Making Your Pricing Strategy Stick

As any experienced marketer knows, developing strategy is one thing—managing the change process to embed that strategy in the organization is quite another. All too frequently, companies make substantial investments in more effective pricing strategies and then fail to reap the expected return on that investment because they didn't sufficiently invest in implementation.

The truth is that implementing effective pricing strategy involves changing the expectations and behaviors of all of the actors involved in the sales process. Customers must learn that they will be treated fairly and that abusive purchase tactics will not be rewarded with ad hoc discounts. Sales must learn that they will be rewarded for closing deals that increase firm profitability rather than using price as a tactical lever to increase sales volume. Finance must learn to look beyond cost as a determinant of price to better understand the tradeoffs between price, cost, and market response.

Successful implementation of pricing strategies requires targeting specific undesirable behaviors and devising a detailed plan to change them. Our experience has shown that there are three main ways to affect these behavioral changes:

1. Provide effective incentives.

2. Set appropriate expectations.

3. Develop the necessary organizational skills.

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John E. Hogan is vice-president and director of research in the Boston office of Strategic Pricing Group. He can be reached at jhogan@spgconsulting.com. To register to receive SPG Insights, visit www.strategicpricinggroup.com.