Among the critical factors in the go-to-market strategy for key customers, pricing has a significant importance for the financial results of a company and a direct impact on profit.
This thesis “Pricingstrategies and price politics in the key account enterprise business”compares theoretical pricing strategies identified in leading scientific literature with the pricing methods used in the HP Europe Sales Development environment. With the knowledge gained of this analysis, case studies with typical deal scenarios are documented and pricing strategies as an example recommended. A further result of this research is the recommended redesign of the deal escalation request forms (Big Deal Request Form, Global Pricing Approval Request and War Room Request Form) for key customers used in Sales Development.
For collecting the necessary information an extensive research in English, French and German literature, in the HP Intranet and documented interviews as well as continuous discussions with managers and the German Sales Team were done.
All theoretical pricing methods found in literature already exist in the HP Sales Development business environment or exist as a slightly modified method except the fixed pricing (4.5). The case studies and deal scenarios with pricing recommendation are an input to the Sales Development Team for future pricing. The deal escalation request forms are redesigned for the purpose of efficiency, information sharing, and risk management. It can be used for all European countries for regional, global and special escalated HP pricing requests from the country based Sales force to the Sales Development.
Table of Contents
1.0 Executive Summary
2.0 Introduction
2.1 Foreword
2.2 Goals
2.3 HP Project Plan
2.4 Structure
3.0 HP a global acting IT company
3.1 The HP story
3.2 HP Financial facts
3.3 HP product and business portfolio
3.4 HP organizational structure
3.5 The HP competition
3.5.1 Dell Corporation
3.5.2 Fujitsu / Siemens
3.5.3 Toshiba
3.5.4 IBM
3.5.5 Pre-merger Compaq
3.6 PC Market competition overview EMEA
4.0 Pricing Theories
4.1 Preconditions of the pricing theory
4.2 Markets
4.3 Price and the theory of supply and demand
4.4 Pricing objectives and the break even point
4.5 Pricing methods
4.6 Customer decision process
5.0 Pricing methods HP PSG EMEA Sales Dev
5.1 Costs
5.2 List prices
5.3 Marketing guidelines
5.4 Channel
5.5 TV / MA9 / M72 pricing and MWD
5.6 War Room
5.7 Pricing strategies
5.8 Direct or Indirect Sales channel ?
6.0 Theoretical and HP Pricing in comparison
6.1 Pricing as a competition advantage?
6.2 Theoretical pricing methods
6.3 HP PSG EMEA Sales Dev pricing
6.4 Comparison
7.0 Strategic pricing recommendations and scenarios
7.1 Pricing environment
7.2 Pricing scenarios
7.3 Pricing recommendations
8.0 Deal Escalation Process and redesign of request forms
8.1 Large deal pricing request and escalation forms
8.2 Recommended Big Deal Request Form (BDRF)
8.3 The GPAR Form
8.4 The War Room Request Form
9.0 Conclusion
Objectives and Topics
This thesis examines the pricing strategies and politics within the HP Personal Systems Group (PSG) for key accounts in the EMEA region, specifically in the context of the merger with Compaq. The research aims to evaluate theoretical pricing models against practical applications, document deal scenarios, and redesign internal escalation processes for increased efficiency and risk management.
- Analysis of theoretical pricing frameworks.
- Evaluation of HP's internal pricing environment post-merger.
- Development of strategic pricing recommendations for diverse customer scenarios.
- Redesign of standardized deal escalation request forms.
- Benchmarking of major industry competitors (Dell, IBM, Fujitsu-Siemens).
Excerpt from the Book
Pricing Strategy and deal analysis:
Caused by the sensitive cost information that is given to the customer, Cost Plus strategies are strictly limited to extremely strategic customers. Beside the extensive work for the Sales Dev to collect on a regular basis all the costs and present them to the customer, the pricing itself is quite unproblematic. The fixed negotiated margin on top of the costs keeps the deal always positive.
To increase still the profit above the fixed margin, prices can be communicated to the customer with time delay when cost drop. Of course prices need to be increased as quick as possible when costs go up. As long as the customer does not control very often the internal costs, with a look in the system (what he is allowed to do), it can work (see Cost Plus in chapter 5.7)
Focus: Cost structure, price adaptation timing and negotiation of fixed margin
Summary of Chapters
1.0 Executive Summary: Summarizes the thesis's purpose, which is to compare theoretical pricing with HP's practical methods and provide recommendations for deal escalation forms.
2.0 Introduction: Sets the stage by highlighting the complexity of IT pricing and outlining the specific project goals and structure.
3.0 HP a global acting IT company: Provides an overview of HP's history, business portfolio, organizational structure, and its major competitors in the PC market.
4.0 Pricing Theories: Explores classical pricing theory, market conditions, and macroeconomic functions of price as a foundation for the research.
5.0 Pricing methods HP PSG EMEA Sales Dev: Details the practical pricing methods, tools, and marketing guidelines currently used within HP PSG EMEA.
6.0 Theoretical and HP Pricing in comparison: Contrasts the theoretical frameworks from Chapter 4 with the real-world practices identified in Chapter 5.
7.0 Strategic pricing recommendations and scenarios: Offers specific recommendations and case studies for different customer procurement strategies.
8.0 Deal Escalation Process and redesign of request forms: Proposes optimized and redesigned request forms for large, global, and "War Room" deals to enhance efficiency.
9.0 Conclusion: Reviews the research, acknowledges the limitations due to time constraints, and suggests potential areas for future exploration.
Keywords
Pricing Strategies, Price Politics, Key Account Management, Hewlett-Packard, Compaq, IT Market, Cost Plus Pricing, Deal Escalation, Margin Management, Variable Contribution Margin, Sales Development, Competitive Advantage, Business Modeling, Procurement Strategy, Risk Management.
Frequently Asked Questions
What is the primary focus of this thesis?
The work investigates the pricing strategies and mechanisms used by the HP Personal Systems Group (PSG) for key accounts in the EMEA region, particularly following the merger with Compaq.
What are the central themes of the research?
The core themes include theoretical pricing models, the competitive IT landscape, internal cost structures, specific deal escalation processes, and the practical application of pricing scenarios for strategic customers.
What is the main goal of the study?
The primary goal is to evaluate existing pricing methods, provide recommendations for improved strategic deal management, and redesign internal request forms for better efficiency and risk management.
Which scientific method is used?
The thesis utilizes qualitative research methods, including literature review, analysis of internal HP documentation, and documented interviews with various HP managers and stakeholders.
What does the main body cover?
The main body covers company history and organizational structure, theoretical pricing, practical HP pricing methods (such as "War Room" and "Cost Plus"), comparative analysis, and detailed strategic recommendations.
What are the characteristic keywords of this work?
Key terms include Pricing Strategies, Price Politics, HP, Compaq, Cost Plus, Deal Escalation, and Margin Management.
How does the "War Room" function in HP's pricing?
The "War Room" is described as the most aggressive pricing institution within the team, used for large strategic deals where a specific business case and recovery plan are required to gain approval.
How did the merger with Compaq influence the research?
The merger serves as a crucial backdrop to the thesis, requiring an analysis of how the combined company's size, product portfolio, and integrated cost structures affect competitive pricing strategies.
- Quote paper
- Christian Lang (Author), 2002, Pricing strategies and price politics in the key account enterprise business, Munich, GRIN Verlag, https://www.grin.com/document/66556
