Developing an Effective Competitive Pricing Strategy to Increase the Overall Savings for a Fast Food Company

The Business Challenge

The client, a well-established fast food company in Sweden, was facing predicaments in sustaining their profitability for the last few years. Their belief that the company’s pricing strategy was incorrect was making them highly skeptical of implementing new pricing initiatives. However, the new top-level management realized the power of competitive pricing and approached SpendEdge to leverage its competitive pricing solutions to enhance ROI.

Companies in the market need to formulate better competitive pricing strategies to stay competitive in the market. Get in touch with our experts and know how competition based pricing can help your organization to achieve better savings and gain higher profit margins.

Solutions Offered

The pricing experts at SpendEdge performed a detailed analysis of the pricing opportunities of transactional and value pricing models to spot quick opportunities. They adopted a research methodology that consisted of qualitative and quantitative data collection techniques to help the client implement a pricing strategy with confidence.

In a span of 12 weeks, the experts implemented a competitive pricing strategy to capture the interest of customers willing to spend on their products. They quantified buyer personas and selected a price that their customers were willing to pay. Also, the competitive pricing strategy ensured that they didn’t increase the prices of the products with the highest margins. Instead, they reduced the sourcing costs of raw materials for these products by identifying suppliers offering better prices. Furthermore, they analyzed the pricing models to figure out the key factors driving the prices of the company’s offerings.

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Key Findings

The competitive pricing analysis engagement helped the company to raise the prices of their offerings by an average of 3% across the country. This resulted in a 31% increase in the overall savings of the company. Discovering regional variations in pricing helped the client to identify cost-saving opportunities and make prudent business decisions.

What is Competitive Pricing?

Competitive pricing is a strategic process of pricing the company’s products or services in accordance with the competitors in the market. This is often done by businesses selling similar products as the attributes of the products remain similar. Also, competitive pricing takes into consideration factors such as the product’s life cycle and the stage of the product.

Analyzing the pricing model of competitor companies requires a great deal of market knowledge and expertise. Request a free demo and know how our experts can help you develop better strategies.

Everything Brands Need to be Aware of When it Comes to Price Discrimination

What is price discrimination?

Price discrimination refers to a pricing strategy that charges different customers different prices for the same product or service. This is one of the common competitive practices used by larger, established businesses in an attempt to profit from differences in supply and demand in the market or target customers. In this pricing strategy, the seller charges each customer the maximum price that they perceive the customer would be willing to pay. In more common forms of discriminating prices, the seller groups customers on the basis of certain attributes and charges each group a different price.

Types of price discrimination

For pricing strategies to succeed, businesses must have a clear understanding of their customer base and its needs. The most common types of price discrimination used include:

First-degree price discrimination

It is also known as perfect price discrimination, occurs when a company charges the maximum possible price for each unit consumed. As prices vary among units, the firm captures all available consumer surplus for itself. In the modern business world, companies rarely practice such types of prices discrimination. In such types of price discrimination, businesses can accurately determine what each customer is willing to pay for a specific product or service. This makesit possible to sell that good or service for that exact price. However, it is time-consuming and difficult to master for most businesses. Here, sellers can capture the highest amount of available profit for each sale.

Second-degree price discrimination

It is a pricing strategy of charging a different price for different quantities consumed, such as quantity discounts on bulk purchases. Here, the ability to gather information on every potential buyer is not present. Instead, based on the preferences of various groups of consumers, companies price products or services differently. Businesses mostly apply second-degree price discrimination through quantity discounts; bulk purchasers tend to receive special offers and discounts that are not granted to those who buy a single product. This strategy does not completely eliminate consumer surplus, also it allows a company to increase its profit margin on a subset of its consumer base.

Third degree price discrimination

Third degree price discrimination occurs when different consumer groups are charged different prices. Third degree price discrimination is the most common strategies today that several players in the market are adopting. This pricing strategy provides a way to reduce consumer surplus by catering to the price elasticity of demand for specific consumer groups. Common examples of third degree price discrimination include admission prices to amusement parks, movie theater ticket sales, and offers in restaurants. Consumer groups that may otherwise not be able or willing to purchase a product are captured by this pricing strategy, which eventually increases the company’s profits.

