We at Koivu Solutions wanted to understand what decision-makers really think about pricing currently. So, we tasked Norcall to carry out an extensive study by calling decision-makers and interviewing them. The results were insightful.
The following discusses some of the study’s insights, and at the bottom you’ll find a link to a presentation of the whole study.
The scope of the study
The study was conducted through phone interviews with 40 decision-makers in June 2022. The interviewed companies came from the retail, wholesale, and manufacturing sectors.
For over a decade, the so-called Amazon effect has increased the frequency of price changes. During the last three years, COVID, logistics problems, climate change, and the conflict in Europe has accelerated the price change cycle even more. How do companies react to all this?
The key takeaways from the study are
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An increasing pressure to do price changes more frequently.
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The processes are regularly taking too long with the current headcount.
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The tools used to create the price changes are not designed for these market conditions.
While in many companies the situation is recognized and the difficulties have been experienced, pricing is still seen as a supporting function rather than a strategic tool. Thus, competing with more dynamic pricing practices gives leading businesses an advantage.
The main conclusion of the study
Currently, improving pricing would potentially increase profit margin by even 10-25%. For any company, this would be a significant result to the bottom line.
Surprising results
While seeing opportunities for improved profit margins, many companies did not have any clear organized and strategic efforts in progress to improve the situation.
