BCA

From: World Advertising Reseach Center (WARC)

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 make pricing decisions

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.

Recovery periods allow shift away from cost cutting

“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%.

Advertsing expenditure rates to decline

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, 4 August 2011

By Chris J. Anderson

 By John Riley

 Sales managers don’t get much sleep these days. Scouring the landscape for orders is a character building experience. Meanwhile, the economy continues to limp along as sales managers and their master’s search for solutions that will keep their companies afloat.

 Of course, management recognizes many companies have drastically cut back their inventories, but they also know some companies are still buying and they want a piece of that action. If that isn’t happening, executives usually make a change in sales managers or restructure the sales force. It’s a predictable course of action, especially if they are not familiar with, or have forgotten, how sales people fight for Team One in the trenches. The real problem may be management itself.

Expectations can be a problem

 For example, management expectations can exceed the sales force’s capabilities. This can easily happen if there has not been a dialogue between management and the sales manager to set mutually agreed sales goals at the outset of each year. Motivation is normally built into the process through a sales incentive program that handsomely rewards the high achievers. While the goals must be realistic, they need to be ‘stretch’ goals, which usually call for a stellar performance’. With both management and the sales manager on the same page, unrealistic expectations can be minimized or eliminated.

 Since sales people are in a high risk/high reward function, executives who do not have sales backgrounds may sometimes find the rewards earned by their sales staff to be unjustified and an unnecessary burden on the company’s budget. As a result, they may be prone to reduce the size of a sales person’s territory or the number of accounts he handles as a not so subtle way of reducing the commissions the salesperson can earn. Additionally, a salesperson faces aggressive and skilled competitors who are equally determined to earn their commissions so producing results is by no means assured. Establishing and maintaining a well structured incentive system is absolutely essential to attract and keep high achievers.

 Things aren’t always what they seem

 Reliable organizational support is necessary to provide service continuity to customers when a salesperson is off calling on other customers or prospects. Support personnel occasionally see their sales people entertaining customers, flying to exciting locales to meet with prospects, accompanying the company President to call on an account, or being invited to a customer golf outing. This sometimes leads to members of the office staff becoming envious of their sales people undermining their commitment to sales support. What the office staff doesn’t see is their sales person being called at home at 9:30 pm to hear an irate customer report the salesman’s product had failed resulting in a production line shut down. After rushing to the customer’s plant to help resolve the problem, the salesperson finally gets home at 2:00 am. Or office staff doesn’t see the salesperson’s face when she learns, after four intense months of working on specifications and production issues for her customer that the promised order was going to a competitor who did none of the work, but offered a slightly lower price. Management needs to insure the support staff  recognizes and understands the multifaceted and essential role of the sales staff.

 In the final analysis, the sales force is accountable

 So when sales tank, don’t be too quick to blame the sales force. Ask if sales goals have been mutually agreed, a realistic incentive system is in place and the organization is providing the necessary support.  Make adjustments if necessary, however, in the final analysis, the sales force is accountable.