Case Study Description of Discovering Hidden Pricing Power
Even in a mature and complex market, which is resistant to across-the-board price increases, there are still many ways to deftly raise effective prices and increase market share. Pricing policy, if wielded wisely, can still be a powerful tool. The path to these pricing opportunities lies in three actions management can take: changing the structure of the price (bundle benefits, unbundle benefits, offer alternative service levels and price points, link future purchases to current transactions, change the price effectiveness period, substitute components of the price, shift some of the price to suppliers); building more subtlety into the pricing process (set prices selectively rather than across the board, move prices in smaller increments, raise invisible prices, match price moves to the market, use discounts strategically to build relationships with desirable clients); and exploiting patterns common in other difficult markets (price against the leader, follow the leader, seek out segments that will tolerate higher prices). With the hidden power of pricing, a company facing a highly price-competitive market can use knowledge and subtlety to improve its returns and share.
Swot Analysis of "Discovering Hidden Pricing Power" written by David V. Potter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Price Subtlety facing as an external strategic factors. Some of the topics covered in Discovering Hidden Pricing Power case study are - Strategic Management Strategies, Marketing, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Discovering Hidden Pricing Power casestudy better are - – there is backlash against globalization, geopolitical disruptions, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs,
increasing household debt because of falling income levels, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Discovering Hidden Pricing Power
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Discovering Hidden Pricing Power case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Price Subtlety, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Price Subtlety operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Discovering Hidden Pricing Power can be done for the following purposes –
1. Strategic planning using facts provided in Discovering Hidden Pricing Power case study
2. Improving business portfolio management of Price Subtlety
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Price Subtlety
Strengths Discovering Hidden Pricing Power | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Price Subtlety in Discovering Hidden Pricing Power Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– Discovering Hidden Pricing Power firm has clearly differentiated products in the market place. This has enabled Price Subtlety to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Price Subtlety to invest into research and development (R&D) and innovation.
Learning organization
- Price Subtlety is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Price Subtlety is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Discovering Hidden Pricing Power Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Price Subtlety has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Price Subtlety to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Price Subtlety has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Discovering Hidden Pricing Power Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Price Subtlety is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Price Subtlety has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Discovering Hidden Pricing Power HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Price Subtlety has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Discovering Hidden Pricing Power - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Price Subtlety
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Price Subtlety does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Price Subtlety has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Price Subtlety has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Price Subtlety are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Price Subtlety is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David V. Potter can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Price Subtlety in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Discovering Hidden Pricing Power | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Discovering Hidden Pricing Power are -
High cash cycle compare to competitors
Price Subtlety has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Interest costs
– Compare to the competition, Price Subtlety has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Discovering Hidden Pricing Power HBR case study mentions - Price Subtlety takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Discovering Hidden Pricing Power, is just above the industry average. Price Subtlety needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Price Subtlety supply chain. Even after few cautionary changes mentioned in the HBR case study - Discovering Hidden Pricing Power, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Price Subtlety vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Discovering Hidden Pricing Power has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Price Subtlety 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Discovering Hidden Pricing Power, in the dynamic environment Price Subtlety has struggled to respond to the nimble upstart competition. Price Subtlety has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Discovering Hidden Pricing Power that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Discovering Hidden Pricing Power can leverage the sales team experience to cultivate customer relationships as Price Subtlety is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Price Subtlety has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Price Subtlety, firm in the HBR case study Discovering Hidden Pricing Power needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Price Subtlety needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Opportunities Discovering Hidden Pricing Power | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Discovering Hidden Pricing Power are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Price Subtlety in the consumer business. Now Price Subtlety can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Price Subtlety can use these opportunities to build new business models that can help the communities that Price Subtlety operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Price Subtlety to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Price Subtlety to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Price Subtlety can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Discovering Hidden Pricing Power, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Price Subtlety in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Buying journey improvements
– Price Subtlety can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Discovering Hidden Pricing Power suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Loyalty marketing
– Price Subtlety has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Price Subtlety can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Price Subtlety to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Price Subtlety has opened avenues for new revenue streams for the organization in the industry. This can help Price Subtlety to build a more holistic ecosystem as suggested in the Discovering Hidden Pricing Power case study. Price Subtlety can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Price Subtlety can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Price Subtlety can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– Price Subtlety can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Discovering Hidden Pricing Power External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Discovering Hidden Pricing Power are -
Increasing wage structure of Price Subtlety
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Price Subtlety.
Regulatory challenges
– Price Subtlety needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Price Subtlety business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Price Subtlety in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Price Subtlety can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Price Subtlety with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Price Subtlety will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Price Subtlety high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Price Subtlety.
Stagnating economy with rate increase
– Price Subtlety can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Price Subtlety needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Price Subtlety can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Price Subtlety can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Discovering Hidden Pricing Power .
Weighted SWOT Analysis of Discovering Hidden Pricing Power Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Discovering Hidden Pricing Power needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Discovering Hidden Pricing Power is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Discovering Hidden Pricing Power is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Discovering Hidden Pricing Power is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Price Subtlety needs to make to build a sustainable competitive advantage.