A Supplier to the Automotive Industry Employs a Value-Based Pricing Model to Grow its Global Position
The Challenge: A leading supplier to the automotive industry needed to grow its global position in the marketplace, utilizing a new technology for its tier supplier customer base. The company engaged Blue Canyon Partners to determine how to move from its current cost-plus pricing approach to a value-based pricing model.
Assessment: Blue Canyon conducted an in-depth, strategic market analysis in Europe, China, and the United States to better understand key influencers in the market. The project team also identified several value drivers for the new technology, including dimensions around total cost of ownership and enhanced efficiency in the manufacturing environment.
Strategic Solution: Blue Canyon proposed a value-based pricing strategy that was built on the key value drivers identified in the marketplace and encouraged the company to partner with its customers to offer proof of the new technology’s value. Additionally, Blue Canyon described how the client should compare its solution to competitive products in the marketplace and provided guidelines on a segmenting and targeting strategy that would support the value-based pricing approach.
Results: The analysis provided valuable insight into the market being receptive to a value-based pricing model if there was proof of financial savings and the ability to better meet the specifications of automotive original equipment manufacturers. As a result, the client is in the process of implementing the valued-based pricing principles outlined by Blue Canyon.