Dhl Pricing Strategy Essay
1. Using the EVC framework (i.e., differentiation value), what opportunities exist for price customization at DHL? (In other words, where is there value that is not priced out?).
Based on the differentiation value, the following price customization opportunities exist for DHL.
- DHL can charge a premium for its extensive network span and coverage in remote areas that they serve, which are not serviced by their competitors, like Africa.
- Differentiation premium could be charged on high speed which currently DHL doesn’t do specially for parcels product line. Although DHL is cautious in charging for this differentiation because of lack of guarantee, their advertisements and strength are in that regards.
- Value added services …show more content…
This approach is not expected to generate much conflict as pricing could be based on customer segments and geographic spread. Regional managers can customize their regions by providing discounts on top of the base pricing structure. As long as the regional managers have visibility and incentives to improve company profitability than just their own regions, it should result in less conflict.
5. Given your recommendation in (4), what should be the role of the corporate pricing manager? If you were in his/her shoes, how would you handle the upcoming meeting?
As the Corporate Pricing Manager, I would ask all regional managers to come prepared with details such as size of customer segment, product line revenues (DOX,WPX), fixed and variable costs servicing these segments, P&L statements, dynamics and interactions of their regions with others, analogous competitor prices, and recommendation of pricing structure for their region with the goal to maximize profitability while maintaining market share. As a team then we can establish as price floor for services in their particular regions. It will allow the sales reps to determine the level of discounts to offer to the biggest customers when they are negotiating