Last September we were fortunate to have Ingo Hennecke, Global Pricing Manager at Bayer CropScience share his story of how to execute a value strategy in a competitive, global market. Bayer CropScience is a large global organization that operates in over 120 countries with over 23,000 employees and nearly €9.5 billion in revenue (2014). The lessons here are certainly useful for any organization that is serious about deploying a value strategy.
Here are highlights from that presentation.
- The challenges the agriculture business is facing (e.g. climate change and population growth) also offer major opportunities for them to offer value.
- In recent years they have focused intensively on understanding customer needs, in particular identifying the most relevant economic value drivers.
- In a high competitive market it is important to identify and communicate the differential value of their solutions.
- At a high-level, economic value drivers in agriculture breaks down to 1) increased revenue (e.g. more yield) and 2) cost reduction (e.g. less sprays).
- There is also an emotional contribution dimension (source: Mike Wilkinson). For growers this could be peace of mind (“nothing bad will happen to my field”) and recognition from peers (“best looking field around”).
- They sit at the very beginning of the complex agriculture value chain with growers in the middle and food consumers at the very end. But, there are also opportunities in between to deliver differential value to channel partners, such as better packaging, transportation and support.
- They used the 3P framework to guide the global roll-out: 1) Processes, 2) People, and 3) Powerful Tools.
- Value pricing has been fully integrated into all key business processes, notably in their new product development and price adjustment processes.
- Pricing managers lead the process at the global/region/country level and are the center of a much wider pricing community in the business units and other corporate functions. This team supports the community with classroom training, webinars and individual coaching. Their success has been recently recognized by a corporate Leadership award.
- Powerful tools are essential because “a craftsman without a good tool box will never reach his full potential.” There is a tool to support each major step in their pricing framework. For example, LeveragePoint is used to support the price setting.
So is it worth it? Yes, definitely according to Ingo Hennecke. For some products, the team discovered differential value that was not reflected in the original price positioning and by re-aligning these cases significantly improved profitability. However for many products, the value pricing framework validated their current positioning. This may increase sales confidence during negotiations with channel partners and growers. To access this webinar with Ingo Hennecke On Demand, click here.