Pricing Careers Weekly > 3/26/18

Pricing Careers Weekly is a collection of pricing jobs, resources, thought leadership, news and professional development events for pricing professionals.

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Value Innoruption Advisors

Founded by Dr. Stephan Liozu, Value Innoruption Advisors provides training and consulting resources for organizations interested in embedding value-based methodologies in their go-to-market strategies related to innovation, marketing, pricing, and sales. Value Innoruption Advisors offers two popular value and pricing management certification programs – Customer Value Modelers™ (CVM™) and Change Agent in Pricing™ (CAP™).

Click a link below to learn more…

 

Featured Jobs

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Events

European Pricing Summit 2018 | Finance iQ

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Date: April 16-18, 2018

Location: TBD in London, England

The advent of disruptive technology, growth of e-commerce and increasing competition from global markets are just a few of the reasons why leading companies are spending time and money to develop a pricing strategy that works.

Many pricing leaders are wondering what direction to take their pricing strategy in and want to benchmark with other organisations to decide what is the most profitable option. But KPIs and pricing models are almost always confidential, and the majority of organisations are unwilling to disclose the facts and figures that the industry needs. The industry has a dilemma where practitioners want to have insights on new developments in strategies, but they are usually subject to commercial secret.

Given this situation, IQPC will be launching a limited-access, confidential mentoring panel as part of our European Pricing and Commercial Excellence Summit to enable our clients to obtain first-hand tips from our mentors to assist them in creating the most profitable pricing strategy.

Workshop: Value-Based Pricing and Differential Value Quantification | Stephan M. Liozu, CPP

Date: Tue, 1 May, 2018 | 9:00 am – 4:00 pm

Location: PPS Spring Conference | Loews Chicago O’Hare Rosemont Hotel in Chicago, IL

More firms and their pricing leaders are embarking on value-based pricing strategies every year. Research shows increased adoption from 17% of firms in 2008 to about 25-30% of firms in 2016. Part of the deployment process of value-based pricing is the implementation of the Economic Value Estimation® (EVE®) process to quantify differential value. While adoption of value-based pricing and the implementation of EVE® is increasing, pricing professionals still face difficulties in designing and executing value-based pricing strategies and particularly executing the EVE® methods across their organizations.

In this unique one-day workshop, we go through the latest science on value-based pricing and on the EVE® process. We also review how to operationalize the outcome in value-based innovation, value-based marketing and value-based selling strategies. This is a unique and powerful workshop to learn theoretical and practical dimensions of EVE® and value quantification. Participants will also receive a signed copy of the “Dollarizing Differentiation Value” book as well as an eBook called “A User’s Guide to Value Modeling.”

Attendees will learn:

  • How to operationalize value-based pricing and EVE® in your daily business and track that your approach is successful
  • How to practically link value-based pricing with value-based innovation, value-based marketing, and value-based selling
  • How to use multi-functional collaboration to accelerate deployment of value-based pricing

(Level 600 Workshop)

 

 

Workshop: Price Execution for Sustained Profitable Growth | Navdeep Sodhi

Date: Wed, 2 May, 2018 | 9:00 am – 4:00 pm

Location: PPS Spring Conference | Loews Chicago O’Hare Rosemont Hotel in Chicago, IL

DESCRIPTION

Many companies find themselves ill-prepared to handle disruption or tap into innovation opportunities due to a legacy of weak pricing execution. New product introduction, organizational redesign, big data solutions, and other strategic investments – all of these critical functions can fall short without solid price operations.  Customers frame their perception of value received or procurement risk based on their vendors’ ability to execute pricing. Given the ever-changing marketplace, even smart companies need to adapt quickly with continuous price improvement.

However, companies have far more control over their pricing operations than they realize. In the workshop Pricing Execution for Sustained Profitable Growth, we will discuss a breakthrough approach for superior execution, one that can systematically eliminate pricing-related risk or leaks to bring new profits straight to the bottom-line without alienating customers. In this workshop, our discussion will include a holistic organizational approach for keeping senior management engaged while dismantling functional silos with the spirit of continuous improvement.

