Exclusive Insight into our Business Intelligence Meeting: Pricing Excellence in the Corrugated Industry
- dstuehlinger
- vor 2 Tagen
- 5 Min. Lesezeit
After our last Business Intelligence Meeting - an exchange format for family-run companies in the packaging industry - we asked Gábor Honti, chairman of the board of the Hungarian packaging manufacturer EHISZ, about his impressions. In the interview, he talks about what he took away from the workshop on pricing, what challenges he sees for medium-sized companies and why he can recommend the Business Intelligence Meetings.
During the last Business Intelligence Meeting, we had the opportunity to visit EHISZ. Our Business Intelligence Meetings offer network intelligence events for small groups (10 - 15 participants) of family entrepreneurs in the packaging industry. During our one-and-a-half-day Business Intelligence Meetings, we place great value on a balance of impulses, structured and informal exchange.
The focus topic of this Business Intelligence Meeting was Pricing Excellence in the Corrugated Industry. Gábor is giving us exclusive insights into his key takeaways from the last Business Intelligence Meeting, his evaluation of market developments regarding pricing and why he perceives the Business Intelligence Meetings to be valuable.
The Importance of Pricing Excellence in the Market
ProAc: How can you tell that competition and companies. or potential customers are becoming more professional in terms of pricing?
From my point of view, if the potential customers or the competition are getting better at pricing, it means it is going to be harder for you to win a quotation or to get a new customer. Because either way, if the competition is better than you, it means they have the better price, better service portfolio, or in terms of options, they give better options to the customer. And in this way, they will win the customer.
And when the customers are getting better in pricing, it means that they are more focused on the topic, they get more quotations from other players, they start to look at the main drivers of the industry, for example EUWID in the paper industry
However, with the market itself decreasing, the competition is more present, so customers get more quotations and with that, they get more market information and offers from competitiors. They also start to analyze the market more.
ProAc: Where do you see the biggest challenges (internal/external) for implementing structured pricing in today's small and medium-sized sales organizations?
Internally, for small and medium-sized companies, I would say, the biggest challenge is not to implement sophisticated pricing mechanisms but rather the lack of data. You can only implement a structured pricing, when you have data.
Externally, what is a bit problematic from my experience on the one hand, is that a lot of companies, like larger corporations, decide to go in with really low prices because they have the capital to opt for lower profit rates for one or two years and then, in the end, they will be stronger because they eliminated some of the competition. So this really puts pressure on our market.
On the other hand, some small and medium-sized enterprises, they do not really have a sophisticated pricing. So, when they feel the urge to win new customers, they go all in and they don’t really care about the price. They just want to win the customer and get some money from it, so they offer at surprisingly low prices.
So right now, in this market, you cannot really prepare yourself for a company or a region, thinking that a certain strategy will work, because we see that our competition is offering at unpredictable prices.
What I also see, in a small market like Hungary, of course is that competitors are going for my clients, but the other way round, I am also going for their clients. And this, in the end, leads to companies potentially gaining more volume but decreasing their profit margin.
ProAc: How much relevance do you give to this topic in your company?
Me personally and within my company, give a lot of relevance to this topic. Right now, we are confronted with a situation, where we have lower margins than before. But especially in this situation, I still need to find the maximum for my company with every individual customer.
ProAc: Has the Professionals Academy helped you find or implement optimization approaches for pricing within your organization?
Key Insights into the Business Intelligence Meeting
ProAc: What was the most surprising or newest idea you took away from the workshop?
The newest idea for me was tender pricing. I was not aware of the fact that 80% of the sales volume in the corrugated industry is handled via tenders. So it was really interesting to hear what the speaker had to say about tender pricing and how they would structure it.
ProAc: Was there a specific section (e.g., value pricing, tender pricing, sales incentives) that particularly stuck with you? Why?
What stuck with me was market segmentation and customer segmentation. I think that for companies with a long history and many long-time customers that you work together with for 15 or 20 years, it is very easy not to question this relationship. You just go with the flow.
But actually, sometimes you have to stop, and you need to check whether this business relationship, even if it is longstanding, does it still work for me the way it is?
ProAc: What way of thinking or perspective on pricing has changed for you?
Es gab keinen Aspekt, der meine Sichtweise auf die Preisgestaltung durch den Workshop wirklich verändert hat, da ich ihr in meinem Unternehmen bereits große Bedeutung beimesse. Aber er hat mir geholfen, meine Gedanken zusammenzufassen und eine zusammenfassende Perspektive auf die Preisgestaltung zu bekommen.
Implementation in the Day-to-Day Work
ProAc: Have you tried or plan to use any of the tools discussed, such as pricing logic with price corridors, customer classification, or a tender database?
Yes, What I actually plan to use is the way to systematically build up the price to reflect value to the customer. So you look at your product and the cost basis of your product, but then you also consider the surroundings like differences in regional price levels. You look at customer segments and at whether you can charge different segments different prices for your product etc.
And with this, you have a decision-making tool. So you can use the information you have in your existing portfolio, analyze this and then use this information to win new customers.
Our Business Intelligence Meetings
ProAc: If you had to convince other people to participate in the workshop on pricing mechanisms or in business intelligence meetings in general, what would you say are the main benefits?
Considering the Business Intelligence Meetings in general, I would say, the main benefit is to get to meet new people, to meet other people in the industry and have the possibility to network with them. The topics of our meetings are very interesting and I really benefit from getting information about the market.
ProAc: How would you summarize the overall benefits of the workshop on pricing mechanisms for your company in a few sentences?
The workshop gave me a really structured way to look at my portfolio and the way I think about future customers and the way I will acquire new customers.
ProAc: Thank you very much for the interview, Gábor, and the opportunity to get your insights and share them with others! We are looking forward to seeing you at our next Business Intelligence Meeting!
If you want to learn more about pricing mechanisms and the importance of structured pricing in the corrugated industry, please continue reading here: