Satish Dharmarajan is the Director of Pricing and Business Intelligence at Orkin, He is an Advisory Board Member at the University of Tennessee at Chattanooga, and has held analytics roles at Home Depot, Walgreens, and Whirlpool. Satish also acts in short films.
In this episode, Satish educates us on differentiating products/services from competitors of similar offerings as he stresses the importance of understanding the buyer’s journey along with the core problem that they want to solve.
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Why you have to check out today’s podcast:
- Learn the importance of knowing what the buyer’s journey is and what state they are in as they come in to buy a product
- Find out how brands differentiate themselves from competitors when they all offer the same products/services
- Understand how customer-perceived value helps brands sell well even with competitors
“If you know your customer, you can price it right. If you know what they’re looking for, you can have them pay what you want them to pay for your product or service.”
– Satish Dharmarajan
Topics Covered:
01:50 – How Satish got into pricing
04:29 – Talking about getting to that ‘big place’ and the process that it involves in order to reach that
07:08 – The importance of knowing what the customer is specifically looking to solve
11:39 – Mark’s pigeon problem
12:40 – How brands differentiate themselves from competitors when they all offer the same products/services
17:54 – How customers choose where to buy between brands, and how pricing and packaging people should respond
20:59 – Appliance pricing at Home Depot; how customers care about price changes
23:34 – Looking at and analyzing competition; the importance of customer-perceived value
26:26 – Satish’s pricing advice
26:59 – Connect with Satish
Key Takeaways:
“That’s basics of customer service, which is not too different if you were in the cellphone business, if you were in the internet business, or if you are doing anything else, selling anything else online. You would want to know what specifically that customer is looking to solve for.” – Satish Dharmarajan
“The way your products are arranged next to each other, could be used as a leverage for selling the same products at a different price point.” – Satish Dharmarajan
“As pricing professionals, you need to figure out what’s the bare minimum, such that you can make sure that even the person who is coming in to replace a refrigerator is going to be willing to pay. But at the same time, it’s not at a giveaway price where you’re not making enough margins from the other consumers.” – Satish Dharmarajan
People / Resources Mentioned:
- Orkin: https://www.orkin.com/
Connect with Satish Dharmarajan:
- LinkedIn: https://www.linkedin.com/in/satishdrajan/
- Email: [email protected]
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.)
Satish Dharmarajan
If you know your customer, you can price it right. If you know what they’re looking for, you can have them pay what you want them to pay for your product or service.
Intro
Mark Stiving
Today’s podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike. If you’re looking for a new pricing role, or if you’re trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast.
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the pesky relationship between them. I’m Mark Stiving, and our guest today is Satish Dharmarajan. Here are three things you’d want to know about Satish before we start. He is the Director of Pricing and Business Intelligence at Orkin, which is why I said pesky. By the way, he is an Advisory Board Member at the University of Tennessee at Chattanooga. He’s held analytics roles at Home Depot, Walgreens, and Whirlpool, and I am fascinated by this whole consumer world, so I can’t wait to talk to him. Oh, and by the way, he’s a short film actor. No, he’s not short; he acts in short films. Welcome, Satish.
Satish Dharmarajan
Thank you, Mark. That was a fantastic introduction. I couldn’t have done a better job myself.
Mark Stiving
I just enjoyed it. It was good. Thank you. I hate it when I’m enjoying my own work.
So, how did you get into pricing?
Satish Dharmarajan
It was more of a happenstance than by choice, I should say. So I went into consulting, into analytics consulting after having done an in-house consulting role for Whirlpool. In-house strategy jobs, usually, back in the day – I make myself sound like it’s 25 years ago, but it wasn’t; it was only ten years ago – it was still a lot about analyzing the data and helping provide direction to different people, which is essentially what data analytics is all about today. And when I got into analytics consulting as a role, it seemed like it was new, and it was picking up a lot of steam. So, I started there. But the type of projects I got to do were really a lot more pricing-oriented, especially both at Walgreens and at Home Depot. The roles that I held there, from looking at data analysis, it quickly jumped into making pricing recommendations so that those analyses could be actioned upon by either the loyalty program on the Walgreens’ end or the merchandising team or the cost out function at Home Depot, the groups that I was supporting, so much so that the pricing team at Home Depot wanted me to support them, me and my team to support them with more pricing analyses, more indepth data strategy applied to pricing, which led me into my current role, where I came into Orkin to set up a pricing and analytics function ground up.
