Finn Helmo Hansen is the CEO and Co-founder of Price Beam and Stratinis, helping businesses use pricing and revenue growth to win.
In this episode, Finn discusses the two companies he founded – Stratinis and Price Beam – and their significant contributions to the field of market research in pricing. He also sheds light on effective pricing optimization strategies.
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Why you have to check out today’s podcast:
- Find out how Price Beam does market research for optimizing pricing using a cloud-based technology
- Discover what advantages and capabilities conjoint analysis have over other market research techniques
- Learn insights into the pricing optimization frontiers that are on the rise
“It’s not about communicating once you’ve launched the price increase or even the day before, it’s a continuous communication. And if you as a pricing team think that you’re communicating enough, then double it.”
– Finn Hansen
Topics Covered:
01:13 – What paved his route to pricing
02:29 – Is there truth to wine quality equals higher price?
03:24 – What prevent wineries from raising wine price
05:02 – How do these companies he created, Price Beam and Stratinis differ from each other and why he created these two
07:17 – What specifically does each of these companies do?
09:25 – More in-depth discussion of the business structure of each company
11:09 – How does Price Beam and Stratinis relates to or differs from Conjointly [the process of gathering data up to analysis]
13:59 – The way AI [called Tool Plus] works in the whole process of data research and analysis
15:30 – What more can conjoint research method unpack that historical can’t?
21:43 – Distilling the concept of shrinkflation
24:56 – Finn’s comments on companies increasing prices by way of package machinations
27:37 – The next frontier in price optimization
29:41 – Testing different promotional alternatives
30:47 – Finn’s best pricing advice
Key Takeaways:
“The next frontier in price optimization is going to be around promotion optimization, especially in CPG, because there’s a lot of money there.” – Finn Hansen
“You need to communicate as much as possible, talk about the value.” – Finn Hansen
“Communicate about prices all over the year and sell internally.” – Finn Hansen
“Pricing communication is key.” – Finn Hansen
People /Resources Mentioned:
- Survey Monkey: https://www.surveymonkey.com
- Momentum Now: https://www.themomentum.com/momentum-now
- Conjointly: https://conjointly.com
- Carrefour: https://www.carrefour.com/en/group/stores
Connect with Finn Hansen:
- Email: [email protected] / [email protected]
- LinkedIn: https://www.linkedin.com/in/finnhelmohansen
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Finn Hansen
It’s not about communicating once you’ve launched the price increase or even the day before, it’s a continuous communication. And if you as a pricing team think that you’re communicating enough, then double it.
[Intro]
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the buyer-driven relationship between them. I’m Mark Stiving, and our guest today is Finn Hansen. And here are three things you want to know about Finn before we start. He is the CEO and Co-founder of Price Beam, which he started in 2017. He is the founder of Stratinis, and I hope I pronounced that correctly, we’ll find out in a minute, also a pricing software company. And possibly my favorite or most curious thing, he started out in the wine industry. I love the idea of pricing wine. We’ll ask him a question or two about that. Welcome, Finn.
Finn Hansen
Thank you very much for having me, Mark.
Mark Stiving
Thank you. Hey, how’d you get into pricing?
Finn Hansen
Well, actually I did price wine. That was my background. I worked in various sales and marketing roles in the wine industry, or I should rather say wines and spirits. it’s very different to price a spirit, which is still today sold as much more of a brand than wine, which at the time I did it. And also even today, people almost don’t care about the commercialization of wine. They do. But it’s more about, hey, I’m making a great wine and I love it, and I want to talk for the next three hours about the grapes and how we have produced this fantastic wine. And very few people think about what price we should be charging. so it was a bit of a niche back then. But that’s my, the company I worked for was looking at both wines and spirits and champagnes and quite a few other things. Then it became a career in pricing.
Mark Stiving
Fascinating. But I have to ask, I think that wine is the product that probably has the biggest correlation between price and signal of quality, as most people have no idea what the quality of the wine is, and they buy it based just on the price. Is that a true statement or not?