Attendees will learn:

  • How to find the Hidden Pricing Factory within your organization
  • How to secure trust and organizational support with evidence-based assessment of the overall pricing capability
  • How to align pricing operations with your pricing and sales strategy

(Level 500 Workshop)

 

29th Annual Spring Pricing Workshops & Conference | PPS

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Date: May 1-4, 2018

Location: Loews Chicago O’Hare Rosemont Hotel in Chicago, IL

We are excited to announce we’ll be in Chicago, IL for our 29th Annual Spring Pricing Workshops & Conference May 1-4, 2018!

You can register now and take advantage of our Early Bird Offer (Buy 2 Get 1 Free, expires March 23rd).

 

 

Resources

Profitable Innovation (eBook) | Simon Kucher & Partners

Why it’s urgent – and how the best companies combine innovation and marketing to rebuild their pricing power and their profits

The most urgent management challenge of our time is to combine innovation and marketing into one unified process. Even the best marketing can’t save a company that fails to innovate. On the other hand, even the most innovative ideas will flop if companies do not understand the value of their products and establish that value profitably. Combining these two functions gives you the best odds of escaping the oppressive price and competitive pressures that plague today’s markets around the globe. It gives you the best chances to generate the profit that continuously fuels further innovation and ensures long-term survival.

Download book here:

Profitable Innovation – Free download | Simon Kucher & Partners.

 

 

Paper: Robust Dynamic Pricing with Two Substitutable Products | Manufacturing & Service Operations Management

We consider a practical dynamic pricing problem with two substitutable products involving a number of business rules commonly seen in practice. Demand substitution exists between the two products (interproduct substitution) and may also exist across different time periods (intertemporal substitution). However, there is limited demand information such that the underlying probability distributions of the demand cannot be characterized precisely. We use an interval to represent, respectively, the demand for each individual product in each period, the aggregate demand for the two products in each period, and the total aggregate demand for the two products across multiple time periods. We propose a robust optimization model for this problem to maximize the worst-case total revenue. For the problem with interproduct demand substitution only, we develop a dynamic programming algorithm and show that the search spaces in the DP can be reduced greatly, which enables the algorithm to generate optimal solutions in a reasonable amount of time. For the problem with both interproduct and intertemporal demand substitutions, we develop a more complex dynamic programming algorithm and design a fully polynomial time approximation scheme that guarantees a proven, near optimal solution in a manageable computation time for practically sized problems. Our computational results show that, compared to a risk-neutral approach, our robust optimization approach can decrease the variance of the revenue at a small expense of the average revenue. We also generate a number of managerial insights: (i) none of the key structural properties commonly studied in the pricing literature hold for our problem; (ii) the revenue impact of ignoring intertemporal demand substitution when such substitution exists can be quite significant; and (iii) under- or overestimating the bounds of the demand intervals or imposing moderate business rules leads to relatively small revenue loss, typically less than 3%.

Read complete article here:

Robust Dynamic Pricing with Two Substitutable Products | Manufacturing & Service Operations Management.

 

 

Report: Holiday pricing: Making sense of the madness | Bain & Company

 

Unwrapping holiday pricing traditions

We expect that as demand rises, so do prices and profit margins. Unfortunately, this is no longer true for the average retailer in the holiday season. Even as demand recovers from the Great Recession, the volume of holiday promotions (volume = depth × breadth × length) continues to grow, while operating margins shrink. A number of factors are at work here:

