Case Study: Pricing Organization Design – Agricultural Chemicals
Challenge: A global agricultural chemical producer sought to improve its pricing governance including organizational processes, price setting, and discount management. In the past, many business units had had no list prices. Instead, they managed most pricing on a transactional basis using a cost-plus approach.
Approach: The company engaged Wiglaf Pricing to conduct a data mining exercise, leading to the identification of price variance management improvement strategies on a business unit by business unit basis. Price management improvements were delivered through improved price governance, list and target pricing policy, sales incentives aligned to profits instead of revenue, and defined transactional pricing process that would work with their Salesforce.com and other CRM solutions.
Result: Business units universally reported that pricing was under better control with greater coordination between sales, marketing, and finance. They also reported a stronger focus on pricing according to the differential value delivered to customers. Margins improved by up to an additional six percentage points in some business units within the first quarter after the initial implementation. The company is still rolling out the process with different business units as each business unit continues its pricing transformation.