Finn Hansen
on wine, I would definitely agree. Whether it’s the biggest one, I’m not entirely sure. the company I worked for was in the luxury goods industry, where you would see the same kind of signal that if a luxury product is expensive, then it must by definition be good. But yes, to a large extent, there’s a lot of, if this is an expensive wine, and that’s more on the wine side than on let’s say spirits brands or beer brands. If a wine is expensive, then by definition it must be great. And if it’s twice as expensive, it must be defined to be twice as good, which is, it makes life sometimes easier for people who work in the industry. And sometimes it makes it much more difficult because how do you build the brand off the wine product rather than just talking about price and the grape variety, which it very often boils down to.
Mark Stiving
Okay. So under the assumption that’s a true statement, why don’t wineries just drive prices up?
Finn Hansen
Well, a little bit of the, I don’t want to say it’s a secret, but the financials of wine production are really not conducive to having too high a price. Because there’s not enough people wanting to pay for it. We used to say that if you wanted to make money on wine. And it’s back in the day, so it might have changed slightly. But if you wanted to make wine money on wine, you needed to be priced somewhere between 10 US dollars and 20 US dollars in the US market. Obviously prices vary around the world, and it doesn’t necessarily reflect a European or Asian price point. But in US terms, if you want to make money on your wine, you need to be between 10 and 20. If you’re below 10, you need way too much land, and therefore, too much capital tied up into wine production.
And if you’re more than 20, yes, you’re maybe signaling value, but there’s not that many people. Again, 20 years ago, many things have changed, but that many people who would’ve paid more than $20 for a bottle of wine, unless there was some quite simple indication, this was a great bottle of wine, but even then, you wouldn’t have the market size to meet that. I do think that’s a little bit of the correlation, right? You can be, you always need to find a sweet spot in whatever category you’re in, be it in wine, be it in CPG, be it in anything really. It’s too expensive. You’re alienating consumers too cheaply. You may be driving a lot of volume, but you’re not profitable enough.
Mark Stiving
Excellent. Okay. So now let’s jump topics real fast. I’m very curious, can you tell me and the audience what Stratinis do and what Price Beam do and why did you start two different pricing businesses?
Finn Hansen
Well, they’re kind of different for different purposes. Stratinis is more of a, let’s say a classical pricing software company. It helps, it looks at discounts and rebates and helps push KPIs to the sales team to optimize that these days.
Mark Stiving
And is that more retail or B2B?
Finn Hansen
It’s more B2B. So it’s deal making deal rules making sure that in particular, that the sales team is informed about profitability, but also sometimes pricing guidelines. The reason why I’ve created Price Beam is more that I really thought that there was a need for democratization of insights, and of course, that’s a bit of a marketing generalization. But I do find, or still to this day, that very often insights are too expensive in our industry. And then you’re a little bit stuck with should I spend a lot of money on buying some very expensive insights. I go out and I contract one of the classical market research companies who may not have pricing as a specialization. They may do other things.
They may be taking a bit longer, or should I try to do it myself? Yes, there are people out there who can do price research and pricing insights themselves, but in reality, they will end up in a manner, it’s too difficult or it takes too much specialty knowledge, or at least, again, it’s a rather small audience. So what Price Beam comes in is that we try to sit in the middle of that. It’s a cloud-based platform. It goes out and collects insights into what consumers or businesses are willing to pay. And then it combines that sometimes with historical sales data and some clever AI algorithms. But it basically outputs in a number of days. It outputs an analysis on what customers, consumers are willing to pay, which segments are not willing to pay so much, what segments are willing to pay more. and then that’s all then produced as quick and relatively affordable insights to the customers.
Mark Stiving
Yeah. Obviously, I love the words you’re using. I don’t understand quite how we do this. Anyone who says they can gather data on a customer’s willingness to pay. So that implies to me you can read people’s minds, which I know you can’t. So therefore what are you doing?
