How did a B2B distributor adapt its pricing strategy to stand out in a market shaken by new entrants and galloping inflation?

In an inflationary market with increasing web competition, the price image of one of our clients, a B2B distributor, had significantly deteriorated. Moreover, its historical discount model no longer made sense for its customers. We helped our client to simplify its pricing policy and redefine price levels in line with the market, making it easier for its sales teams to use it and defend its value to his customers.

Our client had to deal with a difficult industry context and a high level of internal complexity

As a B2B distributor is subject to rising manufacturer product prices, our client faces increasing costs, making it difficult to establish stable and competitive prices. Added to this is the entry of web players (pure players) who are disrupting the status quo on prices. Additionally, customers in this market are increasingly sensitive to final prices and price increases.

Determining prices tailored to each customer or customer category is now essential

Our client’s internal tools and traditional pricing strategies were not adapted to face these challenges. The price structure had become too complex, and the discount mechanisms proposed to customers no longer met their price expectations.

We transformed our client’s pricing policy using a tailored four-step approach:

#1

First, we carried out a 360° diagnosis with a combined approach that was both quantitative – analysis of sales data, customer segmentation, price positioning – and qualitative – understanding of the price structure, interviews, and field tours. We were able to highlight a variety of complexities in the pricing structure that were resulting in prices not matching customer expectations.

#2

Together with the client, we designed a new pricing policy by reworking the customer segments and the different associated rates and discount levels. Strategic and operational working groups were conducted to define a realistic target.

#3

We used our in-house pricing software Optix to calculate the prices of the hundreds of thousands of items in the catalogue and anticipate impacts on margins according to different scenarios of changes in discount practices.

#4

Finally, we prepared the deployment on a pilot area, with particular attention to change management to ensure that sales teams would respect and correctly leverage those new price lists and pricing rules.

The result:

A clearer pricing policy leverageable by sales teams and +2 points of margin

This project simplified the client’s pricing policy and its use, with a more relevant customer segmentation, and fairer price levels. The sales teams have sufficiently got to grips with the now well-positioned prices, knowing how to link them to the right customers. On the pricing team side, the price structure is easier to maintain and adapt as needed. 

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