To know more about third degree price discrimination and other popular pricing strategies

Wearable Camera Market – A Pricing Overview

Today, people are indulging in sports and entertainment activities more than ever. They are looking for new ways to capture their experiences, apart from the handheld camera. A wearable camera provides them the perfect option to capture videos on the go. It also provides a first-person view of the experiences. Currently, the sports and media industry accounts for more than half the demand for wearable cameras. Additionally, value-added product features such as instant media sharing, and customization of settings related to widgets and transfer medium will result in high demand for wearable camera from the media and entertainment industry. Our procurement market intelligence report on the global wearable camera market anticipates the market to grow at an impressive rate of 16.95% for the next couple of years.

Regional markets

North America currently accounts for the highest spend in the wearable camera market and is closely followed by the European region. APAC and South America are the fastest growing markets in this sector. Much of this growth can be attributed to the robust growth in major end-user industries such as tourism and media, strengthening of regulatory frameworks with respect to the ease of doing business for global suppliers, and increasing investments by global and regional suppliers.

Demand-supply scenario

Prices of wearable cameras are expected to decline moderately during the forecast period due to the growth of regional suppliers in the APAC region. Regional suppliers in the APAC region are likely to offer wearable cameras at a lower price compared with their global counterparts due to factors such as low raw material and labor costs. This, in turn, intensifies the price competition in the market. Additionally, the spend of suppliers on R&D is on a rise to deliver products with high data security and enhanced ease of use with additional features. However, it is estimated to moderately impact the prices of wearable cameras.

Supplier costing

The manufacturing of wearable camera includes procuring raw material costs including components such as transistors, capacitors, PCB, sensors, and materials, including plastics. The costs of such materials are expected to increase at a CAGR of 4%-5% by 2022 due to the growing focus of suppliers on customization of components to attain end-product differentiation. Apart from raw materials cost, manufacturers have to consider other cost aspects including R&D, labor, administrative, channel costs, logistics, and manufacturing costs.

Factors impacting pricing

Suppliers in the wearable camera market are increasingly focusing on developing lightweight and miniature wearable cameras with high image stability. This increases the R&D costs of suppliers, which, in turn, raises the final cost of end-products. Additionally, suppliers are increasing their R&D spend to design products with enhanced durability and multiple API architecture support to enhance customization ability at buyers’ end, which subsequently increases the R&D costs.

Cost saving opportunities

Although raw material and labor costs are on a rise, there are few cost-saving opportunities that exist in this market. Collaborating with component providers to attain differentiation in design and operational features looks to be one obvious route to save on costs. These suppliers enter into agreements with their component vendors, which helps in developing new products to attain the USP of end-product in the market.

Read more about the pricing landscape in the wearable camera market along with procurement best practices, supply market insights, pricing insights, and market challenges in SpendEdge’s upcoming report on the global wearable camera market.

Verizon

Verizon is an American telecommunication conglomerate and the largest wireless communication service provider in the US. The key services offered by Verizon includes wireless communications, mobility, internet of things, IT solutions and cloud, and business communications. Verizon’s PCI compliance solutions help clients to understand the requirements that affect business, avoid common pitfalls that increase risk, and navigate the road to compliance. In 2017, Verizon released a Payment Security Report, which demonstrated the correlation between organizations PCI compliance standard and their ability to defend themselves against cyber attacks.

AT&T

AT&T provides network, cybersecurity, and mobility services to businesses. The company provides services and solutions to end-user industries such as finance, healthcare, retail, hospitality, consumer goods, and transportation. AT&T offers a robust suite of solutions for PCI compliance including consulting, managed security, strong authentication, and project planning and management services. Here are some of the detailed solutions offered by the company:

Build and maintain a secure network	· AT&T Consulting Firewall Assessment Services · AT&T Managed Security Services · AT&T Managed Firewall Service
Protect cardholder data	· AT&T Encryption Services · AT&T VPN Services · AT&T Web Security Services
Maintain a vulnerability management program	· AT&T Endpoint Security Services · AT&T Managed Endpoint Security · AT&T Consulting Application Services
Implement strong access control measures	· AT&T Token Authentication · AT&T Consulting Secure Network Integration · AT&T Managed Hosting
Regularly monitor and test networks	· AT&T Internet Protect · AT&T Security Event & Threat Analysis · AT&T Security Device Management

Cisco

Cisco manufactures and sells networking hardware equipment and telecommunications equipment. It also provides solutions to ensure compliance with standards such as PCI and HIPAA. The company is also a member of the PCI Board of Advisors, Technical Working Groups, and DSS Special Interest Groups. On June 26, 2017, Cisco announced new training and developer programs for its 28,000 networking professionals at the company’s annual user conference to accelerate the adoption of internet-based networking.

