60% of Distributors Will Implement New Pricing Programs
The 2010 NAW (National Association of Wholesalers) Study, Facing the Forces of Change®: Decisive Actions for an Uncertain Economy[1], reviewed strategic insights into the key business and economic trends affecting the wholesale distribution supply chain through 2015. While price optimization has been to this point the domain of larger more sophisticated distributors, a focus in this area is now more widely accepted by distributors of all sizes and maturity. With the huge profit impact of gross margin optimization programs on the bottom line, it makes sense. 60% of distributors surveyed indicated they are planning or currently implementing systems and internal programs starting now thru 2015.
The term price optimization or strategic pricing often gets thrown around with varying definitions and perception. In the simplest terms, the strategy can be defined as the balancing act of raising prices for gross margin gain without losing profitable business. Of course, the real job is to dig deep into the data while also adding the distributor’s own knowledge. That is, you must spend time analyzing and modeling sales volumes, prices, costs along with customer and product segments, all the while matching this information to your own strategies, tactics, market intelligence, and customer behavior.
[1] This informative report written by Guy Blissett is available for purchase at https://www.naw.org/publications/pubs_item_view.php?pubs_itemid=142