I started with doing a lot of analysis because that was really where every pricing job should begin – analyzing the current state and defining what that future state should be, which is no different from an analytics job. And then holding a pricing lens on top of that means fairly easy, because you’re looking at it to say, ‘okay, if the objective is to maximize revenue, maximize profit, maximize the volume of customers that you are able to sell to, maximize the share of wallet that you’re getting from an individual customer that you sell to, pricing is at the core of all of those.’
Mark Stiving
I think that’s a fabulous answer. Now, I have to say, when you said the words ‘we look at what the future state is supposed to be’, in my mind, I thought you were picturing ‘I have the vision that says, here’s what we need to get to.’ And when I think about pricing, it’s always like, ‘let’s take one more step. How do I do one more piece of price segmentation? How do I do one more promotion?’ And so, is that what you’re thinking of for future state? Or do you truly have this big vision that says, ‘hey, we’re trying to get to this big place?’
Satish Dharmarajan
I usually start from the big place and then talk about the steps that lead you to that big place, with that crawl, walk, run fashion, to say, ‘okay, in order to reach that big place, what do you need to achieve? Why can’t you get there today?’ And then you get a slew of points that you can’t necessarily do today yet; it’s preventing you from achieving that end pricing objective. Then you break it down into– go ahead.
Mark Stiving
So, I want to know how you define the big place. And before you answer that, if I were defining the place I really want to be, I want to be charging every customer a different price based on their willingness to pay. But there’s no way we know their willingness to pay and we don’t necessarily have the ability to charge different prices to different customers all the time for many different reasons. But what would you define as the big picture? How do you say, ‘this is what we want to get to?’
Satish Dharmarajan
So that’s a very good big picture to have. If you want to charge different customers to different prices from different customers, you can. There isn’t something that you cannot achieve. The question is what information do you need in order to be able to differentiate or assess that willingness to pay?
The first thing maybe to say, okay, I can charge a higher– start at the foundational level, right? So, the most reasonable thing to do is I can charge more from people who have more money. Is that easy to identify? Fairly easy. The census gives you that data. Who makes how much money? They may not tell you specifically this individual makes a million bucks a month, and that other individual is going to make a million bucks over their lifetime, but what they will tell you is in that census block, are there more people who live there? Are they making more money than the rest of the population? You can use that as your starting point to say, ‘okay, now if I wanted to target only those people who make more money, how am I going to differentiate what I’m offering to them from the ones who live in areas that don’t make as much money?’ And then that’s when you start to break down your problem into more bite-sized chunks. Because it’s that classic statement that everyone talks about – how do you eat an elephant one bite at a time?
Mark Stiving
Exactly. Okay, so I was not going to go here, but because you brought this up, it suddenly hit me. Are you using the value of my house to decide how much I pay?
Satish Dharmarajan
Mark Stiving
Yes.
Satish Dharmarajan
Not necessarily. Wait, not exactly. Maybe. Who knows? But there is certainly an element of, not the value of your house, but how large your house is, how much time is spent in taking care of the problems around your house and where you live. So, if your house is a mansion, great. If you’re surrounded by other mansions, great. But what if you live right next to a creek? The kind of pest pressure you’re going to have is going to be significantly different from your neighbor who lives across the street from you. They are not going to have the same extent of troubles that you’re going to have as someone who lives right next to a water body.
Mark Stiving
Okay, so help me think through this for a second. The first words you said were ‘the size of the house’, and I would have said, ‘well, that sounds like cost-plus pricing’. And then when you said, ‘okay, if you live by the creek, you’ve got a bigger problem’. And so, if I recognize that I have a bigger problem, then I would be willing to pay more to solve it, right?