Finn Hansen
Well, I mean, underneath it’s, let’s say it’s fairly classical market research methods. There’s conjoint analysis in the game. There are some other methodologies as well. On the more sophisticated end, there’s some menu-based conjoint where it’s more about choosing from a menu. You build your own products, which you may find in restaurant chains, but it’s the same mechanism if you are in automotive or even in the travel industry, you’re choosing from a menu. And on the more similar side, it’s even down to things like Max Diff and even some Gabor-Granger and other methodologies. I think that what we do is we produce input. and as I try to tell my clients all the time, is that we produced an input that may indicate that there’s a certain willingness to pay for this product or for these products.
It could be more than one, obviously. It’s a decision support. It’s not the final truth. There is no such thing as the truth in pricing, I think, on value. But it’s an indication that if you have a set of consumers in a given market, then they’re more likely than not to be within a certain range of willingness to pay. conjoint has a better reputation than let’s say, Van Westendorp or Gabor-Granger justifiably so. But once you start combining different methodologies, and actually we find that we can often actually use different methodologies in the same survey and then combine that and sometimes even combine it with historical sales data to see, well, if we have been selling this kind of product before, do we have historical elasticity? Do we have a historical reaction to pack size changes and promotional spend? And how does that correlate with what we’re getting from the consumer? And then we mix that all up into a big pile of data and spit out some, hopefully, somewhat more reliable data points than if you and Van Westendorp only ask them about their willingness to pay.
Mark Stiving
Yeah. And so are you guys selling consulting services to individual companies with this package of software capabilities or analytical capabilities? Is that the way I should think of this?
Finn Hansen
It’s not a consultancy service as such. It’s an automatic cloud-based service. If you do need, let’s say, strategic consulting, we typically point the customer to a consulting partner. It’s kind of a tool. I call it Tool Plus. And it puts us a little bit in between the classical market research companies, for that matter, the strategic consultants. They would be on one side and they would be full consultancy. There happens to be some data, but it’s all about what they do with the data. On the other side of the spectrum you would have SurveyMonkey. Now they call them Momentum Now, but SurveyMonkey, so do-it-yourself platforms where you go out and you collect data is definitely cheaper than going to the consultants. But it requires more specialty knowledge. We are basically packaging all the research. and then we’re adding a little bit of human flavor on top so that a human can go in and judge the data and can put commentary in and produce various things. But it’s still delivered in a cloud-based style. It’s still delivered in a cloud. Okay. Speed. Right? I mean, it’s not waiting months for a bunch of consultants to get ready. It’s literally delivered in days.
Mark Stiving
Yeah. I’m not a hundred percent with you yet. Only in the fact that I’ve got buckets in my head and I haven’t fit you in a bucket yet. And so now I can imagine there are software companies like Conjointly. And so they’re going to let you do conjoint. Yeah. There are software companies like SPSS that say, hey, you can do any statistical analysis you want with this capability. And so it almost feels like you are somewhere in between those two that says, I’m giving you a set of statistical tools that drive you directly towards pricing decisions.
Finn Hansen
I mean, it’s closer to Conjointly. In that sense, we would go out and do value attributes. So conjoint studies the mix is that we do the tool part of it. But we take a little bit of the difficulty out of it sometimes. If you ask people, how do I run a conjoint analysis? Oh, you need to look at attributes and levels, and you need to have these permutations and forbidden pairs. And very quickly it becomes a very specialized language. It becomes very specialized. And our platform takes that away. So in the setup phase, we simplify it a bit. There’s a human who will follow the whole setup. But it’s sold as a tool, but it’s a human behind the scenes that kind of makes sure that you don’t need to know anything about statistical significance or sample size or even how to really discuss attributes and levels and forbidden path.
And then at the other end, the human comes in, well, in the middle, the machine takes over. And that you could argue is the same as what Conjointly or other automated platforms do. It’s the machine that distributes the survey. It’s the machine that makes sure that we capture the data very quickly. People these days, they don’t get a physical survey into the letterbox. They literally take the survey on the cell phone or the computer on the laptop. But then what we do again in the end is that we put a human touch to it. So whatever the machine spits out, it’s not simply a bunch of charts. well, we do that as well, but there’s literally a human who takes the time to sit down and then take the results and produce additional insights that the machine still struggles to some extent to produce. Machines are getting better.
