Competitive Price Moves: Understand Competitive Dynamics

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來自 University of Virginia 的課程

Pricing Strategy in Practice

51 個評分

University of Virginia

Pricing Strategy in Practice

51 個評分

課程 4（共 4 門，Specialization Pricing Strategy Optimization）

In this project-centered course, Darden's Ron Wilcox and BCG's Thomas Kohler will walk you through a real-world case, from problem statement to detailed analyses. You'll use all three lenses (cost, customer value, and competition) to recommend an optimal price—and then adjust to market disruptions. Utilizing the concepts, tools and techniques taught in previous Specialization courses—from basic techniques of economics to knowledge of customer segments, willingness to pay, and customer decision making to analysis of market prices, share, and industry dynamics—you will practice setting profit maximizing prices to improve price realization. You'll finish the course with a portfolio-building project that demonstrates your pricing prowess.

從本節課中

Curveball

This week, you will respond to new developments in the LED light bulb market: a new competitor and new regulations. Just like in real life, you'll need to adjust your strategy when the competitive landscape changes and new regulations emerge and reconsider the retail marketplace and reevaluate the B2B market. You'll also head out into your own "real world" and do some detective work about the LED bulb market in your area and relate those finding to the case. We'll finish the course with BCG pricing experts sharing their insights into what makes pricing such a rewarding field.

Signaling Games4:24

Extensive Form Signaling Games7:26

Gas Wars and Takeaways4:37

Competitor Pricing Models3:13

Competitive Price Moves: Understand Competitive Dynamics9:11

Competitive Price Moves: Assess Your Options6:15

Competitive Price Moves: Choose and Execute Best Move4:11

與講師見面

Jean Manuel Izaret
Senior Partner and Managing Director, Leader of BCG’s Global Pricing Practice
Ronald T. Wilcox
NewMarket Corporation Professor of Business Administration & Senior Associate Dean for Degree Programs
Marketing
Thomas Kohler
Associate Director, Pricing
Marketing, Sales & Pricing Practice

With price moves, I mean the active management of your

prices through a process called war gaming.

It contains seven steps and it starts with understanding the competitive dynamics.

And it's no coincidence that this course about competitive pricing started about

your competitors.

It's really the starting point.

Next is you need to set your own goal.

What you're actually trying to solve or what you are trying to achieve.

Ideally, this matches very closely with what overall business goal is.

Too often, I find clients who say,

fix my prices without trying to tell me what they're really trying to achieve.

Based on that, you try to identify your own potential moves.

You then chart possible competitive moves and,

then you choose the best possible move to achieve your goal.

And this really is the chess middle four that I introduced previously.

Then, you execute your move but you're not done yet,

because then you have to monitor the outcomes and competitive responses.

Which might change your perception or some of your behaviors of your competitors

which might lead to a redefinition of your own goals and so on and so forth.

I developed a little example for

you to kind of walk you through each of those steps.

And the market I picked is residential furnitures.

We have to deal with three companies, Smith, Modern, and Cozy.

And they sell in three product categories, living room, dining room, and bedroom.

And they cater to four customer segments, they're people who rent, they're the first

home owners, family with kids who live in a family home, and empty nesters.

Now, the first thing you want to do is, you want to define your market landscape.

And, you're really setting up your chessboard

here because you need to define what each playing field is about.

You have, in the rows, the product categories, living dining and bed room.

And you have in your files the segments, renters, first home owners and so on.

Now for each of those playing fields, you have to determine what is the profit pool?

So I'm not talking about the market size of revenues but really,

where is the money made in the industry?

So, the bubble sizes here define how much money is made and

obviously, big means a lot and small means not so much.

Now the next step is, you need to map the market place onto these.

So for each of the playing fields, we're now saying,

who is owning what share of the profit pool?

So in this example here, Smith has three quarters of it and Modern and

Cozy share the rest.