Satish Dharmarajan
That goes directly into that customer’s willingness to pay. And how much more willing are you going to be? And how much more disposable income do you have that makes you want to solve for that problem? So, a lot of probing questions need to be asked, even if you’re thinking about something as simple as pest control. You need to ask a lot of probing questions. So, what do you like to do in your yard when you have free time? How do you spend your time, Mark?
Mark Stiving
I’m rarely in my yard. If anything, I sit on my deck, but that’s it. I fly airplanes.
Satish Dharmarajan
If you’re outdoors and on your property, how are you spending your time?
Mark Stiving
Just sitting, looking out at the airport.
Satish Dharmarajan
Okay. Would you want to be disturbed by mosquitoes at that point?
Mark Stiving
No, but luckily, I live in Reno and we freeze the mosquitoes every winter.
Satish Dharmarajan
Okay, so let’s say you lived in a part of the country where there were mosquitoes.
Mark Stiving
I’d hate them.
Satish Dharmarajan
You’d hate them. You’d want to pay anything you can to get rid of it, to get that time on that deck, even if it’s an hour a week that you spend outdoors, you’d want to make sure it’s taken care of. So, a lot of that probing is done when the person who’s selling you pest control should be asking. Do you like to entertain people on your yard? If you have gatherings over the summer, that makes it more sense for you to have pest control services, and on top of that, mosquito-controlled services. Oh, by the way, do you want to make sure that those are– do you have a lot of plants in your yard?
Mark Stiving
Quite a few, yeah.
Satish Dharmarajan
So, you want to make sure that the pest control service that’s being sold to you isn’t going to hurt your plants. Any of those plant flowering plants?
Mark Stiving
I have no idea.
Satish Dharmarajan
Okay. Because if they are flowering plants or if they attract bees or butterflies, you definitely don’t want certain types of services. You want certain other types of services. So clearly, by asking these questions, you’re trying to differentiate between them. Go ahead.
Mark Stiving
Right, absolutely. That’s brilliant. By the way, since you bring this up, I often tell clients that ‘you don’t want a direct salesperson until the deal is about $10,000.’ And what you just described to me was essentially a direct salesperson coming out and asking me what’s going on and learning my story. But I can say that I don’t know if I’ve ever paid $10,000 in my lifetime for pest control at this point in time.
Satish Dharmarajan
Yeah, and you don’t need a direct salesperson for a pest control job. You could do the exact same thing through your call-center. If your call center rep is able to establish that connection with the person calling them with a problem, the first thing that the person wants to hear is that someone’s listening to them. The second thing they want to do is be able to tell them that the problem that they’re calling about is solvable. And the third thing is to know that it’s solvable specifically for them. That’s basics of customer service, which is not too different if you were in the cellphone business, if you were in the internet business, or if you are doing anything else, selling anything else online. You would want to know what specifically that customer is looking to solve for.
Mark Stiving
Nice. Okay. I want to apologize to my listeners for a second. I have a really important, personal question to ask. Do you guys solve pigeon problems?
Satish Dharmarajan
Oh, we do.
Mark Stiving
Oh my God, I’m calling Orkin as soon as I get off this call.
Satish Dharmarajan
Guys, by the way, that’s not a plug. I did not say, Mark, ‘for sale’.
Mark Stiving
No.
Satish Dharmarajan
And Mark is not going to get paid for saying that you should go to Orkin for your pigeon problems.
Mark Stiving
For your pigeon problems. I’ve been fighting pigeons for a long time now, so.
Satish Dharmarajan
I’m certain we can take care of that.
Mark Stiving
Okay. Good.
Satish Dharmarajan
I just need your number and get my branch to get in touch with you.
Mark Stiving
Okay, got it. No worries.
Okay, so let’s talk about the difference between retail and manufacturing. So when I was looking over your LinkedIn profile, you’ve worked with Whirlpool and you’ve worked with Home Depot, and I assume Home Depot sells Whirlpool appliances at some point in time.
Satish Dharmarajan
Yes.
Mark Stiving
And so, what’s the difference in thought process when you are doing pricing and data analytics for those two different organizations?
Satish Dharmarajan
So, let’s start with Whirlpool because that’s where I worked first, and that’s really where the cycle begins, too. So, you start with the manufacturer trying to create differentiation between their products. They’re not going to change their line a whole lot to create differentiation between a Home Depot and a Lowe’s. If Home Depot, Lowe’s, at that point, Sears, Best Buy, all wanted to sell the best Maytag washer out there or the best refrigerator out there or the best generator or kitchen utensils and appliances out there, they were all going to get the exact same products from the same lines. There would be some differentiation based on how the brand wanted to differentiate themselves or set themselves apart from their competitors, and that’s where both pricing and merchandising came into play. So, merchandising analytics–
Mark Stiving
Wait, I didn’t understand. So, you said the brand differentiates. So, let’s be super clear. Are we talking about the Home Depot brand or are we talking about the Whirlpool brand?
Satish Dharmarajan
The Home Depot brand on one end, but also differentiating between Maytag and Whirlpool.
Mark Stiving
So, for example, you may give Home Depot and Lowe’s essentially the exact same refrigerator with a different part number on it, maybe a slightly different feature on it, but they’re both getting the best possible refrigerator with just a tiny bit of differentiation.
Satish Dharmarajan
Yup.
Mark Stiving
Okay.
Satish Dharmarajan
And that’s essentially going to be the case for any manufacturer. They’re going to want to manufacture the same product to be sold across multiple retailers while helping the retailer create a differentiation between them and their competitor.
For Whirlpool, where it becomes an opportunity is they can sell the exact same product under the Maytag brand at a different price point point than under the Whirlpool brand or under the Amana brand, which is their low-end brand. The same product with the same abilities, with very similar capabilities, could be sold at significantly different price points, whether they were selling it under the JennAir brand versus with the Whirlpool, the Maytag, the Amana, or something else, or a home brand for Sears.
Mark Stiving
Right. We used to see this in cars all the time. It’s interesting.
Satish Dharmarajan
And that same logic applies on the retail-end as well. And I’ll take the example not of Home Depot, but of Walgreens. So, Walgreens came up with their own home brand at this point when they were trying to launch the loyalty program several years ago. And I don’t know if you’re a loyalty member. They’ve changed that program so much over time; I don’t know how someone’s still on it. They’ve changed because I’m not working for them. I think that’s the explanation. But the idea was to position their house brand to be sitting right next to the comparable other brand, to see that it’s the exact same. Let’s say you were looking for Tylenol, acetaminophen. The Walgreens brand of acetaminophen would have the exact same strength, the exact very similar packaging, even in some cases, but priced significantly lower. The idea, the thought there was really not to create a product that’s less expensive or to spend on marketing. It was to sell something to a customer at a slightly lower price point. More customers would buy that at the lower price point, but the brand is not spending on any of the marketing or advertising for tylenol.
Mark Stiving
Yes. Okay. And so, when you were with Whirlpool, you were working to figure out how people bought at Home Depot versus Lowe’s versus other manufacturers?
Satish Dharmarajan
That was the core part of my role while I was at Whirlpool. It was to help differentiate the consumer mindset, first, and a lot of data research, consumer research to be able to say, ‘how is the Home Depot customer different? How does the Home Depot customer look different from the Lowe’s customer?’ At that point, this was before Home Depot changed how their floors look. Lowe’s was a lot more attractive to women than it was for men because of the lighting they used on the floor. So the type of products that you could present would be slightly different. The planograms, the way your products are arranged next to each other, could be used as a leverage for selling the same products at a different price point, at Lowe’s versus Home Depot.
Mark Stiving
Fascinating. Tell me about the difference between did people shop around for your product? Because it feels to me like an appliance. My refrigerator broke down. I have to go buy a new refrigerator. I might go to Lowe’s and Home Depot and three other stores to go look at the different refrigerators available or I might go online and say, ‘oh, I really like this Whirlpool refrigerator. Where do I go get it?’ And so, how do you think consumers actually think about this? And then how do we think about it as we’re pricing and packaging for different retailers?
