Executive | 140130 | Commercial Excellence: how to make it stick? | Presentatie | Onno Oldeman

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<ul><li> 1. Commercial Excellence How to make it stick?Workshop summary for distributionOnno Oldeman Juriaan Deumer Amsterdam, January 30, 2014Amsterdam Office Barbara Strozzilaan 380 1083 HN Amsterdam, The Netherlands Tel: +31 (0)20 753 1253, Fax: +31 (0)20 753 1277 e-mail: onno.oldeman@simon-kucher.com Internet: www.simon-kucher.com</li></ul> <p> 2. Simon-Kucher &amp; Partners' profile World market leader in pricingNo. 1 in "Marketing and Sales"* Competence ranking "Marketing and Sales"1Simon-Kucher &amp; Partners2"world leader in giving advice to companies on how to price their products""the world's leading pricing consultancy"Boston Consulting Group3Peter Drucker "pricing strategy specialists"McKinsey &amp; CompanyGlobal presence 27 offices worldwide"... in pricing you offer something nobody else does."&gt; 2,000 projects in the last three years Employees: 700 MarketingBoston Amsterdam New Bonn York Brussels San Cologne Francisco Miami Copenhagen Frankfurt Istanbul So Paulo London Luxembourg Santiago de ChileMadrid Milan Munich Paris Vienna Warsaw ZurichBeijing Tokyo DubaiStrategySmart Profit GrowthSalesSingaporePricing Sydney* Source: Manager Magazin Aug. 2007-2011/IMB (Institute for Management &amp; Consulting); survey among 400-500 top managers Commercial Excellence_20140130-1- 3. Commercial Excellence at Simon-Kucher: Smart Profit GrowthCommercial strategyMarketingMarket strategyBrand portfolio managementBrand and assortment strategyAssortment optimizationChannel strategyInnovation managementPricing strategyRestore value programsMarketingCompetitive strategyMarketing efficiency StrategySmart Profit GrowthSales &amp; CRMPricing Value-based price settingSales PricingCategory managementTrade terms &amp; discountingKey account managementPricing process and organizationManagement of distributorsNew revenue models/ (un)bundlingSales transformationPromotion managementValue selling and monitoringSource: Simon-Kucher Commercial Excellence_20140130-2- 4. Clients: Industry leaders and hidden champions Automotive Audi Continental DaimlerConsumer Maserati MercedesBenzPorsche Renault ToyotaEnergy BP/Aral Conergy E.ONFinancial Services EnBW RWE ShellSunways Tank &amp; Rast YelloIndustrial Goods &amp; Services Bosch Carl Zeiss CaterpillarAd van Geloven Dr. Oetker Nikon Beiersdorf FrieslandCampina Nestl Danone Nike PepsiCoDemag MTU SchaefflerSiemens Stork ThyssenKruppAllianz ABN AMRO AXABarclays BNP Paribas DBExpress Generali Western UnionMedia &amp; Entertainment Frankfurter John Wiley PearsonReed Elsevier Sanoma Media ScholasticPharma &amp; Life SciencesPrivate equity24 of the top 25 pharma companies3i Credit Suisse CVCRetailThe Economist WMG Wolters KluwerSoftware &amp; TechnologyBol.com Castorama DelhaizeEbay Mediamarkt METROMIGROS OTTO ReweTelecommunication 1&amp;1 DTAG E-PlusLinkedIn PayPal QtelCitrix Google IntelCapiton Goldman Sachs GildeMicrosoft Novell PanasonicHalder Lion capital KKRSAP Semikron SunGardTransport, Logistics &amp; Travel Skype Vodafone Xbox LiveAccor DB Schenker DHLGermanwings KLM/Air France LufthansaThomas Cook TNT TUISource: Selected references from Simon-Kucher project experience; confidentiality agreements prevent us from naming many other major partners Commercial Excellence_20140130-3- 5. Simon-Kucher thought leadership Books (selection)Articles (selection)USABrazilFranceUSASpainUKUSANLHungaryJapanKoreaGermanyChinaNLGermanySource: Simon-Kucher Commercial Excellence_20140130-4- 6. Setting the scene: Necessity for Commercial excellence from daily practice"I never walk away at negotiations, no is not an option since we have to defend market share in a declining market."We sell to much on price; we should be much more explicit on the value we deliver"We have to monetize our services more explicitly, we give away to much for freeOur price &amp; discounting approach is mainly historically grown, cost-plus and complex ""We are in the middle of a storm: its a price war out there" Our product has become a commodity, we have to position our added value more strongly Our commercial targets change with the season, in March it is margin and in October it is volume" We systematically manage our sales funnel, to actively hunt for the potential in our priority growth segments" We should differentiate our commercial approach more strongly, based on the segments we serveSource: Simon-Kucher &amp; Partners project database Commercial Excellence_20140130--5 -5 7. Commercial excellence is all about obtaining pricing power"The single most important decision in evaluating a business is pricing power." Warren BuffettPricing power is the ability of a company to get the price it deserves for the value it deliversSource: Bloomberg.com, 2011 Commercial Excellence_20140130--6 -6 8. Do you have pricing power? 