Caption: Naresh T Raisinghani,
CEO and Executive Director, BMGI unveils white paper in the presence of Hiramen
Aher of Mahindra Automotive and Tomas Ernberg of Volvo India.
We all love discounts and when
it comes to passenger vehicles, the more the merrier. It’s almost like a
birthright for a customer, demanding a discount from an OEM and its dealer.
This has led to a pricing strategy that is best described as “me too pricing
strategy”. The price war delivers short-term benefits to the organisation, but
the organisational profitability, which is a long-term metric is definitely impacted.
This demonstrates the need to establish a scientific linkage between value
proposition for the customer and the pricing.
Breakthrough Management Group International (BMGI), a global
consulting firm, has come out with a white paper on “Demystifying pricing in
Passenger Vehicle Industry- Scientific way to stay ahead of curve”. This paper explores methodologies beyond the
existing practices for right pricing. The current practice of benchmarking, an
industry favourite, is adopted for pricing right. Over a period of time, there
have been frameworks developed that can enrich the traditional methods adopted.
Going beyond benchmarking, one could use the approach of understanding the ‘job
to be done’ where the current solution does not limit ideation.
The voice of the customer has
been an age old method of gathering inputs for design but recent studies have
shown that the customers’ stated needs may be limited to their current solution
and habits. Ethnographic studies dig deeper and reveal insights that were
hitherto unknown for the solution designer. The R-W-W screening (Real - Can we
win? – Is it worth doing?) is simple yet effective for answering many questions
and screening between various options for design.
Innovating on the business
model will help establish the right approach will add another dimension to the
pricing that will ensure that the organisation does not suffer in the long term.
The right business model by innovation and disruption is more relevant approach
for business growth as it focuses on entire value stream, from creation to
delivery. Today’s organisations have to look beyond for other streams for
revenue generation. As an example, renting vehicles has been explained as
revenue generation stream for the passenger vehicles, apart from sales of
goods. This overall approach on Business innovation prepares the organization
ready for the future and leads the segment.
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