IBM

IBM is one of the oldest technology company that provides hardware, software, and middleware apart from hosting services in areas such as mainframe computers and nanotechnology. The company offers a range of services for businesses including cloud services, business consulting, financing, analytics, unified communication services, and compliance services. Recently, IBM announced that it is teaming up with Toronto-based FinTech company, Dream Payments to generate new revenue streams from mobile payment solutions. The partnership has allowed Dream Payments to maintain bank-grade security, scale its cloud infrastructure, and improve PCI compliance and data sovereignty.

Trustwave

Trustwave Holdings in an American company that offers solutions to help organizations fight cybercrime, protect data, and reduce security risks. The company caters to industries such as education, restaurants, payment services, financial services, retail, and government. The company offers around-the-clock support, a full suite of PCI services, access to world-class PCI experts, and security portfolio that enables compliance. In 2017, the company was named the best PCI compliance provider for the second year in a row at the CNP Expo held in Orlando, Florida.

Read more about the top vendors in the PCI compliance solutions market along with pricing models, procurement best practices, supply market insights, and category management in SpendEdge’s upcoming report on the global PCI compliance solutions market.

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Top Challenges Faced by the Cotton Suppliers within the Cotton Industry

Cotton production dates a long way back to the ancient civilization of Indus Valley of India and Pakistan, with some estimates believing cotton farming to be about 7,000-year-old. Cotton, as the modern world knows it, owes its existence to the industrial revolution in England and invention of cotton grin in the US. Although cotton is widely used in the textile industry for clothing materials, they have applications in other areas as well. For instance, cottonseed oil can be used for cooking and in products like cosmetics, soaps, pharmaceuticals, plastics, and rubber. The demand for cotton for various industries from APAC, MEA, and the South American region is driving the growth of the cotton industry (SpendEdge Report – Global Cotton Market – Procurement Market Intelligence Report). However, numerous factors are hindering the growth of this industry.

Challenges Hindering Growth in the Cotton Industry

Growing Popularity of Synthetic Fibers

The demand for cotton fiber is slowing down due to rise in popularity of polyester in the textile and apparel industry. Increase in cotton prices and increasing lack of supply has led to the expansion of production capacities of purified terephthalic acid, which is the primary raw material for polyester. Companies in the textile and apparel industry are switching to polyester because of low-cost and durability.

Increase in Production Cost for Cotton

In comparison to most of the agricultural commodities, cotton has the highest per-acre energy costs. For instance, it can require more than 5,000 gallons of water just to manufacture a t-shirt and a pair of jeans. Also, cotton has a high dependence on oil prices for its energy costs in manufacturing and logistics of textiles and fabrics. In addition to energy costs, the cotton industry is also facing a shortage of labor, which is why suppliers are facing challenges to meet the supply quantity and delivery schedules.

Price Volatility in Cotton Industry

Cotton farming usually starts out in spring and require a favorable climatic condition. Natural disasters and change in weather could affect the demand-supply dynamics in the cotton market. For instance, Hurricane Harvey affected the cotton supply in the US leading to the shortage of materials and forcing the cotton suppliers to import cotton from other APAC countries, including China and India. Such fluctuations in the cotton prices could negatively affect the demand for cotton, and suppliers can opt for more stable alternate materials.

High Competition for Acreage Among Agricultural Crops

Crops such as rice, wheat, soybeans, and corn deliver consistently higher returns to farmers compared to cotton crops. Increasing demand for such staple foods will encourage the farmer to plant food crops instead of cotton crops. The report on the global cotton market – procurement market intelligence report from SpendEdge estimates that growth in demand for these crops can lead to a potential decline in acreage for cotton and could affect the supply globally.

Read more about the challenges in the cotton industry along with market trends, cotton prices, cotton supply chain, and key suppliers of cotton in SpendEdge’s upcoming report on the global cotton market.

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Procurement Research Report on the Global TV Advertising Market Now Available from SpendEdge

Increased penetration of D2H across geographies has propelled the growth of the global TV advertising market.

LONDON: The procurement research report on the TV Advertising market is a necessary part of SpendEdge’s marketing category portfolio and offers a detailed analysis of the key factors influencing the supply market, sourcing and procurement decisions, pricing models, and procurement best practices. Furthermore, it also offers profound insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

Increased spend by end-user segments, such as online businesses, followed by food chains, cosmetics products, and personal care products, on TV advertising has led to the growth of the global TV advertising market. The rise in spending of end-user segments is attributed to factors such as an increase in their marketing budget.