Satish Dharmarajan
That’s why you think about consumer journey. Different consumers are coming into the pipeline, so to speak, from a different point. If you’re coming in as a luxury shopper who’s trying to put a refrigerator for that second home that they’re building, the way they’re going to be looking for that product is going to be significantly different from someone who’s looking to replace a broken refrigerator in their primary dwelling. So how those searches work, I’ll leave that to the search people to talk about. But once people have come in looking for that product with that price point in mind, the replacement refrigerator typically is not going to be super expensive. It’s going to be very similarly priced to the refrigerator that they currently have versus someone who’s trying to move into a new home or is trying to buy a product for a second home or for their basement. Each of those buying journeys are very different, and therefore, ideally, the manufacturer and the retailer would be able to sell the same product to different customers based on where they were coming from. But unfortunately, that’s not the world we live in today.
So as pricing professionals, you need to figure out what’s the bare minimum, such that you can make sure that even the person who is coming in to replace a refrigerator is going to be willing to pay. But at the same time, it’s not at a giveaway price where you’re not making enough margins from the other consumers. Pricing can also be adjusted after the product has been launched based on who is buying your product, if you see that a lot, and that’s asking the customer and the consumer, ‘why did you buy this product?’ Was it to replace an existing product or was it for a new location or was it for a new home? Looking at that mix from a data analysis perspective gives you a sense for what this product is primarily working for. There are very few products which are going to work for too many groups at the same time.
Mark Stiving
So, do you spend time actually talking to customers, people who bought your product or didn’t buy your product?
Satish Dharmarajan
I don’t spend time talking to them, but I’m gathering that information for sure.
Mark Stiving
So through survey data as opposed to qualitative?
Satish Dharmarajan
Yeah, survey data, but also, there’s a little bit of a qualitative aspect to it because a lot of those conversations that reps can have over the phone at the branches can be transcribed and then be assessed for quality. The data analysis and natural language processing has become interesting.
Mark Stiving
And easy nowadays, much easier than it used to be.
Satish Dharmarajan
That’s what I’m saying.
Mark Stiving
Okay, so let’s talk about being at Home Depot then. So, when you think about an appliance at Home Depot, are you thinking someone came in to shop for the appliance, or are you thinking the appliance brought them in? Did the appliance bring them in or they’re just randomly shopping and saw the appliance? Or does that even cross your mind?
Satish Dharmarajan
So, if you’re thinking about appliance pricing, it doesn’t matter, right? Because you’ve already figured out a price point that, and there’s a manufacturer that suggested retail price that’s offered to the Home Depot, and Home Depot locations based on where they are would price them differently. If your Home Depot store is in an appliance desert, so to speak, using borrowing heavily from the food deserts that a lot of cities have, if you’re in an appliance desert where there aren’t enough other locations for you to go buy that appliance from, the price point is going to be slightly different. You and I know that. As pricing professionals, most consumers don’t necessarily pay attention to that. But once the product is priced, Home Depot is not necessarily going to be making a change to that product’s pricing in that cycle. They can only make a change if they’re taking that product off the line, slapping it with a different logo or a different number, and therefore selling it at a different price point. Because memories last a long time, and people with technology, you can remember what the price point for a particular product was and how it’s changed over time. But if it’s a different skew, you can price it differently and there’s no tracking back.
Mark Stiving
Well, that’s fascinating. So, you think that people care that you change the price on a product where I can tell you, on Amazon, they change the price every day, two or three times on a product.
Satish Dharmarajan
Oh, certainly. That depends on the ticket size. Ultimately, if you’re buying something like an appliance that’s several hundred dollars, how much the price is varied on the floor is going to be different from how much the price is varied online. Online, e-commerce allows you a lot more leeway, a lot more flexibility to make those changes, just like Amazon does. Even for a high-end product, the difference between an $832 refrigerator and an $834 refrigerator is not going to be too much for the consumer when they are buying it. But to the company, it’s definitely going to make a difference.
On the floor, making those price changes are going to be significantly harder. They can run different promotions at different points to say, ‘now this product which is listed at 834 is available to you at 832’, and the mindset that the consumer has is going to be different at that point.
Mark Stiving
Right. Interesting. Okay, wide open question. Tell me about competition. So, how do you think about competition? How do you analyze competition? What data do you use when you analyze competition?
