Southeast Asian Businesses Struggle to Extract Full Value from Products and Services
Singapore – Almost 40% of businesses in Southeast Asia across multiple industries are struggling to extract full value from customers and avoid price competition. These are findings from a survey by international pricing consultancy Simon-Kucher & Partners, following its 15th APAC Pricing Forum in Singapore.
To tackle these issues, more than 50% of organizations from industries including finance, technology, healthcare, media, telecommunications, education and utilities across Singapore, Malaysia and Indonesia are planning to raise their prices between one to five percent in the next 12 months.
“Organisations in both the B2B and B2C sectors are struggling to price for value,” said Dr. Jochen Krauss, Singapore Managing Partner at Simon-Kucher & Partners. “We are not surprised to see that many businesses are planning to raise prices to offset market trends such as higher operating costs, however we have identified several methodologies that organizations can apply to ensure they are considering the full value of their products and services, as well as the specific needs of customers.”
In the B2C sector, businesses often rush to set up promotions and discounts to address competition or align with seasonal expectations, such as the Great Singapore Sale (now in its third consecutive year of revenue decline). Without clear targets for success and a customer-specific strategy, these ‘one-size-fits-all’ tactics are unlikely to drive revenue.
“Our recommended approach for a successful promotion is to ensure appropriate frequency, clear communication to target customers via the most relevant channels and a clear measurement strategy,” said Dr. Krauss. “The key is to understand that your customers, their needs and how they want to hear from you are constantly evolving. Consumer goods providers and retailers must be willing to evaluate promotions and offers at extremely regular intervals to make sure they are deriving the most benefit from the initiatives.”
For B2B organizations, the challenge typically comes down to monetizing innovation as products and services evolve. As technology drives the speed of product development, organizations must compete on creativity. Price becomes an afterthought as organizations strive to offer bigger and better features than their competitors, spending significant time and expense on designing and building products without considering how they will monetize them. Research conducted for Simon-Kucher & Partners publication Monetizing Innovation found that 72% of all new products fail, with that number rising to 76% in APAC.
“If a new product or feature does not fully meet customers’ needs and provide value, the price becomes irrelevant and the product will fail,” said Dr. Georg Tacke, global CEO of Simon-Kucher & Partners and co-author of Monetizing Innovation. “Product and service providers have the power to change the innovation game. By putting customer demand and willingness to pay at the front and centre of development, organizations can ensure they are offering something of true value, hugely increasing the likelihood of monetization.”
Other findings shared at the recent 15th APAC Pricing Forum, held in Singapore in May, include the following. The survey was conducted on-site among senior leaders:
- 17% of organizations wish to improve their current pricing structures
- 17% of organizations wish to reduce discount levels
- 15% of organizations wish to better balance price and volume
- 11% of organizations wish to use improved pricing models to fight cost increase
Simon-Kucher & Partners, Strategy & Marketing Consultants:
Simon-Kucher & Partners is a global consulting firm with 1,000 professionals in 33 offices worldwide focusing on TopLine Power®. Founded in 1985, the company has more than 30 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.