“Purchasing managers must partner with service providers that possess technological capabilities such as programmatic buying and geo-targeting,” says Tridib Bora, a marketing industry procurement research specialist at SpendEdge. “This provides cost-saving opportunities in terms of reaching target customers at a low cost and ensures the reach of the TV advertising campaign to the right target audience,” added Tridib.

It is difficult to identify service providers that possess the expertise and have capabilities to create innovative campaigns that can attract an audience and stand out in the TV advertising space. Collaborating with service providers that have low proficiency and limited service portfolio may result in poor campaign performance in terms of converting sales.

Need more insights on this report?

This procurement report on the TV advertising market offers insights on:

Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
Key suppliers and assessment of their capabilities
For a comprehensive, detailed list, view our full report

Get unlimited access to all our reports. Our Insights platform ready-to-use procurement research reports, latest supplier news, innovation landscape, markets insights, supplier tracking, and much more at the click of a button. Request a free demo now

Procurement Research Report on the Global Rice Husk Ask Market Now Available from SpendEdge

Increasing global demand for rice husk ash from the growing building and construction segments for manufacture of substances, including concrete mixes and the steel.

LONDON: The procurement research report on the rice husk ash market is an indispensable part of SpendEdge’s agro commodities and raw materials category portfolio and offers a detailed analysis of the key factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. Furthermore, it also offers meticulous insights into the key market developments, demand-supply shifts, and supply chain management to help sourcing and procurement experts make smart procurement decisions.

Rice husk ash is widely used in the steel industry due to its beneficial properties such as high insulation, low thermal conductivity, high melting point and porosity, and low bulk density. This makes it suitable for producing flat steel whose typical uses are in the production of automotive body panels and white goods.

“Procurement managers must comply with certifications and quality standards to ensure quality of the end-use products or applications,” says A Kowshik, an agro commodities and raw materials industry procurement research specialist at SpendEdge. “Suppliers also need to adhere to various compliance systems issued by REACH, NSF, UKAS, and FDA,” added Kowshik.

Purchasing managers find it challenging to formulate procurement budgets as there is significant volatility in prices of raw materials. The lack of knowledge on price fluctuations can be disadvantageous, and purchasing managers must end up paying more than the market price due to contractual obligations.

Need more insights on this report?

This procurement research report on the rice husk ash market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Procurement best practices
Negotiation strategies and cost-saving opportunities
Key suppliers and assessment of their capabilities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

Get unlimited access to all our reports. Our insights platform ready-to-use procurement research reports, latest supplier news, innovation landscape, markets insights, supplier tracking, and much more at the click of a button. Request a free demo now

End of an Era for TV Advertising? A Procurement View

As you make your way through the blog, you would have already got past many advertising on your desktop or mobile device right from website ads, Google paid search to promotional e-mails. You may struggle to remember the last time you saw a TV commercial or turned the TV on for that matter. If TV advertising is dead then why are TV advertising rates still high with brands willing to pay millions of dollars just to get their spot there? Although the market share of traditional media like radio and newspaper is dwindling, TV advertising is still unshaken, which can be justified by its steady growth rate with a CAGR of over 4% (SpendEdge Report: Global TV Advertising Market – Procurement Market Intelligence Report 2017-2021).

Growth Constraints of TV Advertising Market
Brands on an average spend 8-10% of their marketing budget for the TV medium. The high cost of purchasing TV advertisement is driving the brand managers to evaluate alternate advertising channels. Additionally, it is difficult to determine the ROI of TV ad campaigns making the companies skeptical about massive investments in this medium. The emergence of the alternate channel along with growing use of mobile devices could hinder the growth of this market.

Shift from TV to Online Platform?
It has been observed that brands are reallocating their TV advertising budgets to online platforms by analyzing the recent trends. As per the report, the global digital advertisement spend had surpassed global TV advertisement spend in 2016. However, TV advertising agencies can benefit from this trend as broadcasting agencies will lower the TV advertising costs to attract brands and sustain in the market. Additionally, the shift towards digital medium is moderate in APAC and MEA regions due to lack of penetration from online platforms.

Is the TV Advertising Market Growing?
The growth prospect for TV medium may look bleak, but certain factors are driving the growth of this market. The most important one being increasing penetration of DTH across emerging markets. DTH allows for increased transparency and broadcasts content based on personalization and customer recommendation to ensure targeted reach. The most exciting growth prospects come from online businesses who are opting for TV medium to reach the masses and thus contributing around US$860-US$865 on TV mediums in the US.

