Marketers struggle with pricing

04 August 2011

NEW YORK: Many brand owners are still struggling to set prices in a way which serves their wider strategic objectives, according to a new study.

Accenture, the consultancy, surveyed 1,000 CMOs and CFOs worldwide, and found that 56% expected company sales to rise by 5% or less in 2011, while just 14% anticipated posting double-digit revenue gains.

However, although 71% of firms put price optimisation in their top three priorities for the next 18 months, only a quarter boast "sophisticated" capabilities here at present, and 36% stated processes are "manual and fragmented".

Indeed, three-quarters of corporations fail to tailor pricing for different marketing goals, and the same number suggested pricing is not closely linked to overall strategy.

Marketing teams were always involved in making pricing decisions at 70% of the featured companies, ahead of product managers, registering 58%, and finance departments, on 52%.

Exactly 66% of manufacturers use analytics to inform pricing levels, compared with 56% using such systems to generate insights, 52% monitoring the impact of price changes, and 50% testing hypotheses.

"In a market of essentially permanent volatility, CFOs and CMOs are staying a bit more reserved in their plans, despite their own expectations for growth," said Greg Cudahy, managing director of Accenture's Operational Strategy practice.

"In past recovery periods, there has been a greater expectation of the ability to capture price leverage across the board, and a related shift away from cost cutting and cash- position building."

Elsewhere, a 54% majority of the panel agreed good service was a primary factor in securing a competitive advantage, beating innovation and product differentiation on 53%, and price positioning with 51%.

Marketing and branding logged 48% on the same metric and the value proposition received 42%.

Looking forward six months, 27% of firms intend to reduce their advertising expenditure rates, measured against 21% pursuing such an approach during the last 18 months.

Around 30% of organisations planned to implement product redesigns and rationalisation, as well as customer rationalisation, while 49% hoped to streamline corporate structures.

Data sourced from Accenture; additional content by Warc staff