72 Percent of All New Products Flop
More than ever, price pressure and price wars are placing the world economy under immense strain. Companies are less and less able to achieve the prices they need. Only one-third of planned price increases actually get enforced in the market. This is the lowest implementation rate ever for price increases. Two years ago, companies achieved on average about half of their price increases. These are the results of the Global Pricing Study 2014 conducted for the third time by the global strategy consultancy Simon-Kucher & Partners in collaboration with the independent Professional Pricing Society (PPS).
By far the best and often the only way to overcome price pressure is through new products, as 77 percent of the approximately 1,600 responding managers confirm. Still, almost three-fourths of all new products miss their profit targets.
“This is alarming news for companies,” comments Dr. Georg Tacke, Simon-Kucher’s CEO, “but nothing that can’t be solved. Price pressure, price wars and competition shouldn’t hold them back from achieving the prices they want. It’s definitely feasible.”
The study confirms this. Of the study respondents, one group rose above the others. This group, the “Best”, meet their price targets for new products and continue to do so in the long term because they factor pricing and marketing into the innovation process from the very beginning. The “Rest” should follow suit if they want to be competitive in the future.
About the Global Pricing Study 2014:
Approximately 1,600 participants, of which 39 percent are C-levels, from companies of all industries and over 40 countries across Europe, the Americas and Asia, took part in May/June 2014 in an online study conducted by Simon-Kucher & Partners. The study takes place every two years in collaboration with the independent Professional Pricing Society (PPS).
Dr. Georg Tacke is the CEO of Simon-Kucher & Partners.
David Vidal is a Partner and Jan Haemer is a Director at Simon-Kucher.
Get the report here: