In an interview with Baydhir Badjoko, Founder of The Consultants bvba, shares his insights on crafting effective pricing strategies in competitive markets. He highlights the importance of aligning pricing with a company’s overall strategy, combining value-based and competition-based pricing for optimal results. Badjoko discusses the impact of a qualitative and quantitative approach on profitability and market positioning, while integrating Lean Six Sigma principles to enhance operational efficiency. He also addresses common pricing challenges in product launches and emphasizes the role of strong pricing governance in driving both top-line growth and bottom-line improvement.
Key Approaches for Competitive Markets
We started the interview by asking, “What key pricing strategies do you consider most effective for businesses in competitive markets, and how do you ensure they align with a company’s overall strategy?”
Baydhir Badjoko replied, “Pricing strategy’s alignment with the company’s overall strategy and vision is a must. It will determine your sales and profit’s targets. The most effective pricing strategies in competitive markets is a combination of value-based pricing and competition-based pricing. Value based pricing ensures that the prices reflect the customer’s value perception and competitor-based pricing considers the price positioning benchmarked vs the competitors. Particularly, when there are a lot of competitors a company’s needs to master their pricing. Not only on the strategy level but effectively implementing it. This is also why following the pricing strategy elaboration, we are supporting our clients with implementation services, day to day operations, processes and integration”.
Optimizing Profitability
Entrepreneur Mirror: Could you explain how your qualitative and quantitative approach to pricing impacts a company’s profitability and market positioning?
Baydhir Badjoko replied, “The results of our qualitative and quantitative approach to pricing is a maximization of the company’s profits and ideal market positioning. This also comes with key insights to continuously maintain that positioning as it can evolve throughout time. Our qualitative approach captures and reflects the perception and emotions right into our client’s pricing strategy. On the other hand, our quantitative approach focuses on numbers and hard facts. We clearly differentiate ourselves through our demonstrated abilities to crystalize and implement both qualitative and quantitative approaches for our clients. This has led to measurable positive impacts on their margins and sales.”
Integrating Lean Six Sigma
Entrepreneur Mirror: How do you integrate Lean Six Sigma principles into your pricing projects to optimize operational efficiency alongside pricing improvements?
Baydhir Badjoko replied, “This is a very good question. First & foremost, we have Lean and six sigma black belts amongst our team. Lean principles are being integrated to sharpen the focus on pricing’s value-added elements, continuous improvements and customer driven approaches. Six sigma helps us to implement rigorous and measurable improvements of pricing processes quality with well-chosen KPI’s for example and adequate reporting analytics. Six sigma empowers our client’s pricing teams and company’s owners to have more efficient and effective day to day operations and organizations.”
Overcoming Pricing Challenges
Entrepreneur Mirror: What are some common pricing challenges businesses face when launching new products or services, and how do you address these challenges?
Baydhir Badjoko replied, “For new services and new products, the Top pricing 3 challenges are: 1. Absence of benchmark, 2. Very little data or historic, 3. Unclear strategy. We help our clients addressing these issues by clarifying their vision and link their vision to a clear overall strategy. We can then define with them which role & space the new products or services are designed to occupy. Our approach also enables to find alternatives to direct historic and benchmark data or select the right ones…”
Driving Revenue and Profitability
Entrepreneur Mirror: In your experience, how does a strong pricing strategy contribute to both top-line growth and bottom-line improvement? Can you share a case where your approach significantly improved both?
Baydhir Badjoko replied, “Pricing is by far the most effective way to positively impact your bottom-line. 1% pricing improvement generally delivers more than 3% bottom-line improvement. We have a track record of projects for several clients in Europe, MENA and US whether medium sized companies or large groups where both bottom-line and Top line have improved. Consider a real-life case where we have implemented a combination of value-based pricing strategy & competition-based pricing. This combination has been powered by Machine learning that we have written and led by a governance to we have co-designed with our client’s management and operational teams. This implementation enabled our client to improve on a double-digit basis (above +9%) their sales & margins. And it is logical as value-based pricing really captured the willingness & ability to pay from their customers. The competition-based analysis and process put in place ensured a daily/monthly accurate benchmark vs competitor whilst the governance process enabled decision making under 24hours on the products & services. A very satisfactory project for our client which continues to harvest positive results from it in 2024.”
Assessing Value Perception
Entrepreneur Mirror: What tools and processes do you use to assess the value perception of a company’s products or services, and how does this influence your pricing recommendations?
Baydhir Badjoko replied, “We are using three sets of tools to assess the value perception of a company’s products & services. 1st set is a 360° assessment, 2nd set is Machine learning and AI powered tools and software often integrated with our client’s ERP or CRM, 3rd set is a proprietary approach that we have designed, a well-kept secret that of course our clients get to discover.
Adapt to Market Shifts & Client Needs
Entrepreneur Mirror: How do you ensure that your pricing governance framework remains flexible enough to adapt to changes in the market or client needs?
Baydhir Badjoko replied, “That is a fair question. You need to put the right set of KPI’s in place to measure how well your governance addresses the client’s needs, benchmarks with competitor’s practices and aligns with your company’s internal targets. Also take the pulse. Pricing strategy & governance impact positively numbers but business is also about people. Take the pulse on how your teams experience the governance framework.”
Integrating Commercial Excellence
Lastly, we asked, “Commercial excellence goes beyond sales and marketing. Could you elaborate on how your strategies positively impact other departments, such as product development and customer service?”
“Commercial excellence follows pricing very closely. One needs the other to maximize results for the company. The strategies we co-create with our clients map all the critical points between their company, and their direct and indirect customers. This results in tangible and measurable customer retention and customer conversion. There again the sales strategy needs to reflect your company targets, objectives and vision both long term and short-term.” Baydhir Badjoko concluded
Resource: Baydhir Badjoko
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Visit TheConsultants to learn more about it www.theconsultants.eu
Phone: +32487202710,
email: insights@theconsultants.eu , https://www.linkedin.com/in/theconsultants/
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