Building Materials 

Building Materials companies are no longer characterised as merely commoditised offers in a spot market.  They have become critical players in the supply chain for commerical and residential construction.  This sector then faces the challenge of defining, communicating and capturing value to ensure optimal return on its assets

THE INDUSTRY

The alarming trends in the building materials industry are:
-  shrinking margins;
-  low cost substitute products;
-  growing power of the wholesale intermediaries and major accounts and;
-  overcapacities at all points through the supply chain

Price is often regarded as the primary driver to make the sale. In many cases, the pressure to deliver volume sales has led to:
-  excessive discounting;
-  channel conflict and;
-  poor signalling for market pricing management leading to market price pressure

The key challenge is to achieve optimised sales volumes versus an 'economic margin'.  This optimisation can be done through:
-  product and customer segmentation;
-  development of effective pricing management tools to model Total Invoice Cost and Total Value Acquired for each key customer

Implementing change in an organisation where pricing is traditionally managed on an ad-hoc or tactical only basis requires a structured and complete solution

CHANNEL MANAGEMENT

Fortune 500 and ASX 200 companies are placing added emphasis on the management of pricing and the implementation of clear price and discount guidelines.  Managing multiple channels has become a necessity to drive low cost factory products and reduce supply chain costs. Wholesalers, independent building supply chains, major chains and value add manufacturers are important market channels for building materials manufacturers

This multi-channel strategy requires a centralised price management across customer bases. Factors, such as customer-specific net prices, volume based rebates, short term incentives and order by order 'specials', are crucial for managing the numerous channels.  Without a clear and concise pricing and discount policy, unstructured go-to-market situations occur.  The challenge then lies in developing a consultative approach with key personnel that generates an effective and sustainable pricing solution

WORKING WITH PRICING INSIGHT

Pricing Insight uses an 8 Step Strategic Pricing Management Process.  We engage with your company through the following structured approach:
1)  Initial stakeholder interview
2)  Diagnostic evaluation (see Online Diagnostic)
3)  Identification of key pricing issues
4)  Initial report and workshop proposal
5)  Pricing workshop and/or consulting assignment with key recommendations and actions
6)  Publication of an implementation plan
7)  Set-up of a project team
8)  Complete project plan

Our consulting approach is specifically tailored to your company's needs to optimise price and discount systems. We support the preparation, development and execution of:
-  pricing strategy initiatives;
-  pricing policies & tactics;
-  processes to monitor, report and control price realisation

Your company's pricing can improve within 90 days by focusing on the following key areas:

1) Implementation of price control systems
The development of price systems that determine regional, national and international prices. The price systems determine the price architecture of the products and account for differences between core, side and complementary products

2) Development of discount management systems
Price structures are developed using a number of pricing mechanics including:
-  List Price less % discount;
-  Long Term Incentive rebates;
-  Special project/contract pricing and;
-  Exclusive customer pricing and specials management

3) Pricing market management
The concept of price leadership differentiates the market players according to size, strength, behaviour and strategy. Considerations toward 'natural' market areas and 'natural' customers help to define the scope of operations. We coach the price leader in the internal set-up and support the external price communication. This allows the market to understand 'how to price' in a rational and fair market place

4) Optimisation of price lists
We optimise the price list of our clients by developing price architectures that strategically position SKU relativities, product groups and customers.  This will make it easy for your company to do business and support 'value for volume programs' with key customers

5) Executing price rises in the market
We support our clients in the preparation, implementation and monitoring of price increases in the market. The process of price increases involves internal participants (sales, marketing, operations and finance functions) as well as the external business partners


Contact us on +61 2 9091 0226 to evaluate your Margin Expansion potential