EURO and Pricing: Development of a European Price Corridor

EURO and Pricing: Development of a European Price Corridor Presentation for the ICM Conference "European & Global Pricing" 18th & 19th January 2000, Brussels SIMON w KUCHER & PARTNERS Strategy & Marketing Consultants Bonn Office Haydnstr. 36 D - 53115 Bonn Tel: ++49-02 28/98 43 315 Fax: ++49-02 28/98 43 320 E-mail: Bonn@simon-kucher.com Internet: http://www.simon-kucher.com January 2000 SIMON w KUCHER & PARTNERS Strategy & Marketing Consultants Consulting Areas: Regions: • Strategy Global Scope • Marketing Focus Europe and USA (Projects in 30 countries) • Value-to-Customer and Pricing • Economic M&A-Support 121 • Implementation Size: 99 82 125 Employees 51 60 40 30 Industries: 9 16 20 20 24 3 4 5 Partners: 1985 19 86 1987 1988 1989 1990 1991 1992 1993 1994 1995 199 6 1997 19 98 1999 • Automotive, Transportation • Chemicals Hermann Simon, Ph.D. (Chairman and CEO) • Health Industries (Pharmaceutical, Medical Devices) Eckhard Kucher, Ph.D. (Managing Director, Bonn) • Industrial Goods (Machinery, Electro) Klaus Hilleke, Ph.D. (Managing Director, Cambridge) • High Tech (Hardware/Software) Karl-Heinz Sebastian, Ph.D. • Telecommunications Georg Tacke, Ph.D. • Energy/Utilities Michael Laker, Ph.D. (Managing Director, Vienna) • Services Bernhard Ebel, Ph.D. (Managing Director, Paris) • Consumer Goods Bernhard Böffgen, MBA • Trade/Retail Dieter Lauszus, M.A., MBA (Managing Director, Munich) Visit us on the world-wide web: http:\\www.simon-kucher.com SIMON w KUCHER & PARTNERS Strategy & Marketing Consultants GmbH Bonn: Haydnstrasse 36 - D-53115 Bonn - Tel: ++49/(0)228/98 43-0 - Fax: ++49/(0)228/98 43 120 - bonn@simon-kucher.com Cambridge: One Cambridge Center, Cambridge, MA 01242 USA - Tel: ++1 617 576 2750 - Fax: ++1 617 576 27 51 - cambridge@simon-kucher.com Vienna: Kaerntnerstrasse 7 - A-1010 Vienna - Tel: ++43/(0)1/51 25 74 40 - Fax: ++43/(0)1/51 25 74 411 - wien@simon-kucher.com München: Beethovenstrasse 12 - D-80336 Munich - Tel: ++49/(0)89/54 47 93-0 - Fax: ++49/(0)89/54 47 93-50 - muenchen@simon-kucher.com Paris: New in 2000 SIMON w KUCHER & PARTNERS (0G01X003) P 2 -2- Overview • Current Situation and European Pricing Realities • Price Differentiation and Harmonisation Factors • Options for Strategic European Pricing • Procedure for the Development of a European Pricing Strategy • Condition Systems and Implementational Aspects for the European Price Corridor SIMON w KUCHER & PARTNERS (0G01X003) P 3 -3- What ist the EURO? • The national currencies will be replaced by one common currency. • All financial transactions, invoices, and reports will be done "in EURO" rather than in local currencies. • EURO bank notes and coins will replace all money from the "penny" to the DM1000 bill. • Single money and capital markets, no differences in interest rates between countries. SIMON w KUCHER & PARTNERS (0G01X003) P 4 -4- The Road to the EURO 01/01/1999 01/01/2002 01/07/2002 Start of EURO as End of currency cash currency union currency transition Big Bang? Cash Cash Cash National currency and currency and currency and Currency book money book money book money Cash Cash Book EURO currency and currency and money book money book money SIMON w KUCHER & PARTNERS (0G01X003) P 5 -5- European Currency Union • One currency = EURO • Uniform currency policy = Stability pact • One central bank = ECB • Linear transformation of national currencies • Relative prices remain unvaried The European Currency Union is not a currency reform! SIMON w KUCHER & PARTNERS (0G01X003) P 6 -6- European Pricing Realities - Examples Coca Cola, 1.5 l Marlboro Red Nutella 400 g Price (ECU) Price (ECU) Price (ECU) 3.