BOSTON, Oct. 17, 2023 /PRNewswire/ — “What’s the price?” That question is heard every day around the world in many different languages and in many different contexts. Pricing and prices drive the global economy by enabling commercial transactions, business decisions, and policy moves by governments.
But getting pricing right is difficult given all the variables that affect it. Inflation, discounts, value extraction, and price elasticity are just a few of the many factors in play.
Strategic pricing is the answer, according to Boston Consulting Group (BCG) executives Jean-Manuel Izaret and Arnab Sinha in their new book Game Changer: How Strategic Pricing Shapes Businesses, Markets, and Society (John Wiley & Sons; October 17, 2023; hardcover $45.00; ISBN 978-1-394-19058-4). Their mission is to flip the flawed and clichéd conversations surrounding pricing to an approach that promises winning strategies for greater and fairer value to the buyer and seller and to society at large. The principles behind this approach are collaborative growth, not a zero-sum outcome; value sharing, not value extraction; dynamic, not static pricing; and strategic decisions, not ones based solely on numbers.
To help executives make pricing choices with greater speed, confidence, efficiency, and impact, the authors offer a methodology based on seven logical and distinct pricing games. The Strategic Pricing Hexagon organizes these seven games into a framework that enables decision makers to formulate a clear pricing strategy and shape their business and markets with authority. The Strategic Pricing Hexagon enables leaders to identify imbalances in their market, assess the resulting opportunities and risks, and then design solutions on the basis of their pricing strategy.
- Value Game: Aligning the prices of unique solutions with customer value
- Uniform Game: Optimizing the same prices for all customers
- Cost Game: Driving efficiency to set prices in commoditized markets
- Power Game: Negotiating high-stakes deals in concentrated markets
- Custom Game: Customizing discounted deals amid heavy competition
- Choice Game: Shaping customer behavior with segmented offers
- Dynamic Game: Managing floating prices on the basis of real-time dynamics
This framework enables leaders to answer the three critical questions that form the basis for their pricing strategy: How do we want to create and share value? What pricing game do we want to play? What pricing model benefits our value creation strategy?
The authors also address the often-sticky politics of setting a pricing strategy by discussing the roles that sales, marketing, finance, and other functional departments play in each pricing game. In addition, the authors provide pragmatic recommendations on how to bring pricing strategy alive for each of the seven games. Further, they explore how businesses can use artificial intelligence and other sophisticated analytic tools to augment their pricing toolkits.
The book concludes by using the strategic pricing approach and Strategic Pricing Hexagon framework to examine some pressing societal topics, including the notion of fairness in pricing, eradicating diseases, shaping demand for green solutions, and encouraging lower carbon emissions. Given the insights, research, case studies, industry perspectives, and methodology that this book offers, Game Changer is certain to be a go-to resource for decision makers for many years to come.
Learn more about Game Changer here.
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About the Authors
Jean-Manuel Izaret is a BCG managing director and senior partner and the global leader of the Marketing, Sales, & Pricing practice based in San Francisco. His work as a BCG Fellow focuses on the topic of pricing model transformation. Jean-Manuel has worked on pricing issues across industries, including consumer goods, retail, high tech, financial services, and industrial goods. He has a PhD in marketing and an MS in engineering, both from Ecole Centrale Paris. He also has an MS in economics from the Paris Institute of Political Studies.
Arnab Sinha is a managing director and senior partner based in Philadelphia. He leads the Pricing practice in North America and the firm’s work in revenue management. He has helped clients deploy winning pricing strategies across industries—airlines, automotive, food and beverages, health care, home care, luxury retail, personal care, and snack food—on every continent. Arnab has a PhD in mechanical engineering from the Massachusetts Institute of Technology and a BTech in mechanical engineering from the Indian Institute of Technology.
About Boston Consulting Group
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.
Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.
SOURCE Boston Consulting Group (BCG)