Pricing Inflation masterclass:
review by Benno van Mersbergen
Benno van Mersbergen was speaker at our Pricing Inflation event. As Director Product Strategy and Marketing at Friesland Campina Ingredients, Benno is responsible for the overall strategy and marketing of different product groups. Pricing strategies fall within this scope. We asked him to share a bit about the event.
What did you share with the participants during Pricing Inflation, in a nutshell?
During the Pricing Inflation event, I first started explaining how we tackle price setting at Friesland Campina Ingredients. The inflation challenge we faced last year was enormous and setting the right prices was crucial to overcome this. This includes deciding what price drivers we want to focus on, how to make the difference between products on which we can apply value based pricing, versus the ones that are more relevant for market based pricing. Another important thing to keep in mind are the internal factors like the supplies and production capacity, and figuring out how to use these to our advantage.
Next in the presentation my colleague Pieter focused specifically on the inflation challenge. On what products can we actually relay the increased prices? For some products, for example, we couldn’t ask a higher price. In Asia, where we have competitors, the energy prices decreased instead of increased, due to China not having an issue with importing from Russia. Thus, we knew not to increase the price of our products in that area of the world. On the products without competitors from that region, however, we could increase in price.
Lastly, my colleague Tjalling discussed how to set a price with the right information on the field. Sometimes it is necessary to make quick, ad hoc decisions, outside of the office, sometimes even without a stable internet connection. It’s important to equip people with the skills and information to do just that.
What is something you shared, that was new/surprising to the participants?
Something that surprised some of the participants was the way Friesland Campina ingredients separates value based and market based pricing. Many companies combine these two ways of deciding on a price for a product. We are very adamant about separating the two.
How did the participants react to your presentation?
At Friesland Campina Ingredients we have a very structured approach. Participants were curious what this means for us. The assumption about structure is that it is slow and bureaucratic, and yes, it can be like that if not done correctly.
The concern from the participants was that the competitor will be faster and get the deal before us. Our answer: it’s all about teamwork. Tight structures are possible when the teamwork is strong. Within a day, we usually find and set the price. If you trust each other and know what each person can bring to the table, it can go really fast. You can find time to meet spontaneously to come to the price agreement.
Did you learn something new during the event?
Yes. I was unaware of the systems in place to assist companies in setting good prices. That was new and useful to me. What I also valued was discussing the current challenge of inflation, which has more to do with decreasing the price. Since certain prices that increased due to inflation, are decreasing again, another question is how do we set prices to a lower price? It requires an entirely different dynamic. I found this very relevant. Furthermore, the opinions about this differed between the participants and it led to interesting discussions.
What did you think of the event?
It was my first IFFI event. The crowd was very interactive: not only during the sessions, but also during the breaks did interesting conversations arise. I enjoyed the presentations from the other speakers. The level was good.
Benno van Mersbergen