In the previous part of this articles’ series we’ve discussed the way by which your company can turn Pricing to a competitive advantage.
For the last part, we interviewed a Tefen client, who brought a real-life example of Pricing Excellence and told us about a new Pricing model implementation, the steps taken towards achieving it, the benefits it has brought to the company, and more.
OUR CLIENT’S POINT OF VIEW
Interview with Simone Leone, Sales and Pricing Excellence Director at Boston Scientific
Starting 2012, Simone has created and developed a successful Pricing function within the European arm of the US medical device producer Boston Scientific (BSC)
How would you describe the Pricing culture and “perception of Pricing” in your Company before any specific initiative was taken?
For a while, strategic imperatives at BSC were not capturing Pricing. Focus was limited among top and middle management. Pricing discussions mostly took place in relation to tender negotiations with Clients, but even then there was no implication on Pricing performance measurement.
What were the key drivers leading to specific Pricing initiatives in your Company?
Market trends, characterized by increasing price erosion and adoption of tenders as the most common purchasing method, as well as a “lesson learned” after an aggressive price competition with a competitor.
Moreover, the need to increase product margins provided further support to activate the initiatives.
What steps did you take to gain buy-in and start structuring a new Pricing Practice?
The first step was to expose the need for a Pricing Practice, based on a self-evaluation within the Strategic Plan development. Properly backed by strong economic arguments, the idea has become a “Strategic Initiative”, gaining strong sponsorship from the Company’s Divisional VPs. The new Practice was then tasked with gradually changing the Company’s behavior around Price.
What did you do to identify the most appropriate solution for your Company?
We started the change process by creating a small but powerful team with strong Pricing expertise. The function would own the approval process, the transactional side and tracking & monitoring. It would also develop Pricing methodologies ready to use by the Divisions. After the creation of this initial structure, the Strategic Plan led the evolution of the function.
What are the main benefits the Pricing Practice has brought to the organization?
I will enumerate the main areas:
- Structured vision on price management targets with a limited range of resources;
- Better and faster execution of commercial processes (e.g. tender management) thanks to the set-up of a new Pricing policy;
- Pricing best practices sharing to support launches with a cross-fertilization process;
- Improved management of IT systems thanks to Pricing role as business representatives and key contact point with IT department.
As an ultimate goal, the Pricing team aims to be an internal support for strategy development, providing Pricing expertise to the Divisions.
What internal changes had to take place to accommodate the new approach to Pricing?
Initially we created a “network” with the divisions, introducing the role of “Divisional Pricing Lead” as Pricing key contact point and with clearly defined roles and responsibilities. With this network in place, the cadence was:
- We run a change management process at all levels to foster the adoption of new Pricing procedures and tools
- We achieved top management focus for their direct involvement
- We obtained dedicated economic resources for Pricing implementation
How has Tefen helped in this endeavor?
Tefen provides a wide range or resources and the key is to tailor effectively their support in each phase based on your needs.
In our case, during the design phase Tefen provided Pricing best practices, methodologies and proposals to challenge the status quo and create the initial Pricing vision in BSC.
In the implementation phase, Tefen played a key role in keeping aligned to the designed strategy, from high-level project management to day-by-day, hands-on activities.
Tefen brought in a team of highly skilled, customer-oriented consultants that integrated perfectly with the organization and provided exactly what was needed at each stage of the plan.
Written by Paolo Correale, a Director at Tefen Italy, and the Head of Pricing at global level