Background
A leading chemical company realized they were largely responsible for a decade of price erosion in a traditionally profitable market. As such, specialty grades had become commoditized and key accounts were driving up service demands in exchange for share of wallet.
Action Plan
EMM conducted face-to-face customer value based in-depth interviews to identify where the commodity portion of the company’s value proposition ended and the differentiation began (for several grades once recognized as unique). EMM also segmented the company’s customer base and built segment-specific value propositions to support a tiered pricing model. This resulted in a “re-pricing” of their most popular grades, with a net price realization improvement of 3 basis points. EMM produced an offering structure “menu” that allowed customers to select an offer that met their price point needs while ensuring the company’s margin uplift targets. Lastly, EMM enabled the execution of the new offering, pricing and tradeoff strategy by training sales on the new program and developing a customer workbook to allow them to track customer actions and calculate offers.
Results
The results were impressive. The 14-month engagement for the company was a “net zero” investment with the US regional pilot ($300M business) generating an increase of $24M in operating profit in 4 years.