Mark Stiving
Is it your human or is it their human?
Finn Hansen
It’s our human. So it’s our human who would’ve been yesterday doing one CBG brand, and tomorrow will be doing another CBG brand. So if the customer’s CBG, it’s my human analyst who then goes in and has a look at that and produces more insights than what just a standard conjoint output would be.
Mark Stiving
Yep. And so that makes a ton of sense now because it isn’t quite consulting, but it’s almost like consulting. Yeah. It’s, we’re going to go grab a ton of data and help you analyze it.
Finn Hansen
Yes. But in a more systematic, automated way than classical consulting. So you can either call it consulting light or Tool Plus. It’s not a tool versus consulting. If those are the two opposites, it’s somewhere in the middle. It’s more than just a tool. But it’s less than six weeks of full-time consultancy and services.
Mark Stiving
Yeah. So, so now how do you bundle in, since you’re in the CPG world, how do you bundle in AI at this point? And by the way, where do you think we’re going in the future with this as well?
Finn Hansen
Well, I mean, the AI comes in in a couple of places. It comes in sometimes in adjusting the model. So we find that very often we can tweak the model, especially if we import some historical sales data or some historical POS sellout data the AI comes into that. The model basically learns from, let’s call it mistakes. So we can literally go in and run a, let’s say a conjoint study. The conjoint study will have a certain level of prediction with its pros and cons. the pros are around that. We know what consumers are thinking today. We know we can break it down by consumer segment and a bunch of other things. But sometimes conjoint can be, let’s say, 80, 90% correct, sometimes a bit more, sometimes a bit less. But by then combining it with historical data through machine learning then we actually teach the model. So we get to a point where if we just ran conjoint on its own, we will have a certain level of accuracy and by combining historical data with all for that matter, we let the customer run their sales for the next six months, and then we combine it. It basically learns.
Mark Stiving
Give me some insight here. So conjoint could predict what market share would be given any set of attributes, right? So I look at my attributes versus my competitors’ attributes. If I look at historical data, probably the only thing I’m seeing is price change and volume sold.
Finn Hansen
if you go a little bit more in depth with historical, you also see things like pack sizes. You will see some promotional effects at CPG. You can typically get some sort of promotional, non-promotion versus non-promotion, depth of promotion. But that’s also where we insist on and believe that we are adding additional value because we’re combining the two, or we’re actually starting with the research. We’re starting with the conjoint because the conjoint will get many things that are not really coverable by a historical data analysis. I mean, we get the consumer segments, we get the reactions to new features that you definitely wouldn’t get by data mining, historical data.
Mark Stiving
Right. Well, conjoints are going to give you the dollar value of the brand name.
Finn Hansen
Yeah.
Mark Stiving
And that’s not going to change, right?
Finn Hansen
You say that, but we’ve actually run here during inflation times, we run repeat studies. So some of our clients have been pushing the envelope as much as possible in terms of price increases, right? The inflation goes up and there’s a directive from finance that we must take a price increase. but then they come to us and say, well, we actually want to have a kind of a catastrophe check or reality check on where our consumers, where shoppers have moved? Have they not moved? So we have done quite a few over the last two years studies where we’ve literally repeated the same study, same products, same pack sizes, same everything. and the only thing that was really changing was when we did that study and in some brands we have seen that actually consumers have, it becomes a self-fulfilling prophecy.
They have actually changed their willingness to pay. There’s no other explanation for the change in numbers coming out of the conjoint than that. They must have literally increased their willingness to pay. Because everybody talks about inflation. Everybody talks about prices going up. On other brands, it’s been the other way around. they have literally not followed. and whether that’s because the marketing department hasn’t followed suit, or the brand cannot carry a 25, 30% price increase over two years it’s difficult to guess at least not without going into the detail of that specific brand. But we do a lot of, we call it drift analysis, where we are looking at how consumers change. And it’s also one of the selling points I come up with is that it actually proves that you cannot just mine yourself out of historical data.
