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The Road to Price Excellence in The Automotive Industry: A Q&A with Patrick Stahlschmidt of TIMOCOM

Mitch Lee< Mitch Lee September 14, 2023

Mitch Lee, Profit Evangelist at Vendavo and Patrick Stahlschmidt, Pricing Manager – Sales Operations & Enablement at TIMOCOM explore the journey to price excellence and share insights on market research, strategy, and the path to pricing success in the automotive industry.

It’s always interesting to explore stories of innovation and decipher the factors that led to business success or failure.  In the automotive industry, where every decision counts, the stories of two industry giants, Fiat Chrysler Automobiles and Porsche come to mind. Two leaders, each faced with the challenge of innovation, took radically different paths. One journey led to resounding success, the other to formidable hurdles.

So why do some ideas flourish while others flop? Our eBook, Price Excellence: A Road to Monetizing Innovation explores the Fiat Chrysler Automobiles and Porsche stories and illustrates how price excellence is a critical differentiator in monetizing innovative products or services. We recently sent the eBook out to some folks that we thought would be interested. Shortly after, I had the privilege of connecting with Patrick Stahlschmidt, Pricing Manager at TIMOCOM who shared his unique insights on the concept of Price Excellence. Here’s how it unfolded…

Mitch Lee: Hi Patrick, first of all, thank you for taking the time to read our eBook and sharing your perspective. I’m glad to hear that you found the eBook intriguing, particularly in highlighting two different approaches taken by Fiat Chrysler and Porsche. You mentioned the significance of market research in the success of pricing strategies. You said that, in your view, market research was the deciding factor in their divergent outcomes. Could you elaborate on how market research played such a crucial role in shaping their fates?

Patrick Stahlschmidt: I appreciate your insights into Fiat Chrysler and Porsche’s distinct approaches. But of course, market research was the game-changer here. Launching a new model is complex and costly, especially when it comes to autos. Having worked in automotive pricing for a while, I know that compact cars and SUVs differ drastically in volume and profitability. Launching a compact model is tougher due to lower volume and margins, as opposed to the SUV’s more straightforward path.

Even if roles were reversed, Porsche might have struggled with a compact car launch, while Dodge could excel with an SUV. Launching an SUV back then was a no-brainer. Rarely have OEMs succeeded in launching new compact lines in recent years, highlighting the challenges.

So there’s some nuance here. Exploring both OEMs entering the same sector with different approaches would be a compelling follow up to this read. Still your eBook told an interesting story about different innovation paths.

Mitch Lee: I think that you are right – the results might have been different if Fiat Chrysler Automobiles were going for a new SUV and Porsche had been planning a new compact line. I also agree that market research is the cornerstone of informed pricing decisions. Market research forms a solid basis for the market’s willingness to pay for the offer, both at the unit level, and in total volume at any particular price.

There are numerous factors that extend beyond the dynamics of product-market-price relationships. These factors come into play both during the stages of product development and launch, as well as in the ongoing efforts that follow.

The eBook specifically outlined a set of key areas to concentrate on once the groundwork of comprehending product-market-price connections has been laid. In your experience, are there domains that you’ve identified as especially pivotal in marking the path to success, particularly within the realm of business-to-business?

Patrick Stahlschmidt: In B2B pricing, having an overarching company strategy is paramount. It’s challenging for any company to attain pricing excellence without a well-defined strategic direction. While pricing professionals can improve margins, implement tools, and calculate ideal prices, true breakthroughs occur when there’s a clear company strategy in place, ideally co-created with the pricing department.

Mitch Lee: That’s a compelling perspective, Patrick. Can you delve deeper into how this overarching strategy integrates with pricing decisions?

Patrick Stahlschmidt: A company’s pricing strategy should align with its overall business strategy. This means having a shared understanding of each product’s role in each market and how each market contributes to the company’s overarching goals. Take the automotive industry in Europe as an example; you need different focus models for different markets, like an EV for Norway, compact models for southern markets, and so on. Without a strong product-market-fit, you might have the right product in your portfolio but sell it in the wrong market at the wrong price.

Mitch Lee: To summarize, you emphasize that strategy is crucial for reaching the higher echelons of pricing excellence. Do you have any advice for businesses looking to elevate their pricing strategies?

Patrick Stahlschmidt: In a nutshell, I’d say that strategy is the compass guiding pricing excellence. Businesses should invest time and effort into defining their strategic north star. This includes understanding each product’s role in each market and how it contributes to the company’s overall objectives. Pricing can be a powerful driver for revenue and profit growth, but it needs a clear strategy to truly shine.

Patrick Stahlschmidt’s insights shed light on the multifaceted world of pricing excellence. Market research, strategic alignment, and a deep understanding of the product-market fit are all pivotal elements in achieving success.

As you continue to build and refine your pricing strategy in your own business, let Patrick’s perspective be a lesson. Whether you’re in the automotive industry or any other sector, the principles of pricing excellence remain universal: understand your market, align your strategy, and watch your business flourish.