Read more about the procurement view of the TV advertising market along with supply market landscape, pricing strategies, pricing trends, negotiation strategies, cost modeling, and procurement insights in SpendEdge’s upcoming report on the global TV advertising market.

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Competitive Pricing Study Helps Oncology Drugs Manufacturer Identify Factors Influencing the Pricing Scenario

Category Overview

Currently, oncology drugs manufacturers are facing the need for competitive pricing studies to stay on top of the price fluctuations and offer consistent products for a lesser price without compromising on the quality. Additionally, the number of cancer patients is increasing, and the requirement for oncology drugs is at its peak with several numbers of manufacturers offering quick medical assistance. Competitive pricing studies help oncology drugs manufacturers to assess the factors including the on-going pricing trends and fluctuations influencing the pricing scenario of the industry.

Moreover, the competitive pricing studies offered by SpendEdge, help oncology drugs manufacturers to gain a superior competitive advantage over their peers in the oncology drugs market space.

The Procurement Pain Point and Insights Offered

A global oncology drugs manufacturer wanted to understand the pricing landscape to offer products for a lesser price without compromising on the quality and gain a competitive edge over their peers. Additionally, the client wanted to gain insights into the value chain cost analysis and evaluate the cost structure of the competitors. This would help them improve their pricing strategies across the supply chain.

To cater to the business requirements of the client, the competitive pricing experts at SpendEdge tailored a two-step research methodology, which included primary and secondary research coupled with qualitative and quantitative data collection procedures to address the issues of the client.

During the course of this competitive pricing study, the oncology drugs manufacturer was able to evaluate the principal factors influencing pricing landscape. Additionally, the client was able to assess their supply chain capabilities against their peers in the market space.

Fundamental questions answered in this competitive pricing study include

Business Outcome

The competitive pricing engagement helped the oncology drugs manufacturer devise superior pricing strategies under fluctuating market conditions with the help of SpendEdge’s flexible modeling tool. This helped them reduce a significant amount of cost across the supply chain.

Want to know more about our competitive pricing solutions?

Procurement Research Report on the Global Commercial Printing Market Now Available from SpendEdge

The demand for commercial printing services is increasing rapidly in emerging countries of APAC, such as Japan, China, and India, owing to increasing demand from end-user segments such as the advertising and packaging industry.

LONDON: The procurement research report on the commercial printing market is an essential part of SpendEdge’s marketing category portfolio and offers a complete analysis of the key factors influencing the supply market, significant procurement decisions, pricing models, and procurement best practices. Furthermore, it also offers profound insights into the supply chain risk management, key market developments, and demand-supply shifts to help sourcing and procurement experts make effective procurement decisions.

The adoption of technologies such as web-to-print services, automation in the production process, and logistics support by major printing firms helps to enhance the operational cost and service delivery (of the printed product) for purchasing managers, creating more demand from various end-user segments. This results in an increased demand for commercial printing market.

“Purchasing managers must engage with suppliers in long-term contracts with commercial print suppliers to avail value adds and other benefits,” says Tridib Bora, a marketing industry procurement research specialist at SpendEdge. “This will drastically reduce the total cost of ownership for the service and contracts also help to save on contract management cost and bidding costs,” added Tridib.

Purchasing managers are compelled to make their supply chain green by collaborating with suppliers that follow eco-friendly operational methodologies because of increased stringency of environmental regulations and social importance given to EHS practices.

Need more insights on this report?

This procurement report on the commercial printing market offers insights on:

Supply markets, growth drivers, trends, and challenges
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

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Solutions Offered

Key Findings

What is Competitive Pricing?

What is price discrimination?

Types of price discrimination

First-degree price discrimination

Second-degree price discrimination

Third degree price discrimination

To know more about third degree price discrimination and other popular pricing strategies

Regional markets

Demand-supply scenario

Supplier costing

Factors impacting pricing

Cost saving opportunities

Verizon

AT&T

Cisco

IBM

Trustwave

Growing Popularity of Synthetic Fibers

Increase in Production Cost for Cotton

Price Volatility in Cotton Industry

High Competition for Acreage Among Agricultural Crops

Category Overview

The Procurement Pain Point and Insights Offered

Fundamental questions answered in this competitive pricing study include

Business Outcome

Want to know more about our competitive pricing solutions?

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