  • Deeper promotions. Doorbuster deals are again in full swing this holiday season. Discounts of more than 50% on Black Friday, for example, brought TV prices to record lows; and discounts on toys reached 75% on Cyber Monday. In collaboration with 360pi, we assessed daily online price changes over the first half of the holiday shopping season.2 Looking at prices from November 1 to December 2, we found that, on average, discounts have been deeper this year than last. In electronics and computers, more than half of retailers offered even lower prices this year compared to last year’s deeply discounted prices; and in toys and games, one retailer dropped its average price by more than 2.5 times its average discount last year.
  • Broader promotions. Retailers are continuing to discount broad assortments of goods this year, with storewide discounts being used aggressively. Bain worked with SaleTally to examine the extent to which retailers offered storewide discounts this November.Over half of the 17 retailers analyzed ran storewide promotions this year, indicating a significant breadth in discounted assortment. Average storewide discounts were over 35%, 5 percentage points deeper this year compared to last year.
  • Longer promotions. With retailers offering Black Friday discounts even earlier this year (see Bain’s “Retail Holiday Newsletter #3: The sprint toward Christmas”), promotions are running longer. Data from 360pi on daily online price changes show that some retailers had started promotions in electronics and computers by November 1 and ran discounts for more consecutive days than last year. Retailers also extended Cyber Monday promotions: Bloomingdale’s, JCPenney and others launched online discounts the week before Cyber Monday and continued the deals through the following week.
  • More frequent price changes. Dynamic online pricing has exacerbated holiday pricing madness. Our partnership with 360pi looked at the frequency of price changes by examining the percentage of products that changed price from the prior day, for a sample of 5,000 SKUs. In November, Amazon.com changed its prices on an average of 20% of products in the assortment, more than any other retailer. This holiday season, more retailers are responding in kind. Office Depot, for example, changed prices on 30% of its products on the Saturday after Thanksgiving; that rate was just 18% on any single day last year. Price differentials are moving more closely in sync with Amazon.com this year as more retailers resolve to keep pace with the online giant’s price changes.
  • Greater price messaging. In addition to deeper, broader, longer and more frequent discounts, retailers are broadcasting their promotions more loudly. Bain’s proprietary research with Quad Analytix found that the total number of promotional e-mails increased by 45% in the first two weeks of November compared to last year, and by 69% the week before Thanksgiving.4

Read complete article here:

Holiday pricing: Making sense of the madness – Bain Brief – Bain & Company.

 

 

How Our Brain Determines if the Product is Worth the Price | HBS Working Knowledge

Are consumers more likely to buy if they see the price before the product, or vice versa? Uma Karmarkar and colleagues scan the brains of shoppers to find out.

by Carmen Nobel

Think of the last time you went shopping.

By the time you decided to buy a product, you knew both what you were buying and how much it cost. But was your decision affected by whether you saw the price or the product first? That’s the question at the heart of new experimental research that uses neuroscience tools to shed light on how our brains make purchasing decisions.

“We were interested in whether considering the price first changed how people thought about the decision process, and whether it changed the way the brain coded the value of a product,” says Uma R. Karmarkar, a neuroscientist and assistant professor in the Marketing unit at Harvard Business School, who conducted the research with Baba Shiv, a marketing professor and neuroeconomics expert at Stanford University’s Graduate School of Business, and Brian Knutson, an associate professor of psychology and neuroscience at Stanford. “Because we had neuroscience tools at our disposal, we had the benefit of exploring both those questions,” Karmarkar says.

“WE WERE INTERESTED IN WHETHER CONSIDERING THE PRICE FIRST … CHANGED THE WAY THE BRAIN CODED THE VALUE OF A PRODUCT.”

The researchers found that price primacy (viewing the price first) makes consumers more likely to focus on whether a product is worth its price, and consequently can help induce the purchase of specific kinds of bargain-priced items. Their study, Cost Conscious? The Neural and Behavioral Impact of Price Primacy on Decision-Making, will appear in a forthcoming issue of the Journal of Marketing Research.

The research could help retailers and marketers decide when it’s best to lead with price, which products work best with that strategy, and how to frame sales messages to consumers. (HBS related research on how consumers view pricing can be found in the article Deconstructing the Price Tag.)

Read complete article here:

How Our Brain Determines if the Product is Worth the Price – HBS Working Knowledge – Harvard Business School.

 

 

Pricing News & Discussion

Physician Salaries, Drug Prices Help Drive High US Health Costs | MedScape

Physician Salaries, Drug Prices Help Drive High US Health Costs | MedScape

He points out that in the United States there are 2.6 physicians per 1000 citizens, compared with  Germany, where the ratio is 4.1/1000, and in Sweden, which has 4.2/1000. He adds that high prices combined with high volumes play a role in the imbalance of countries. He used an example of angioplasties, writing that the […]

 

Consumers, Wine Seller Amend Contested Deal In Pricing Row | Law360

Consumers, Wine Seller Amend Contested Deal In Pricing Row | Law360

Law360 (March 13, 2018, 8:01 PM EDT) — Consumers and online wine purveyor Wines ‘Til Sold Out floated a revised settlement Monday that will see shoppers receive credits toward future purchases to resolve a New Jersey federal court action alleging misleading price advertising after their original class action deal spurred backlash from the federal government, […]

