- 1.1 Introduction
- 1.2 Who Should Read This Book and How They Should Read It
- 1.3 Why Target Pricing Operations
- 1.4 Pricing Challenges and Six Sigma Pricing
- 1.5 What Six Sigma Pricing Is
- 1.6 What Six Sigma Pricing Is Not
- 1.7 Summary
1.2 Who Should Read This Book and How They Should Read It
This book has four parts. Part I is about the motivation behind our approach and the payoff in improving pricing operations. We recommend this part to all readers. Part II provides basics of pricing operations as well as basics of Six Sigma. It will be particularly useful for MBA students or others new to pricing. Part III provides details of applying "Six Sigma Pricing," as we call our adaptation to Six Sigma regarding pricing. It is especially relevant for those who will be carrying out or overseeing such projects. This part is the heart of this book, showing how you can use a fact-and-data-based approach to improve operations by designing better processes and controls. The final part, Part IV, is about enterprise-wide deployment of Six Sigma projects and targets senior managers who need to understand enterprisewide ramifications.
The key target audience for the book are business leaders who would like to instill internal discipline and improved capability for pricing. Senior managers will learn how they can improve realized prices by bringing pricing under control. CFOs and other senior managers working on Sarbanes-Oxley issues can validate and set controls on their companies' sales or compensation processes, if related to pricing in any way, using the principles described in this book. For these managers, Parts I, II, and IV of the book should be particularly relevant.
Part III of the book provides the details for applying Six Sigma Pricing or other fact-and-data-based methodologies that improve internal pricing processes, which should be very helpful for mid-level managers involved in carrying out or overseeing Six Sigma Pricing projects. A detailed example called "Acme," based on our experience with a few different companies, supports each chapter in this part. Managers will also find supporting evidence for building a business case for such projects in Part I as well as lists of business processes in Part II.
Pricing practitioners and strategists within companies can use this book to bring colleagues together from various functions to explain pricing operations and to define roles in order to streamline pricing within the company among different functions and between the company and its customers. They can view Six Sigma Pricing as a framework to help align multiple functions to common objectives and help functions work together. They should at least skim through Parts I and II to understand how pricing operations can support or foul up any pricing strategy. They can then read Part III to see how to improve internal pricing processes, and they may find Part IV useful in drawing up enterprise-wide plans for improving pricing operations.
Consultants with pricing backgrounds will discover a practical approach to help their clients manage pricing operations better, thereby actualizing the pricing strategies they are recommending. These consultants already have tools and frameworks to understand the marketplace and to extract better prices. They can enhance their value to clients also by considering internal processes and ways to improve realized prices consistently. For them, Parts III and IV can be quite useful, while Part II can help delineate internal and external aspects of pricing.
Six Sigma experts will find in this book yet another domain within the enterprise to apply their expertise. These experts have made tremendous and well-documented contributions to the organization, not just in manufacturing but for such varied services as internal audit, customer service, and IT services.4 These experts will find that using Six Sigma for pricing can have a huge impact even with small projects. They should read the chapters on pricing and pricing operations in Part II of this book carefully to familiarize themselves before they get into Part III to see how their Six Sigma expertise applies to pricing.
Finally, business school students, primarily those in MBA programs and those with marketing interests, can also benefit. Business schools are sometimes accused of emphasizing theory to the neglect of practice.5 Our book addresses two gaps: We introduce students to pricing operations as a marketing topic and in the application of an operations management tool for process improvement, namely Six Sigma. Both Part II and III should be part of the same course. The final Part IV would be especially valuable if supported by case studies involving enterprise-wide deployment of Six Sigma, TQM, or Lean Manufacturing.