They use value propositions, training sessions and might design a framework for the trade terms. The final design of the trade terms and the actual pricing decision is then taken by another function (such as Sales or Marketing).
An executing pricing function sets the prices or has a voice that weighs heavily in the decision. They need to have much more detailed information than the enabling organisation and different KPIs. The executing organisation is more common in situations where there are large numbers of customers or articles , such as B2C.
Of course, there are variations, such as if the pricing function sets a minimum price on a product (executive decision) but then tries to make the sales force charge a higher price by enabling a better decision.
The two dimensions in practice through three prisms
We see that the two dimensions are very useful when designing an organisation on three different levels:
- The organisational belonging.
- Local or centralised decision-making.
- Employee profile
Organisational belonging
If an organisation wants to focus on exploiting and executing decisions, it should primarily reside in the sales organisation. This will make the feedback from the markets more direct and ensure buy-in from the sales organisation by “being one of us”. The strength in the sales organisation comes into play when trying to execute on incremental improvements (exploiting).