And then you have all the answers, even if you had all the breakdowns. that sometimes is the argument. Oh, but we can break it down by pack size. We can break it down by ingredients. We can break it down by flavors and what have you. And in theory, you can try to break down historical data, but if consumers are changing because of COVID because of inflation, because of changes in consumption, patterns from away to home or from home to away or to new innovations, you just cannot predict enough from historical data on its own. But historical data still has, it can verify certain parameters of your model and therefore make it more powerful than, let’s say, conjoint on its own.
Finn Hansen
Yeah. So you could argue the conjoint shows me today, how are people making decisions? But historical data is suspect as soon as you have a shock to the marketplace, right? Yes. Something like conjoint or new technologies or something that comes out. And now we have a shock. So the way we make decisions is now different. Yeah. And so conjoint can capture that, but historical data can’t.
Finn Hansen
The other advantages of conjoint, and for that matter, other market research techniques, is that it’s better at looking at growth scenarios. One of the questions I’m getting at the moment is around, well, we took a price increase in 21. We took a price increase in ‘22. We took a price increase in ‘23 because we had too many excuses, but we took price increases. And that was all nice and good, but we probably can’t take another price increase because either we had Price Beam data set that the consumers are fed up with price increases, or we just basically don’t believe that we can push the envelope anymore because maybe competition didn’t take the last price increase or what have you. So what do we do if we can’t take price increases or at least frontline price increases?
Well, we start looking at the assortment. We start looking at pack sizes. To some extent you can use either forward looking research or you would use backward looking historical analysis. You can use both of those. But one of the things we find is that people start asking, well, could we find new consumer segments? Could we find new consumer audiences? Maybe we’ve been selling to this consumer segment in the past, and we have been pushing prices to these people as much as we possibly can. But what if we could go in and look at data instead of guesswork, but could look at should we get younger consumers? Should we get more affluent consumers? Should we get consumers for where sustainability is more relevant? And then market research can go in and say, well, we actually did this market research. We broke down the conjoint or the Gabor-Granger broke down the menu-based analysis. And it shows that in this specific consumer segment target audience, there’s actually a growth potential. And that you will struggle with historical data mining almost no matter what, because it may not exist as data points, but more importantly, will also not really tell you that there’s an opportunity amongst younger consumers or people who prefer spicy more general flavors or whatever it might be.
Mark Stiving
Yeah. I think that’s awesome, right? Because in conduit you could learn that, hey, if you tweak this one product feature, this one capability you could bring in a different market segment. Or you could start to dominate a new market segment. Yeah. So that’s really interesting. Since you do all this analysis, I’m going to ask if you are one of the people who caused this problem in the world. I love this, so don’t get me wrong. The concept of shrinkflation, you know what I mean when I say that?
Finn Hansen
Sure.
Mark Stiving
So, I think of shrinkflation as people are more price sensitive than they are size sensitive. Have you done that analysis? And is there some way to quantify the ratio of price sensitivity to size sensitivity?
Finn Hansen
We’ve definitely done that. We do that every day, I would say. There’s definitely a hard fact to support that theory. It does depend on the brand. It does depend on the category as well. In CPG in general, I would say it’s probably a factor of six to seven between the two. So six to seven times more price sensitive than size sensitive. but there’s a little bit of, let’s say, communication in as well. I think communication sometimes is a bit underestimated in the pricing world. It’s also how you communicate about changes, whether you communicate about the changes, whether you do it as a one step exercise or two or three step exercise. I found that those who have done it most successfully in CPG, at least they haven’t done it as a one step exercise of just, hey, let’s reduce the pack. And then that’s all good. And in theory you can do that, but if you get caught out, that’s a bit more problematic. But if you start by changing the pack size but you’re hitting some other psychological price points rather than the straightforward price increase at the same time, then it works better. But yes, there’s definitely a hard truth to that statement.
