In the recent past, the passenger vehicle industry has registered slower growth. It appears as if we are in a time where discounts have become inevitable, customer expects and OEMs are obligated to give. This has led to a pricing strategy that is best described as “me too pricing strategy”. While the price war delivers benefits in the short-term benefit to the organization, but the organizational profitability, which is a long-term metric will be impacted. This demonstrates the need to establish a scientific linkage between value proposition for the customer and the pricing.
This paper explores methodologies beyond the existing practices for right pricing.
The current practice of benchmarking, an industry favorite, is adopted for pricing right. Over a period of time, there have been frameworks developed that can enrich the traditional methods adopted. Going beyond benchmarking, one could use the approach of understanding the ‘job to be done’ where the current solution does not limit ideation.
The voice of the customer has been an age old method of gathering inputs for design but recent studies have shown that the customers’ stated needs may be limited to their current solution and habits. Ethnographic studies dig deeper and reveal insights that were hitherto unknown for the solution designer. The R-W-W screening (Real – Can we win? – Is it worth doing?) is simple yet effective for answering many questions and screening between various options for design.
Innovating on the business model will help establish the right approach will add another dimension to the pricing that will ensure that the organization does not suffer in the long term. The right business model by innovation and disruption is more relevant approach for business growth as it focuses on entire value stream, from creation to delivery. Today’s organizations have to look beyond for other streams for revenue generation. As an example, renting vehicles has been explained as revenue generation stream for the passenger vehicles, apart from sales of goods. This overall approach on Business innovation prepares the organization ready for the future and leads the segment.
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Breakthrough Management Group International (BMGI), is a global consulting firm with a strong focus on delivering results and partners with organizations in various stages of their business life cycle to transform their business performance. BMGI enables businesses to Innovate, Strategize and Solve Complex Business Problems. Headquartered in the US, BMGI has delivered cumulative benefits to its clients worth several billion dollars with an ROI of 5:1 to 20:1.
In India, BMGI is located in Mumbai. BMGI’s clients include leading Fortune 1000 Global companies and other Indian companies from diverse industries such as financial services, IT/ITES, airlines, chemicals, FMCG, discrete manufacturing, telecommunications, petrochemical, textiles, healthcare & energy. Some of BMGI’s global clients include Hitachi, Siemens, Philips, Unilever, DeBeers, Avis Budget Group, TNT Express, General Dynamics to name a few.
BMGI’s Indian clients include amongst others Asian Paints, Cognizant, Daimler Benz, HDFC Bank, HUL, ITC, John Deere, Kraft Foods, Piramal Healthcare, Reliance Industries, Sudarshan Chemicals, Vodafone and Volkswagen amongst others.
Mr Naresh T Raisinghani, CEO and Executive Director, BMGI unveils white paper in the presence of Mr Hiramen Aher of Mahindra Automotive and Mr Tomas Erndberg of Volvo India on “Demystifying pricing in Passenger Vehicle Industry- Scientific way to stay ahead of curve”