Reinventing Your Business Model (RYBM)

The old marketing paradigm has undergone a radical change — rather than setting up assets and supplies to create a specific offer aimed at the customer via a selected channel, the formula has been turned around (Kotier, Jain and Maesincee, 2002), and it is now the customers who clearly state what they want, the format, the price they are willing to pay at any given time and the choice of purchase channel. Companies who can take on all this, have to identify the supplies and assets necessary for production. So the investment and production model is reversed, with the offer now being based on what the customer demands. Price has gone from being just one of the important attributes of the product to being a key driver in the decision-making process. From now on it is produced separately, insofar as the business is able to base a price on consumer value. Strategic pricing will mean coordinating marketing interrelations and financial decisions to arrive at profitable prices. To achieve this, there has to be a new focus, a strategic stimulus that creates interdepartmental coherence in marketing and finance and across the rest of the organisation, based on: understanding segments according to variables and reference factors; identifying the company’s competitive advantages in order to focus on the target segment; understanding the cost structure behind the new strategy; taking into account the competitors and their competitive capacity; setting different prices for each offer, according to price sensitivity; price management based on integration of strategic objectives, bearing in mind the product life cycle and seeking maximum returns at each stage (Valls and Alfaro, 2008); trying to anticipate change, technological and otherwise, which can alter previous models substantially by influencing the value chain.