Sectors
Pricing is universal, but my personal and professional focus has been on a small number of sectors: consumer products, health care, technology, retail, consumer services, commodities, industrial products, and construction.
CPG companies traditionally play the Uniform Game with consumers, but several factors make pricing challenging and could warrant a shift to a different game. These factors include price volatility, shifts in consumer behavior, and the proliferation of data and analytics that open up new frontiers in pricing. The manufacturers and retailers of CPGs thus face an exciting but unpredictable future.
Pharma companies generally play the Value Game as they bring breakthrough drugs to the market. But the predominant pricing models, which are per-patient or per treatment, may constrain their ability to share value and create even more benefits for society. Some companies have experimented with alternative pricing models, and such models have been one focal point of my research into pricing.
Companies in the technology sector might play the Choice Game, Value Game, or Power Game depending on how they create value, what their market characteristics look like, and what objectives they pursue. Success depends on thoroughly understanding the appropriate pricing game and on realizing that the game may change as companies seek to reshape their markets or respond to market forces.
Most retailers play the Uniform Game, but some powerful underlying trends will give many of them the ability and the incentive to switch to the Dynamic Game. These include technological innovations that create opportunities for personalization, the maturity of e-commerce as a sophisticated channel, and unprecedented insights from data sources that generative artificial intelligence (GenAI) can unlock and analyze.
Many companies in consumer services play the Choice Game, because it helps them structure their offerings in ways that allow consumers to self-select their preferred option. This sector might be the most active in terms of testing and establishing new pricing models. More opportunities for refinement and experimentation will arise as automation lowers marginal costs and personalization at scale becomes a feasible strategy.
Companies that sell commodity products – which include a wide range of industrial inputs – usually play the Cost Game. But there is a kernel of truth in the old saying that “there is no such thing as a commodity product.” Companies can still carve out an edge in their markets by differentiating their pricing models, introducing alternatives, and creating an enduring cost advantage.
Manufacturers of industrial products tend to play the Custom Game, because they compete in markets with large numbers of customers whose individual purchase volumes can vary by an order magnitude. They need to manage product differentiation, maintain discipline in their negotiations, and use market characteristics to their advantage. In some situations, they can switch to the Choice or Power Game.
Most companies in this sector play the Cost Game in markets with fragmented competitors and concentrated customers. Projects are often standardized and largely undifferentiated, which makes price the most important and visible differentiator across competitors. Success depends on aligning the pricing basis with the cost drivers while seeking incentives for customers to reduce overall project costs.
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