Strategic Pricing and Go to Market Pavan Soni Innovation Evangelist and Researcher [email protected] www.pavansoni.com
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Strategic Pricing and Go to Market
Pavan Soni
Innovation Evangelist and Researcher
www.pavansoni.com
Innovation starts with ‘Discovery’
2
Invention ≠ Innovation
3
Most Innovative Firms- 2014
Highest R&D spent- 2013
Most patents granted-2013
VolkswagenSamsung
IntelMicrosoft
RocheNovartisToyota
J&JGoogleMerck
AppleGoogle
Tesla MotorsMicrosoft Samsung
ToyotaBMWGilead
AmazonDaimler
IBMSamsung
CanonSony
LG ElectronicsMicrosoft Toshiba
PanasonicHitachiGoogle
2/13/2017 Pavan Soni | www.PavanSoni.com |
Source: BCG, Booz & Co., USPTO
The price of missed innovations
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Incumbent
Missed innovation
Innovator
Real loss in incumbent's market cap
% drop in incumbent's market cap
Est. gain in innovator's market cap
Time period
Yahoo!
PageRank search
Google $27 billion 60% $98 billion 2005-2012
HP Touch-screen tablets
Apple $43 billion 47% $258 billion 2010-2012
Nokia Touch-screen smartphones
Apple $95 billion 87% $195 billion 2007-2012
RIM Touch-screen smartphones
Apple $60 billion 90% $195 billion 2007-2012
Sony LCD screens Samsung
$6 billion 23% $144 billion 1996-2006
The final solution should be…
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business model shows the ways6
What pricing model suits you the best?
7
1. Subscriptions
2. Usage
3. Asset Sale
4. Leasing
5. Licensing
6. Advertising
7. Broker
8. Freemium
9. Affiliate
10. Razor Blade
11. Open Source
12. Selling Data
13. Co-Creation
14. Per Module
PSP/ Xbox versus Wii focus
2/13/2017 Business Model Generation (Osterwalder and Pigneur, 2010) 8
Key Partners Key Activities Value Proposition High
performance console
Console audience
Customer Relation
Customer Segments
Hardcore gamers
Game developers
Key Resources Channels
Cost Structure Revenue Streams Hardware sales at a loss Royalties from developers
Sony PlayStationMicrosoft Xbox
Key Partners Key Activities Value Proposition Family console Access to
console users Cheap game
development cost
Customer Relation
Customer Segments
Casual gamers Game
developersKey Resources Channels
Cost Structure Revenue Streams Profitable hardware sales Royalties from developers
Nintendo Wii
Disruptive innovations:
9
Aimed at entirely new customers
Simple and cheaper
‘Good enough’ for some time
Predatory pricing?
10
Skimming pricing
11
Contrasting the approaches
12
The cash curve assessment for pricing 13
Price Elasticity of Demand
14
Fast food?Petrol?
Impulse purchase Luxury goods Necessary goods
Positive versus negative externality
Competitive Positioning:
Why you can’t be
everything?
Source: Porter (1980)
Why you can’t be everything for
everybody!
Sources of value, pricing
and costs
Chose where you derive your value from and the cost and pricing
targets
Pricing and GTM depends on customers and value
17
Think of the entire value chain
18
Pre-purchase Purchase Usage Repurchase
Value for money
Risk reduction
Convenience
Look at the non-customers
19
Soon to be non-customers
Refusing non-customers Unexplored non-customers
Designing for the ‘extreme users’
20
Denmark based Arla Foods develops milk products for NASA
Movies with sub-titles were meant for hearing impaired
Volvo buses were designed to get wheelchairs inside
Key takeaways
• Price elasticity of demand- positive and negative externality
• Cash curve assessments
• Competitive positioning• Differentiation• Cost leadership
• Identify the source of value, pricing and costs
• Think of the business model, and not just product (or tech)
• Think of the entire value chain
• Look at non-customers• Soon to be non-customers• Refusing non-customers• Unexplored non-customers
• Design for the ‘extreme users’21
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