Satish Dharmarajan
In the Orkin space, I don’t think about competition, because it depends on the positioning, the brand positioning. If you can have a premium brand positioning, that’s not going to affect what you charge, because the value that you bring to the customer is so dramatically different from what your competitors can bring in terms of the professionalism that your technician or control is going to bring to your facility, whether it’s commercial or not; it’s going to be significantly different from what competition is going to be able to bring. The knowledge, the training that they bring is going to be significantly higher than anyone else is able to.
In other spaces though, looking at competition is super important, especially if you’re coming in with a product that’s not significantly differentiated. That’s where you need to really think about your competition and look at it in all possible aspects too, such that you’ll want to make sure that you’re priced not too dramatically different from competition, especially if it’s your entry-level product that is very commoditized. So, in those cases, I do gather information through web scraping, which allows you to scrape through various websites and keep track of those online changes as well, periodically. And on top of that, you can also run a lot of information, get a lot of information off the net.
In an industry like pest control, where it’s extremely fragmented and you have a lot of players selling pest control just off their trucks, really, one man with a truck in a backpack can take care of your household pest control needs. That’s not the person that Orkin is going to be trying to compete with. So, there isn’t a necessity for me to try to assess, ‘okay, that Josh Moore with a truck is going to sell you the service for $30 and Orkins going to charge you $99.’ I don’t need to necessarily do that comparison because the value exists.
Mark Stiving
Right. At least the customer-perceived value exists, yes.
Satish Dharmarajan
Certainly, and it comes down to what’s important to that customer and if you have targeted right. If the low-end customer is still coming to Orkin, it could be because of that perceived brand value, but they’re going to have an Orkin truck standing in front of their house as opposed to Josh Moore’s truck with a dead animal sitting on the back.
Mark Stiving
Alright. Satish, this has been so much fun, but I’m going to ask the final question. What is one piece of pricing advice that you would give our listeners that you think could have a big impact on their business?
Satish Dharmarajan
B2B or B2C? I’m going to start with that.
Mark Stiving
You choose.
Satish Dharmarajan
Okay. I would say it’s about knowing your customer. If you know your customer, you can price it right. If you know what they’re looking for, you can have them pay what you want them to pay for your product or service.
Mark Stiving
I think that was a great answer. And in fact, you implied that, if you didn’t actually state it outright during some of the other answers where we had to know what the buyer’s journey was and what state they were in as they came in to buy a product, and so it just made all the sense in the world.
So Satish, thank you so much for your time today. If anyone wants to contact you, how can they do that?
Satish Dharmarajan
LinkedIn would be the best place. I’m at Satish Dharmarajan, or satishdrajan is I think what my LinkedIn ID says. https://www.linkedin.com/in/satishdrajan/ and that’s r-a-j-a-n.
Mark Stiving
And we’ll have the link in our show notes anyway, so it’ll be easy to find you.
Satish Dharmarajan
Awesome. Thanks for taking the time to talk to me. I hope your audience isn’t going to throw rocks at you. Well, they can’t. It’s a podcast.
Mark Stiving
Yeah, exactly. They can’t. They can just make fun of me.
So, to our listeners, thank you so much for your time. If you enjoyed this, would you please leave us a rating and a review? You can get instructions by going to www.ratethispodcast.com/impactpricing. Speaking of recommendations, Armin left this one on Apple podcast for us.
“Pricing made fun and enjoyable. Mark is one of the leading independent pricing experts globally. His commercial background, coupled with relevant academic research, a few books, and hundreds of client engagements make him one of the most engaging personalities in the world of pricing. I appreciate the honest, pragmatic nature of his podcast and the fact that his actionable advice not only helps pricing practitioners, but also those in sales, marketing, and finance.”
And Armin, I am sending you a big check. Thank you very much for that one.
And finally, if you have any questions or comments about the podcast or pricing in general, feel free to email me, [email protected].
Now, go make an impact.
Mark Stiving
Thanks again to Jennings Executive Search for sponsoring our podcast. If you’re looking to hire someone in pricing, I suggest you contact someone who knows pricing people contact Jennings Executive Search.
Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy
