For all the advantages businesses pursue, there is one powerful advantage that is accessible to virtually every business—but realized by very few. That advantage is the price advantage. Pricing is far and away the most sensitive profit lever that managers can influence. Very small changes in average price translate into huge changes in operating profit, yet few companies are as disciplined and deliberate about pricing as they should be.
In the most comprehensive and insightful treatment of pricing management available today, this Second Edition of The Price Advantage shows companies how to use pricing excellence to outperform competitors and increase profitability in both good and bad times. Drawing on more than three decades of client success, three preeminent McKinsey & Company experts demonstrate why pricing is critical to bottom-line profitability and explain state-of-the-art approaches to analyzing pricing and building distinctive pricing capability. Working with colleagues and companies across the globe, they have helped develop leading-edge practical knowledge in pricing for clients in all major industries.
Written in pragmatic terms, this Second Edition of The Price Advantage continues to be the practical pricing guide for thoughtful general managers who have been tempted by the unrealized promise of improved pricing and, perhaps, even frustrated by attempts to translate pricing theory into bottom-line impact. It provides a structured approach for identifying where the most precious sources of untapped pricing opportunity reside in a business, along with practical, case-illustrated guidance on how to capture that opportunity.
Updated throughout to reflect changes in the global pricing environment and advances in McKinsey's pricing knowledge, this Second Edition covers a host of new topics including software and information products pricing, lifecycle pricing, custom-configured products pricing, pricing of high-count product lines, pricing in distributed sales environments, and tiered products and services pricing. Also, the building of a sustainable pricing capability and a high-performing pricing infrastructure is covered in much greater detail than ever before.
With emphasis on translating pricing theory into real improvements and bottom-line performance, the Second Edition of The Price Advantage is designed to give today's CEOs and business managers a competitive advantage in any economy.
The Price Advantage makes the case that pricing is the most under-appreciated lever for improving performance in most companies today. The authors put forth an argument that is compelling for business leaders in every company to elevate their view of pricing opportunities in general, and pricing as a key lever for performance management in particular. Most importantly, however, the book provides practical, pragmatic insights into what approaches a businessperson can take to identify and capture pricing opportunities. It brings both the opportunities and potential pitfalls to life through the frequent use of case examples where companies succeeded in "ringing the cash register" through effective pricing or left a great deal of money on the table through poor pricing actions.
Of particular usefulness are chapters on specific topics that a business leader tackling pricing is going to face sooner or later. The chapter on "industry strategy" where the authors lay out some of the tactics for being a price leader or good price follower seems to be fresh writing on these topics ( I have not seen anything written about this before, and I thought it was quite actionable). Also, the chapter on pricing architecture set forth nicely the different ways of structuring price to drive the right customer and reseller behavior, again providing a way to look at the issue that should drive toward results effectively.
The chapter on issues/opportunities that arise from mergers/acquisitions provides distinctive perspectives on how to take advantage of opportunities and/or avoid huge downside risks associated with these events. The price wars chapter provides a guide for many managers to utilize in avoiding counterproductive (often inadvertent) actions across the markets in which they compete. Sidestepping just one of the potholes that the authors describe is likely to save a business great pain. Executing a strategy that weaves its way through the price war minefield discussed is likely to make the business a top performer, and the managers leading such an effort heroes.
The discussion of pricing technology appeared only to scratch the surface, perhaps a necessity due to the rapid innovation underway. While I was left wanting more in this area, the book did provide a way to segment solutions and approaches in this area that should be useful for those exploring the range of options available in today's - or tomorrow's - marketplace.
Finally, as you would expect from the authors' backgrounds, the insights on how to architect an organizational change program provide a framework that should be useful regardless of whether the challenge is a large enterprise or if you're tackling a focused initiative to capture value in a single product line.
A friend of mine who knows I have an interest in pricing sent me a free copy of this book. Michael Marn has led the pricing practice at McKinsey & Company for a long time now, and I'd been wondering why he hadn't published a pricing book before now.
Unfortunately it turns out to be something of a one-trick pony, and a pony pretty long in the tooth at that. About half of it talks about the well-known price-benefit map. No question it's a fundamental idea, but hardly leading edge. Plus you need a McKinsey team to execute it. Given the pedigree of the authors I was hoping for more. A lot of the book just repeats McKinsey's early work on price wars, postmerger pricing, and overall strategy--good stuff but again nothing new.
If you're interested in pricing, in my opinion there are better options than this.
This is the best book on pricing out in the market today. It is easy to understand and pragmatic......not one of the theory intensive books written by academics that have little or no practical value. Mike Marn's ideas are both easy to understand and to implement. I manage pricing for a SBU of a very large industrial company. Using the ideas from the book (along with a lot of very hard work), we were able to realize a very significant improvement at our bottom line without adding to the competitive intensity of the marketplace. Nothing in the book is magic; however, it all hangs together. A company that executes well on his ideas, will no doubt improve their financial performance.
Product Details : Hardcover: 384 pages
Publisher: Wiley; 2 edition (June 8, 2010)
Language: English
ISBN-10: 0470481773
ISBN-13: 978-0470481776
Product Dimensions: 6.4 x 1.2 x 9.3 inches
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