Intense competition and downstream market consolidation generated increased pricing pressure for an industry leader with business teams across North America, Europe and Japan. The organization needed a proven approach to value-based pricing and pragmatic pricing tools to enable pricing and margin improvement.
Market Edge worked closely with the medical device company to understand its value proposition in specific clinical segments, competitive position in each clinical segment and region/country, and the overall business objectives. Market Edge designed a multi-phase pricing improvement initiative with milestone driven activities.
- Phase I: Current pricing performance was analyzed and pricing policy was assessed
- Phase II: Value pricing analysis was performed to evaluate how individual medical devices (products and associated services) created value vs. competitive products
- Phase III: Transactional pricing analysis scrutinized the range of discounts and rebates throughout multiple sales channels and customer segments
The actionable insights from the three phases generated a range of pricing improvement recommendations. Throughout the phases, improvement opportunities were identified and prioritized based on the potential impact to the business and feasibility (ability to implement the initiatives).
Best practice pricing techniques were embedded in the product management, sales and marketing team. Opportunities for increased performance were identified in price increases, discount management, price optimization, relationship management, and product mix. Pricing adjustments were implemented for over 50 products, directly leading to a significant improvement in operating margins and a corresponding 17% increase in free cash flow.