CASE STUDY

Competitive Pricing Study for a New Automotive Supplier Helps Assess Factors Influencing the Pricing Landscape

Aug 7, 2017

Category Overview

The global automotive industry has undergone tremendous transformation in recent years. This market is also expected to witness significant growth in the coming years as it offers a huge growth potential due to higher economic growth in large emerging markets like China and India. However, the major reason behind the sluggish growth of this industry is the implementation of highly specific regulations. Furthermore, it has also been noted that some of the major emerging markets are loosely connected to global trade flows and require dedicated strategies and investments. As a result of such challenges, many automotive firms across the globe have started opting for competitive pricing studies to identify new automotive parts suppliers and understand how to procure materials from them in an effective manner.

The Procurement Pain Point and Insights Offered

A large automotive firm wanted to gain insights on the value chain cost analysis and gain a better understanding of the cost structures of the competitors’ products, the performance attributes OEMs would be willing to pay for, and the basis on how OEMs decide to switch to a new supplier. Additionally, they also wanted recommendations on a tool that would help them develop pricing strategies in the coming years.SE_Demo2

The competitive pricing analysts at SpendEdge carried out a comprehensive two step research methodology, which included primary and secondary research coupled with qualitative and quantitative data collection methodologies to cater to the specific category requirements of the client. During the course this study, the client was given insights on where in the value chain could they capitalize on the benefits of its product offering with the help of the model cost structures. The client was also offered a fact base for value-per-attribute, which exhibited the price and performance impact.

Key questions answered in this competitive pricing study include

competitive pricing

Business Outcome

The competitive pricing analysis study helped the client understand the factors influencing the pricing landscape and the selection of parts suppliers by the OEMs. Additionally, through SpendEdge’s competitive pricing study, they also received a flexible pricing tool to model specific pricing scenarios using competitive technology costs, market conditions, and customers’ business case requirements. Furthermore, the client was able to evaluate the pricing strategies under changing market conditions with the help of a flexible modeling tool and a list of options for pricing strategies.

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