The Trump administration's plan to impose a considerable tariff on products imported from Mexico and Canada was pause for 30 days, and the White House announced on Monday night. Development increases the time to plan companies, but US companies need to be in a hurry to prepare. For example, tariffs on products from China are still being played. China has announced retaliation tariffs on imports of crude oil, agricultural machinery, and trucks from the United States.
A wide range of taxes on trade can support many US companies' price setting strategies. Some domestic companies will benefit from larger pricing power because international competitors are facing costs. Others will see that the price can be applied by the customs duties that have passed the finished goods and parts imported from other countries. Also, in a specific US market, domestic producers may be challenged by new low -cost competitors.
How does smart companies react? CFO is used to adjusting the price setting when dealing with the sustainable inflation game of the country, but the change in the price setting strategy due to tariffs has been dealt with by CFOs and its market for the past few years. Is different, Adam Echter says. Partner and group lead in the industrial sector of the consultant company Simon-Kucher.
For example, tariffs are mainly unpredictable and are often more materials. In addition, as the Monday events show, the government can turn on /off (or delay them quickly).
How do CFO maintain agile, adjust prices, and maintain market positions, margins, and excellent customers? Talk about chief executive officer I think it is wise for CFOS to follow the Echter on January 23.
Become an agile
Echter says that being ready to act quickly according to tariffs is a competitive advantage. Since customers do not accept the price change in anticipation of the price, it is necessary to prepare a price setting when the tariff is enabled.
Organizations can roll the ball, for example, whether to absorb the cost of duties for products imported from Mexico or products or customers to customers or customers. Domestic sellers can start analyzing whether they are unanimous for the rise due to tariffs by foreign competitors.
“I have all the rights that fit the tariff,” says Echter. “It's a non -complicated and general response, and customs duties are one of the reasons why everyone can pay more.”
To prepare, Echter encourages managers to invest in the price setting team instead of treating the price as an ad hoc function. “I go to the team tomorrow and ask,” Who is the price setting? “And their answer is that” 10 people are 10 %. ” That way, no one has set the price, “he says.
Use additional charges
Flexible price setting models can help companies adapt to cost changes without tinkering with basic prices. According to Echter, consult a sales team about the potential of Surcharges. There are three or four additional charges, such as a system, for example, a specific region, material input, fuel, or shipping. “It's shocking to see the number of CFOs that can't pay extra to the invoice,” says Echter. “It's a systematic change that many companies are ready to do.”
Please be careful about the temporary price abnormality …
Customs duties also bring risks to the domestic market. They say Echter says that low -cost foreign competitors can cause global trade flow that leads to the inflow of the United States. Consider China's reaction to China's potential 10 % tariffs on the US tariff on importing China. As a result, the Eve assumes that if Chinese products cannot find a house here, they may find a way to Europe. European producers who are narrowed down to competition may create sales to look at the healthier US market.
“If a high -quality German machine appears in your backyard and it is half of your price, you need to ask yourself: Is this really a long -term strategy, or just me? Are you looking at what you didn't have? ” CFO says that they need to monitor these potential turmoil and filter signals from noise.
… But we will maintain the price discipline
It is attractive to aggressively agree with low prices, but Echter advises dramatic price reductions. He says that the target discount, flexible payment conditions, and service enhancements are ways to maintain competitiveness without destroying the price position.
“Don't let the world know that you can lower the price,” says the Eactor. “It indicates the collapse of a large -scale price [shows] You are chasing everyone. It confuses your sales representative and your customer. ”
Create a message carefully
A clear communication is required to raise the price of products that greatly affect the impact of prices (high elasticity). “Most people are not excited about the rise in prices, but there is a big difference in understanding emotional reactions and reality,” says Echter. Flavoring prices related to legitimate factors, such as labor costs, supply chain confusion, and rapid input prices, can be more attractive for customers.
“Professional procurements are not excited to hear it, but they will accept it,” says Echter.
There is hope that some of Trump's tariffs will not be realized, but the Eactor does not recommend a strategy 10 days before the development of Monday night, “Waiting and wants to disappear.” yeah.
“I saw the company trying to endure when inflation came,” said Echter. It is said that many of these companies have acquired or bankrupt, just bringing their prices to gain market share and gaining market share.