In this example here, Cozy has probably 80% and you see how to read it.

Now what this does tell us is, who is really strong in what area?

And just to make the gameboard complete here,

we color coded what kind of home turfs is it?

And there are fields that are really dominated by one player.

And there are other fields that are shared between the rest, two or even three.

You can also get fancy and play around with the different shadings around how big

the absolute pools are, so that you can focus primarily on the solid colored and

don't pay too much attention to the smaller profit pools.

Now, since we are playing a game, let stick to this image.

I want you to think about your competitors and

the gameboard really like a map where you have competing kingdoms.

Where companies has their home turf, meaning,

were they make the majority of the money, this is really their castles.

So, this is segments with large profit pools that are dominated

by one of the players.

And in our example, Smith has kind of their main castle in the living room for

empty nesters, a little bit of a smaller castle in the families with kids.

Modern is kind of very strong with the first homeowners, and

there they have the majority of profits coming from the dining room,

a little bit from the living room.

And Cozy really is in the bedroom and mostly with families with kids.

There are other places on the gaming board which I called grasslands.

And grasslands are kind of markets segments with limited profit pool.

And, the shares of the profit are fluid in a sense that there is a lot of give and

take happening here.

And this gives you as an opportunity to manage your overall portfolio better.

So you see here the grasslands and you can see these all kind of midsized to

smaller sized profit pools that are shared between the players.

Lastly, there are deserts.

And these are market segments with very small profit pools, they're kind of niche

segments that are typically out of focus with very little activity.

Now, for all of these three types of playing fields,

they, together create your competitive landscape.

And you must fully understand the market, the profit pools, and

the competitive landscape to make your optimal strategic pricing choice.

Now that we've defined what the landscape is,

we can really start looking into pricing.

And here, you want to observe, first of all, what's actually happening.

So, I signified here with those little symbols where we find aggressive

pricing action or just other important things to know and understand.

For example, there's aggressive pricing happening here for

the empty nesters in the dining room.

And after some digging, turns out that the different players here tried to

secure floor spots with the retailers and therefore, run heavy promotions.

There is a high win rate for Smith in the family with kids and the living room.

So, what this kind might show us is that, Modern and Cozy, the two competitors,

they're maybe a price too high.

Cozy is setting the price umbrella for the bedroom.

So, out of this, this is the stronghold in the family with kids,

and, in the other segments for the bedroom category,

they really managed to influence the price level overall.

And, lastly, there's a lot of aggressive pricing happening in the family

with kids in the dining room and the bedroom for the first homeowners.

And, this was a curious one so, we kind of did more digging.

And what we discovered is that, Modern really tries to expand their

business from their castle in the category they are strong,

meaning, they are moving laterally into a new segment.

And at the same time, they are trying to leverage their strength within a segment,

within the first homeowners and do more business In the bedroom.

So let's wrap this up.

I know what's on your mind.

Where do you get all this competitive intelligence from?

And to answer that question, I'll be back.

To learn about your competitors,

you really have to put on your detective's hat.

And since I'm an overachiever, I'm fully tricked out.

Now, in all seriousness, how to learn about your competitors,

you have to look for the right things.

And it starts with very basic questions, what exactly are they selling?

Who are they selling to?

Where do they make their money?

What are they trying to achieve, what's, kind of, their strategic goal?

Then, you have to leverage all the sources that are available.

A lot can happen already, through observations.

You're going to have a lot of conversations with people who know,

either, people who work with you in the industry, who worked for

a competitor in the past, who just observe the market themselves but also customers.

Well, affiliations come in handy because oftentimes they share data

among their members.

At the end of the day, you'll have to do some of your own estimations.

And lastly, some modeling with the computations.

And don't dismiss.

Facts and the details, logical and

reasoning, intuition, and over time, you will build experience.

And on the last point, try to find yourself a Watson, because talking someone

through the logic what you think is happening, helps a lot, good luck.

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