A Progressive Strategy for Trade Customer Pricing
How a
trade terms framework that rewards trade customer
co-operation puts manufacturers back in control of
pricing
Recessionary
pressures are now requiring consumer products companies
to re-examine one of the most important and challenging
components in their go-to-market strategies – trade
customer pricing.
With vigorous
competition, volatile commodity costs and tight margins,
the prices consumer products companies offer their
retail/wholesale customers can lead to profit erosion if
they are not managed in a structured, disciplined way.
However,
where trade pricing and investment is applied through a
coherent set of mutually beneficial commercial trading
terms, it offers the potential to deliver a powerful
boost to profit- opening up new growth opportunities and
delivering real competitive advantage.
The subject
of trade pricing has become even more sensitive against
a backdrop of rising commodity costs, falling disposable
consumer income and the rise of giant retail and
wholesale groups with huge buying power. Although it is
easy to appreciate why suppliers are often reluctant to
embark on a major transformation of trade pricing, the
scale of the transformation should not deter
manufacturers.
IBM’s
experience of working with leading edge Consumer Goods
companies has demonstrated that by implementing a formal
Pricing and Trade Terms Framework, theses organisations
have successfully put themselves back in control with
trade partners.
The benefits
of this change results in a mitigation of commercial
risk from margin erosion or pricing exposure across
customers and the delivery of increased profit and trade
collaboration.
Date article published: October 2009
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