 

NYC yellow taxis mull pilot program that will allow for surge pricing | Curbed NY

The Taxi and Limousine Commission is set to vote on a pilot program that will give yellow and green taxi drivers the ability to offer customers upfront pricing, similar to how Uber and Lyft does, as well as the option to use surge pricing to determine their own rates, reports Politico. Passengers will have to […]

 

Airbnb Denies It Has Surge Pricing For The Boston Marathon | BISNOW

Airbnb Denies It Has Surge Pricing For The Boston Marathon | BISNOW

AirbnbWATCH issued a report that accuses the short-term home rental website of price gouging for Boston’s biggest sporting event. A downtown Boston apartment that normally fetches $77 per night was listed for $2K per night the weekend of the marathon. A condo that normally rented for $89 per night was asking $1,200 that weekend. Airbnb […]

 

A machine-learning approach to inventory-constrained dynamic pricing | MIT News

A machine-learning approach to inventory-constrained dynamic pricing | MIT News

Incorporating inventory constraints A main challenge to adopting Thompson sampling for revenue management is that the original method does not incorporate inventory constraints. However, the authors show that Thompson sampling can be naturally combined with a classical linear program formulation to include inventory constraints. The result is a dynamic pricing algorithm that incorporates domain knowledge […]

 

What Sushi Can Teach Us About Pricing Models and Consumer Psychology | Skyword

What Sushi Can Teach Us About Pricing Models and Consumer Psychology | Skyword

The pricing model you choose will determine the intrinsic amount of pain suffered by consumers. At one end is the “pay-per-bite” method, which is excruciating for customers, even if it it makes a lot of mathematical sense when pricing and selling items. Somewhere in the middle are more conventional approaches of selling: You purchase an […]

 

Conference: Virtual Pricing Summit 2018 | Professional Pricing Society

Conference: Virtual Pricing Summit 2018 | Professional Pricing Society

Date: Wed, 11 April, 2018 | 2:00 am – 4:30 pm (Eastern US) Location: Virtual Summit DESCRIPTION What Is The PPS Virtual Summit? The PPS Virtual Summit brings leading pricing executives to speak directly to pricing professionals in real-time for real results! Whether you’re looking for tactics on how to lead a Digital Transformation, develop a compelling […]

 

Walmart and Uber Team Up to Take on Amazon | Nasdaq.com

Walmart and Uber Team Up to Take on Amazon | Nasdaq.com

Walmart’s approach vs. Amazon’s: speed vs. control The biggest advantage of Walmart’s plan to outsource the crucial last-mile delivery to Uber and Lyft is that it’s fast and cheap. In the short run, this will allow the company to quickly scale, which is apparent when compared to Amazon’s Whole Food pilot delivery service. As previously […]

 

“Rigged” Pricing, Contracting And Rebate “Schemes,” And Drug Pricing “Shell Games:” FDA Commissioner Scott Gottlieb Lets Loose On The U.S. Biosimilar Market While Offering Peek At New Policies | Mondaq

“Rigged” Pricing, Contracting And Rebate “Schemes,” And Drug Pricing “Shell Games:” FDA Commissioner Scott Gottlieb Lets Loose On The U.S. Biosimilar Market While Offering Peek At New Policies | Mondaq

In a few short days, the United States will mark the eight-year anniversary of the Biologics Price Competition and Innovation Act (“BPCIA”). Signed into law on March 23, 2010, the BPCIA creates a regulatory pathway for the approval of biosimilar drugs in the United States and a mechanism, albeit voluntary, for resolving patent right disputes […]

 

Trump admin keeping drug price info under wraps | CNNPolitics

Trump admin keeping drug price info under wraps | CNNPolitics

The Department of Health and Human Services has not updated the databases that show the public how much money the government is paying for drugs, hospitals and physicians. The database has been instrumental for researchers, journalists and non-profit groups who keep tabs on trends in drug prices and abuses by physicians, and was considered to […]

 

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Cartoons and Quotes

 

“Product Pricing is aligned to the way customers want to acquire their solutions and are delivered via different delivery models including appliances, the cloud, or as on-premise software solutions.

     – N. Robert Hammer

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