Value Pricing in the Chemical Industry - Most Powerful Lever to Profitability

摘要

The chemical industry in Europe is working hard on the improvement of their profitability base.But while innovation and complexity management are heavily discussed by the industry's top managers,the most powerful lever to increase profitability is being ignored by many - value pricing.Arthur D.Litde,jointly with Warwick Business School,conducted a pricing survey with the participation of managers from all chemical industry segments in which measures for profitability increases were investigated.Although a price increase of 1 % can lever the profit (EBIT) by 8 %,many companies focus on much weaker levers like reducing variable costs and sales volumes.In this article we look into the possible benefits of value pricing,the effective BASF approach and the problems posed by a customer management focussing on the perceived strategic importance of customers rather than their contribution margins.