Business Mentor Weekly #35 - Pricing Strategy

. . . something is ultimately worth only what someone is willing to
pay for it. ~ Scott Allen

Implement This Principle: Pricing should be guided by a strategy that
assures the correct pricing methods are applied consistently across
all product lines.

To Get These Results: High gross margins and better market entry
pricing schedules.

Thoughts to Ponder: A pricing strategy helps you understand what the
right pricing methods are; it does not dictate what methods to use.
Your pricing strategy should guide you in the selection of the correct
method or methods of pricing your products. A published pricing
strategy assures those that follow you utilize the right methods for
the right reasons.

Different Pricing Methods:

• Competition-based pricing

• Cost-plus pricing

• Creaming or skimming

• Limit pricing

• Loss leader

• Market-oriented pricing

• Penetration pricing

• Price discrimination

• Premium pricing

• Predatory pricing

• Contribution margin-based pricing

• Psychological pricing

• Dynamic pricing

• Price leadership

• Target pricing

• Absorption pricing

• Marginal-cost pricing

• Minimum Advertised Price

~ Kent B. Monroe,

For more information on these methods see:

Wikipedia – http://emeraldv3.com/PHPList/lt.php?id=YhgMA1JWDRoBB0kFV1Q%3D

Take Action: Identify the following three elements of your strategy:

1. At a primal level, what is it about your company’s products thatmake them unique in the market place?
2. How are the unique qualities of your products materialized in themarket place, how do they manifest themselves to buyers?
3. How does your company communicate value to your prospects relativeto your products?

Using the answers to these questions, craft a one or two sentence
statement to guide pricing of your products. The result is your
pricing strategy; it will guide you in knowing how to select the right
pricing method(s) to use. If the right pricing method does not become
clear, the strategy is not clear or is not crafted properly. Continue
to adjust the strategy until the methods you need to use become clear.

Next Week’s Topic: Customer Service Plan

Business Mentor Weekly #36 – Customer Service Plan

In creating and evaluating your customer service plan, avoid too much
internal analysis. Instead, defer to customers’ perceptions of
efficiency, responsiveness, and courtesy. Your own hunches, biases, or
interpretations shouldn’t interfere with the unfiltered knowledge that
your customers can provide. They are your ultimate judges. ~ Edward
Lowe

Implement This Principle: A well thought our customer service plan
will guide your staff in the delivery of high quality customer service
at a level which supports over all company objectives.

To Get These Results: Better customer service means better customer
retention and a sustainable reputation for excellence.

Thoughts to Ponder: Providing good Customer service means you
understand what your customer needs, what they expect and how they
want it delivered. You cannot know these things without asking them.
Assuming you know what they want, how they want it, when they want it
and who they want it from leaves the door wide open to your
competitors.

Great Customer Service is a Competitive Advantage

Think about it, if you know one supplier uses outsourced support and
the other uses inside support people, and you know you will need to
talk to customer support from time to time, who would you buy from. If
one competitor uses an automated support system and the other gets you
right in to a real person, which one gets your vote?

Take Action: Review these two articles on developing a customer
service plan at the following links:
http://www.esmalloffice.com/SBR_template.cfm?DocNumber=PL25_0100.htm
http://www.dirjournal.com/guides/how-to-create-a-customer-service-plan/

Once you have reviewed these articles, create or update your customer
service offering by applying what you have learned.

Next Week’s Topic: Human Resources Plan

Business Mentor Weekly #37 – Human Resources Plan

Rigorous HR planning links people management to the organization’s
mission, vision, goals and objectives, as well as its strategic plan
and budgetary resources. A key goal of HR planning is to get the right
number of people with the right skills, experience and competencies in
the right jobs at the right time at the right cost. ~ Canadian
Government HR Site.

Implement This Principle: A good human resources plan includes an HR
process, which will increase your effectiveness in interviews and
improve your batting average relative to hiring the right managers and
workers.

To Get These Results: Lower employee turnovers, reduced time in
bringing an employee up to speed, build upon the overall strengths of
the organization, and increase overall company efficiencies.

Thoughts to Ponder: Keep the following points in mind when developing
your hiring policies. These are tidbits I have gleaned from experience
and from some of the best minds on the subject of HR.

Employees are typically a company’s largest overhead item. As such
it makes since to keep your HR manager as a direct report.

Profiling each serious candidate should be a part of your hiring
strategy, the cost is very low and what you learn could save you
thousands, (I charge $50.00 plus materials for a hiring summary and
200.00 for a detailed assessment.)

Hiring of leaders is different in that leadership requires additional
qualities in a person. The four qualities you should be looking for in
leadership candidates are:

• Authenticity
• Ability to see around the corner
• Desire to surround themselves with others better and smarter than they are
• Resilience

Take Action: Candidates should be questioned to discover their:

• Integrity
• Intelligence
• Maturity

Candidates displaying these traits should be given preferential
treatment assuming they exhibit the technical qualities for the job.

• Energy – Positive energy to thrive on action and relish change
• Energize Others – Ability to get other people revved up
• Edge – Having the courage to make tough yes-or-no decisions
• Execute – The ability to get the job done
• Passion – Heartfelt, deep and authentic excitement about work

Next Week’s Topic: Organizational Structure

Business Mentor Weekly #38 – Organizational Structure

An organizational chart is an effective way to communicate
organizational, employee and enterprise information. An org chart
makes it easier for people to understand large amounts of information
as a visual picture rather than as a table of names and numbers. ~
OrgChart.net

Implement This Principle: Establishing clear lines of authority in a
hierarchical graph helps others understand how your company is put
together and helps define your management philosophy.

To Get These Results: Alignment of reporting structure with clear
lines of authority and greater departmental collaboration.

Thoughts to Ponder: A mentoring session on organizational charts may
seem elementary, but once created (or updated) and published, the
impact can be significant for both new hires and existing employees
alike.

With organizational charts employees understand the chain of command,
who the players are, and where they fit in the organization. An
organizational chart also severs as a tool for demonstrating your
philosophy of management so employees understand their boundaries.

Take Action: White board your entire organization, getting input and
dissenting views from each departmental head, this exercise will
unveil issues you can deal with appropriately. Once you are happy with
the chart, publish and distribute it to all department heads.

If you are a small operation, make sure to build an organizational
chart that depicts your vision for your organization.

Next Week’s Topic: Three Year Sales Projections