33% of companies claim to have pricing power Chemical products Commodity products Construction materials Consumer goods Electronic goods &amp; computers Energy and utilities Industrial goods Machinery Pharmaceuticals &amp; biotech Banking &amp; financial services Industrial services Insurance Media and entertainment Retail Transport and logistics Travel and hospitality36% 18% 34% 34% 27% 35% 40% 42% 45% 26% 30% 24% 30% 29% 27% 31%Overall = 33% Source: Simon-Kucher &amp; Partners Global Pricing Study 2012 Commercial Excellence_20140130--7 -7 9. (Reported) reasons for low pricing power1. "We are a commodity" 2. "Our competitors are stupid" 3. Our training is not tailored"Source: Global Pricing Survey 2012 Commercial Excellence_20140130--8 -8 10. Real reasons for lack of pricing power1. Strategy and leadership deficits 2. No systematic commercial approach 3. Insufficient commercial knowhow (methods, people, "real" value pricing)Source: Simon-Kucher Commercial Excellence_20140130--9 -9 11. Power pricing and profits jump when leadership takes active role High Pricing PowerCompanies with C-level involvement in pricing135 EBITDA of last 3 years35%Companies with high pricing power100100 26%Companies with high pricing power13655%-25%35% All others15%Expected EBITDA coming 3 yearsAll others7511%36% All others100 41%C-level involvement in Commercial Excellence significantly increases pricing power, and companies with high pricing power make clearly higher profits.Commercial Excellence_20140130--10 -10 12. Different leaders, different strategies "We have a policy of keeping prices stable to protect our brand. When demand goes down we reduce production but dont lower our prices." Wendelin Wiedeking, CEO Porsche 1992-2009Operating margin %* 20% 15% 10% 5%Year0%"Fixed costs are extremely high in our industry. We realized that in a crisis we are better off with lowering prices than reducing volume."'00'01'02'03'04'05'06'07'08-5% -10% -15%Richard Wagoner, CEO GM 2000-2009* for Porsche partly estimated Commercial Excellence_20140130- 11 - 13. What is Commercial Excellence? Typical questions we encounter TYPICAL COMMERCIAL EXCELLENCE QUESTIONS Where are my biggest sales opportunities in the market, and how do I direct my team to go after them? How do I organize my sales force to maximize sales, and increase efficiency? How do I develop an effective key account program, to put my resources where they matter most? How do we set prices and discounts to maximize profits and customer loyalty? What type of templates and tool support can help me to bring more structure, grip and focus on my sales work?Which KPI would steer the right kind of behavior?What training curriculum and development paths do I need to develop the well-rounded sales person I look for? Source: Simon-Kucher &amp; Partners project database Commercial Excellence_20140130- 12 - 14. Commercial Excellence is all about boosting fundamental capabilitiesShare vision &amp; targetsCommercial excellence ambitionProvide directionCommercial strategy and competitive positioningCommercial targets Commercial vision Commercial leadershipGrowth: Market development Develop capabilitiesManage changeEfficiency: Commercial organizationProfitability: Margin managementChannel management Customer and key account management Funnel management Commercial structure Commercial process Commercial capabilities Price list management Discount &amp; bonus optimization Project pricing People &amp; talent developmentSystems, tools &amp; templatesMarket segmentation Competitive positioning Portfolio and route-to-market strategyMindset: Value selling Value selling argumentum Systematic peer pricing Price defenses &amp; nego Performance managementSource: Simon-Kucher &amp; Partners Commercial Excellence_20140130- 13 - 15. Our view on success factors for a Commercial Excellence transformationExperience from &gt;300 Commercial Excellence projects in the last 3 yearsMake Commercial Excellence a leadership priority, part of the MD agenda We want countries to learn from each other and have one shared approach towards Commercial Excellence. It should not be a one-off, but results that stick Co-create solutions, methods and know-how with Commercial Excellence champions We want to develop Commercial Excellence based on co-creation with the organization. We suggest to select a combination of countries with the highest potential and Commercial Excellence champions, to ensure we leverage best standards and ensure buy-in Ensure early success stories, deliver quick wins There are many initiatives in our organization at the moment, we need to work on early successes as a vehicle to propagate Commercial ExcellenceSource: Simon-Kucher &amp; Partners Commercial Excellence_20140130- 14 - 16. SummaryStarting point for improvementSetting commercial ambition Establishing common commercial language Defining commercial improvement priorities to make it stickCommercial Excellence_20140130- 15 - 17. Thank you!Commercial Excellence_20140130- 16 - </p>

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