Mark Stiving
Nice. I’m glad to hear the numbers like six or seven XL mean, feels like that’s what it should be. People remember prices, actually, they don’t, but they remember prices more than they remember sizes.
Finn Hansen
Yeah. I mean, that’s the other thing that, that’s why I’m softening up a bit with it does depend on the brand and the category, because if it’s something you buy every day, every week, you obviously have a different memory of price than if it’s something you buy every three months. And a lot of consumers when we go out and ask them various types of questions, we find that they don’t really know what this pack of food or this can of a beverage or whatever it might be, should cost. They have an idea and they have a more of a sense of, this seems expensive now, but they cannot even recall what the price was that they paid last time. And there’s a little bit of flatness in some of the demand curves.
We all expect, well, the demand curve goes from top left to bottom right. And that’s it. And if we went to business school, we even learned it was almost linear, which of course it’s never, but in reality, there are certain also some plateaus where whether you cost 279, 289 or 299 in the eye of the consumer, if you ask them that like that, does it matter? Of course it does. But if you just expose them to 279, 289 and 299, they will all make the same choices. So why is your price at 279?
Mark Stiving
Yeah, absolutely. And so now this is the strategy that I think they all implement. Please tell me if I’m totally off base here. So I’ve got a 299 price point inflation’s coming. I need to raise prices, but I can’t raise prices. So instead I shrink the package a little. And I don’t announce it. I just shrink my package and then I shrink my package, and then I shrink my package, and then I come out with a new size, new and improved bigger package size, and we charge 499 for it, and we fill the box that time. and so now we’ve come up with a way to raise prices.
Finn Hansen
I think certainly some manufacturers do that. I think the more sophisticated ones, they will not just be doing that on a single SKU, they’ll be looking at introducing more SKUs into the mix. So if they only had one SKU before, they would replace it with two, if they had three SKUs before they would put four or five in place. So they’re not just inverting commerce changing the size and maybe the price at some point in between, they’re actually changing the perception because suddenly there are five SKUs where there used to be three. But the other thing, and that’s I think we are going in 2024, we’re going more towards is also shrinkflation has been done now as well. And now we’re seeing bad press.
Well, there’s always been bad press from shrinkflation. If you get called out now you’re seeing some retailers like Carrefour, one of the biggest retailers in the world, French in origin, but they’re in many different countries literally naming and shaming the vendors on the shelf. This product had its size reduced at the same time as they increased the prices. There’s literally a sticker so far. I’ve seen it only in the French super markets, but I’m sure they’re contemplating what they can do in other parts of the world as well, or other retailers must be doing the same, but a sticker saying, this vendor has reduced the tax size and increased the prices at the same time. They don’t say shame on them, but obviously that’s the message. It’s negotiation, but it’s powerful negotiation once it comes to the consumer. So I think people are moving on, actually.
Mark Stiving
Yeah. Many years ago, at least in the US they were starting to require per ounce or per unit pricing. Yeah. And that would be interesting, but I think according to what you just said with Carrefour, it’d be really interesting to have historical per unit pricing.
Finn Hansen
Well, we’ve done some per unit pricing because I mean, in Europe and North America at least, it’s quite common that there’s this per unit pricing even by law and many markets. but consumers say they think about that, but once we start testing it, they don’t. I have a lot of data sector support that per unit pricing has a small effect, but it’s the sticker price. It’s the big price point that matters. And the per unit price changes a little bit of consumer behavior, especially if it has certain thresholds or if it’s in a very comparative environment. But in reality, if I tell you that this beverage is 30 cents per ounce or 50 cents per ounce, most consumers don’t really know if that means it’s cheaper, expensive. It’s a legal requirement. Absolutely. But in terms of communication, it’s the price first.
Mark Stiving
Yeah. I was thinking that the per unit price on a historical basis would tell me if someone’s using true inflation or not.
