PRICING NEWS

The Organization of Sales: Key to Implementing the Pricing Strategy

by Prof. Dr. Hans-Christian Riekhof

Pricing strategies are of little use if they are not implemented in the market and with the customer. I have written about this in my Pricing Newsletters No. 65, No. 59, No. 56 and No. 46, and I have also repeatedly emphasized elsewhere that the implementation of strategies requires its own management tools. You can find more about this in my book published by Schäffer Poeschel “The 6 Levers of Strategy Implementation”.

As for the approach to implementing pricing strategies, Britta Seeger, the sales manager of Mercedes-Benz, currently provides a nice example. The Handelsblatt reported on this on 19.02.24. What is Mercedes-Benz planning?

– Mercedes has converted the sales to an agency model. This means that the price sovereignty no longer lies in the branches or with the dealers, but that the headquarters sets the strategic price course.

– The IT systems are standardized in this context, and this also means that the headquarters has sovereignty over the customer and transaction data.

– This largely prevents “discount battles”.

– The Mercedes-owned branches are to be sold to external dealers. According to Mercedes, 80 businesses and 8,000 employees are affected.

– The total sales area is to be reduced by 20%.

This is a big task that needs to be tackled. But in order to actually enforce prices in the market and towards customers, appropriate processes, systems and enforcement options are needed.

Initial successes are already becoming apparent: according to information from the Handelsblatt, the average sales price for Mercedes cars has risen from €51,000 in 2019 to almost €75,000. This is of course also due to the vehicle mix. But the consequences for profitability are obvious. We are curious to see how the implementation will continue.

Best regards from Hamburg

Yours
Prof. Dr. Hans-Christian Riekhof

Photo:
Where are the prices finally decided when buying a car?
Source: © iStockphoto