LOGISTICS companies appear to have a hard time when it comes to raising prices compared to other industries and also an extremely low success rate when introducing new products and services.
These are the results of a special analysis of the Global Pricing Study 2014 conducted by strategy consulting firm Simon-Kucher & Partners, which surveyed 1,600 managers.
According to the results, logistics firms succeed with only 40 per cent of their planned price increases. Eighty per cent of the companies are experiencing higher price pressure compared to last year, the consulting firm said in a statement.
Only 18 per cent of all new products achieve their profit targets, which is the lowest rate that has ever been recorded (considering that in all industries it's 28 per cent).
Thirty-five per cent of logistics companies haven't even been able to reach the anticipated profit target for any of their new products (compared to an overall percentage of 24 per cent).
New products and services could well be used to shift the focus of negotiations away from the price and towards value, said Simon-Kucher director Kornelia Reifenberg.
"Companies make concessions to their customers in the heat of the moment. That's very widespread. They don't see the signals that their dumping prices give to the competition. They don't grasp this has a negative impact on the market price level."
Said Simon-Kucher partner Philip Biermann: "Logistics firms often lack confidence and negotiation tactics. They are frequently at the mercy of their customers' professional purchasing departments.
Recognising the value of your services, developing a negotiation strategy and turning this into an implementable price - logistics managers must get this into their heads!" he said.
How can logistics providers successfully compete against low-priced competitors, implement price increases on the market and establish new products?
Mr Biermann urged them to carefully differentiate customers and services: "One-size-fits-all products are doomed to failure."
It would be better, he said, to proactively offer several service options to make customers recognise the values of the different offerings.
"Cheap services are possible, but they require a narrower service breadth - for example when it comes to flexibility, payment terms or goodwill agreements. If customers want these premium services, then they should also pay for them."
LOGISTICS
02 July 2015 - 20:22
Logistics sector suffers high failure rate for new products
LOGISTICS companies appear to have a hard time when it comes to raising prices compared to other industries and also an extremely low success rate when introducing new products and services.
LOGISTICS
02 July 2015 - 20:22
Logistics sector suffers high failure rate for new products
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