Finn Hansen
Yeah. Right. But what I see now is that, I mean, I think it’s almost like a hierarchy, right? In the last couple of years, pricing managers have tried to take price increases. And those who could, they did so, and if they didn’t, quite frankly, shame on them because if you’re working on pricing, they’re not exploiting the inflation and all the stories about inflation, there’s something wrong. But price increases were taken, and that’s all good pack sizes for inflation have been done to some extent. And I think the next frontier in price optimization is going to be around promotion promotion optimization, especially in CPG. Because there’s a lot of money there. And it’s not only about running the promotions, it’s also, if I’m looking at CPD brands in Europe or in the States, then a lot of them have a 60 to 70% volume sold on deal.
Right? That means that in two thirds of the time, they are on promotion in some way or form or at least two thirds of their volume is sold on promotion. Maybe it’s not two thirds of the week, but it’s two thirds of the volume. And they’ve conditioned their consumers that in the category of and in the brand, well, don’t worry because next next week it will be on promotion again. And unless it’s something you buy every day or every second day, it doesn’t matter. I can wait a week or two to buy detergents, or I can wait a week or two even to buy a lot of non-fresh food products. I can wait. And yeah, so there’s a lot of optimization there and how do people react and how don’t they react on promotions? So I think that’s the next experiment.
Mark Stiving
Area. I used to drink a ton of diet coke. And when it was on sale, I would buy a bunch of 12 packs. And when it wasn’t on sale, I wouldn’t buy any. So I was like, yep, okay. This is easy. And so I’m always confused by promotions. I’m so glad I don’t work in the CPG world much because it seems to me that when you put something on promotion, you are either stealing from a competitor, which is what you’re trying, hopefully doing . you’re generating more demand, which you hope you’re doing, but most likely you are paying down future customers. I’m giving you a discount for something you would’ve bought anyway in the future.
Finn Hansen
Yeah. And that’s one of the things we are now testing. It’s a relatively new study type at Price Beam, but we are basically testing different promotional options, and then we are looking at what’s the source of business we call it? Are you getting volume because people are basically buying upfront or buying to put in, take home and keep until next week or next month. Are you stealing from competitors? Are you stealing from yourself very often? You’re stealing from yourself, if not nobody else. and there’s only a marginal part of the uplift. There’s almost invariably an uplift, and that’s why they can still get away with it so to speak internally. Yeah. But there’s only a marginal part of the total uplift that comes from non-cannibalization of own brands, non stealing of markets. Well, market share from competitors of course, is okay. but very often it’s this forward buying I buy now and I will buy again in one month’s time instead of in two weeks or three weeks time.
Mark Stiving
Yeah. Perfect. Hey, Finn, this has been a blast, but we’re going to have to start wrapping this up. Final question. What is one piece of pricing advice you could give our listeners that you think could have a big impact on their business?
Finn Hansen
One of the advice, and it’s actually not to do with what I do at Price Beam or anywhere else, it’s really around price communication. I don’t think we communicate enough about pricing. I always, when I used to train sales teams and how to do better pricing and go out and negotiate the prices we had decided centrally as one does, it was all about communicating the prices. And it’s not about communicating once you’ve launched the price increase or even the day before. It’s continuous communication, communication, communication, communication. And if you as a pricing team think that you’re communicating enough, then double it. You need to communicate as much as possible, talk about the value, talk about it’s frowned upon to talk about cost-plus, right? But sometimes it’s okay to say, well, costs are going up and we have production costs going up and so forth. But don’t talk about that at the last second. Communicate about prices all over the year and sell internally. That’s communication and sell externally, and also communication. So I think pricing, pricing communication is really key.
Mark Stiving
Love that answer. And then I always say costs don’t drive pricing, but it’s a great excuse to raise prices.
Finn Hansen
So, absolutely.
Mark Stiving
So we can talk about it all we want. Finn, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Finn Hansen
The easiest will probably be email [email protected] or [email protected]. They’ll both get directly into my inbox. So, I love to help.
Mark Stiving
Excellent. Thank you. And to our listeners, thank you. If you enjoyed this, would you please leave us a rating and a review, and if you have any questions or comments about this podcast or pricing in general, feel free to email me, [email protected]. Now, go make an impact!
