtained. The foundation behind the pricing review will be to confirm that your product is neither over-priced nor under-priced in any given market or trade area. This will inevitably improve margins in under-priced products and drive sales in over priced products. In many cases, this process will certainly improve your organizations profitability. Obviously, it will be difficult to raise prices to current customers due to this new found analysis, however, when making new sales presentations to new accounts you can use the higher price levels to increase profitability.

Expand and investigate the revenue and product opportunity grid and begin the process of isolating product groups to segments or quadrants by customer opportunity. In reality you may need to perform additional analysis to draw valid conclusions. Once you have segmented your products and target customers, you will then begin to deploy a more effective product strategy plan and incorporate this into your overall sales plan.

Core Customers

Your current marketing efforts are effectively reaching this group, how can they be emulated to work as effectively with the other segments in B, C and D?

Your sales team should manage this segment with the help of inside sales or internal customer service groups to free up time in devoting to business development with other segments.

Niche Customers

Introduce targeted product marketing to this segment to drive higher profit margins as well as you niche product categories.

Potential Customers

Sales people should devote a high percentage of their time in developing this customer segment.

Targeted marketing efforts should be the highest level for this customer segment.

Non-Core Customers

Develop a plan to devote a separate segment of your sales team to business development within the customer segment if you feel the opportunity and return is significant.

Your companies’ products and price strategy can have a dramatic impact on your margins and income return. Every company has areas where improvements in customer penetration and pricing channels will yield positive results.

Revamp or create price indexes based upon specific customer channels.

Evaluate your proprietary product categories for both pricing suitability and customer channel dissemination.

Expand and study the revenue and product opportunity grid and develop a strategy to penetrate and saturate each of these markets with products where you currently have no influence.

Distinguish your proprietary product categories in terms of marketing and distribution differentiation.

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