Pricing, Profits and Customer Value SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Pricing, Profits and Customer Value
This note discusses how some firms (start-ups and established companies) maximize customer value and profits via their pricing processes. It is aimed at companies that compete on the basis of performance initiatives rather than absolute cost advantages and low price. It is suitable for use in courses or modules in Pricing, Entrepreneurial Management, Strategy, or Marketing.
Authors :: Frank V. Cespedes, Benson P. Shapiro, Elliot B. Ross
Swot Analysis of "Pricing, Profits and Customer Value" written by Frank V. Cespedes, Benson P. Shapiro, Elliot B. Ross includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pricing Profits facing as an external strategic factors. Some of the topics covered in Pricing, Profits and Customer Value case study are - Strategic Management Strategies, Growth strategy, Marketing, Pricing, Strategic planning and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Pricing, Profits and Customer Value casestudy better are - – supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, technology disruption, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%,
challanges to central banks by blockchain based private currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of Pricing, Profits and Customer Value
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pricing, Profits and Customer Value case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pricing Profits, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pricing Profits 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 Pricing, Profits and Customer Value can be done for the following purposes –
1. Strategic planning using facts provided in Pricing, Profits and Customer Value case study
2. Improving business portfolio management of Pricing Profits
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pricing Profits
Strengths Pricing, Profits and Customer Value | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pricing Profits in Pricing, Profits and Customer Value Harvard Business Review case study are -
Ability to recruit top talent
– Pricing Profits is one of the leading recruiters in the industry. Managers in the Pricing, Profits and Customer Value are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Pricing Profits in the sector have low bargaining power. Pricing, Profits and Customer Value has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pricing Profits to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Pricing Profits has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Diverse revenue streams
– Pricing Profits is present in almost all the verticals within the industry. This has provided firm in Pricing, Profits and Customer Value case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Pricing Profits 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 Pricing, Profits and Customer Value - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Pricing Profits has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Pricing, Profits and Customer Value 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.
Analytics focus
– Pricing Profits 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 Frank V. Cespedes, Benson P. Shapiro, Elliot B. Ross 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.
Successful track record of launching new products
– Pricing Profits has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pricing Profits 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Pricing Profits digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pricing Profits has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Pricing Profits is one of the most innovative firm in sector. Manager in Pricing, Profits and Customer Value Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Pricing Profits
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pricing Profits does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Innovation & Entrepreneurship field
– Pricing Profits is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Pricing Profits in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Pricing, Profits and Customer Value | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pricing, Profits and Customer Value are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Pricing, Profits and Customer Value, it seems that the employees of Pricing Profits don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Increasing silos among functional specialists
– The organizational structure of Pricing Profits is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Pricing Profits needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pricing Profits to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Pricing, Profits and Customer Value, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study Pricing, Profits and Customer Value 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 Pricing, Profits and Customer Value can leverage the sales team experience to cultivate customer relationships as Pricing Profits is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Pricing Profits has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Products dominated business model
– Even though Pricing Profits has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Pricing, Profits and Customer Value should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Pricing Profits 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Pricing, Profits and Customer Value, in the dynamic environment Pricing Profits has struggled to respond to the nimble upstart competition. Pricing Profits has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Pricing Profits 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Pricing, Profits and Customer Value, is just above the industry average. Pricing Profits 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.
Low market penetration in new markets
– Outside its home market of Pricing Profits, firm in the HBR case study Pricing, Profits and Customer Value needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Pricing, Profits and Customer Value | 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 Pricing, Profits and Customer Value are -
Building a culture of innovation
– managers at Pricing Profits 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 Innovation & Entrepreneurship segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pricing Profits can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Pricing Profits has opened avenues for new revenue streams for the organization in the industry. This can help Pricing Profits to build a more holistic ecosystem as suggested in the Pricing, Profits and Customer Value case study. Pricing Profits can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Pricing Profits can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Pricing Profits to increase its market reach. Pricing Profits will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pricing Profits can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Pricing Profits can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Leveraging digital technologies
– Pricing Profits can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pricing Profits 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
– Pricing Profits can develop new processes and procedures in Innovation & Entrepreneurship 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pricing Profits in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Manufacturing automation
– Pricing Profits can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
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 Pricing Profits in the consumer business. Now Pricing Profits can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Pricing Profits can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Pricing, Profits and Customer Value External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pricing, Profits and Customer Value are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pricing Profits with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Pricing, Profits and Customer Value, Pricing Profits may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pricing Profits 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 Pricing, Profits and Customer Value .
Technology acceleration in Forth Industrial Revolution
– Pricing Profits has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Pricing Profits needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pricing Profits in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pricing Profits can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Pricing Profits 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. Pricing Profits can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Pricing Profits needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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 Pricing Profits.
Consumer confidence and its impact on Pricing Profits demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Pricing Profits in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Pricing, Profits and Customer Value 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 Pricing, Profits and Customer Value 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 Pricing, Profits and Customer Value 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 Pricing, Profits and Customer Value 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 Pricing, Profits and Customer Value 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 Pricing Profits needs to make to build a sustainable competitive advantage.
