For too many B2B marketing operations, pricing is viewed as “someone else’s problem.” In their minds, people in product management are responsible for coming up with the numbers and putting them in the system. From there, it’s the sales group’s responsibility to simply adhere to those numbers as best they can.
But what if those numbers are wrong? What if those prices have very little rigor or strategic thought behind them? What could happen then?
Well…how does destroying over $1 billion of potential revenue sound?
That’s what happened when the product managers at one large manufacturer threw some really messed-up prices into the marketplace. Of course, these seasoned product managers had the best of intentions. But nevertheless, they had no idea what they were doing!
How to Crater a Market with Cost-Plus Pricing
For one large manufacturer, cost-plus pricing was tantamount to malpractice. In this case study, learn how the lack of strategic pricing capability reduced the value of an entire market by over $1 billion.
Watching over the shoulders of this company’s product managers as they determine the initial pricing levels for this new product is scary! It’s like watching a train wreck in slow motion….you know exactly what’s going wrong and you wince at the carnage that’s about to unfold.
As detailed in the Journal, the full story is a great example of the “good, bad, and ugly” case studies we love to publish. From our perspective, mistakes are just so much more instructive…and a lot more entertaining…than successes.
Now…upon reading this case, you’ll no doubt shake your head in disgust.
But don’t think for second that this story is an outlier or something that could never happen in your organization. This case study is a great reminder about how decisions that can have a huge impact on marketing performance and effectiveness are very often being made by well-meaning people who just don’t have the necessary skills or expertise.
If you’re serious about marketing effectiveness, you have to pay attention to anything and everything that affects performance in the marketplace. And unfortunately, that means things like pricing really are your problem after all.