On September 19, 2023, we held a pricing seminar "Understanding the Current Situation" to review the prices of current products, goods, and services. On February 27, 2024, we plan to hold a pricing seminar for new products, goods, and services, entitled "New Initiatives. The following is an overview of the "Understanding the Current Situation" seminar, which will focus on reviewing the prices of current products, goods, and services. In recent years, the Japanese economy has seen a widespread trend toward price increases in a wide range of sectors, including food, services, electricity, and gas, in response to soaring raw material and logistics costs. This is due to the following factors

1. Soaring raw material and fuel prices: due to the Corona disaster and Russia's invasion of Ukraine. Global supply shortages and supply-demand imbalances due to the Corona disaster, Russia's invasion of Ukraine, etc.

2. logistics slowdown: international cargo transportation delays due to travel restrictions, container shortages, etc.

3. Labor shortages: Labor shortages due to falling birthrates, aging populations, and a decrease in the number of foreign workers

4. Weakening of the yen: Rising prices of imported goods due to the yen's depreciation against the dollar, euro, etc.

 

Rising prices are a major challenge not only for consumers but also for companies. Companies generally need to take the following measures to cope with increased costs of raw materials, labor, etc. Companies need to select and implement the most appropriate measures according to their own situation and market environment.

1. Price pass-on: Reflecting cost increases in the prices of products, goods, and services

2. Cost reduction: Finding substitutes for raw materials and parts, improving efficiency of production processes and logistics, etc.

3. Value-added enhancement: Adding new functions and features to products and services to enhance brand image and customer satisfaction.

4. Value-added enhancement: Adding new features and functions to products and services to enhance brand image and customer satisfaction In order to cope with rising prices, it is important for companies to first implement price pass-through, considering the current situation.

 

In the "Understanding the Current Situation" section, we explained and addressed the following

 Understanding Cost and Grasping the Current Situation The participants confirmed and understood what elements make up cost of goods and services, how much each element costs each year, and the approximate percentage of each product, commodity, or service.

 From Gross Profit to Sales Price and Selling Price Listing Based on the ideal gross profit and cost of sales, the ideal selling price was identified. Based on these, we created a list of selling prices.

 Clarification of products, goods, and services to be sold (Principle 2.8) The top 20% of transactions and the 20% of products that the company would like to sell in the future were clarified.

 Clarification of products, goods, and services to be sold, their features, and specialties The top 20% of products, goods, and services to be sold, their features, and specialties were described and clarified.

 Prepared materials to explain price review to customers and suppliers Analyzed cost increase factors based on profit and loss statements from previous years, and prepared materials for customers and suppliers explaining price revisions based on the sales price list. The company will use these materials to negotiate prices in the future.

 Initiatives for set sales, regular delivery sales, and online sales outside of your City In order to acquire new sales channels in addition to existing sales channels, the company considered the possibility of selling multiple products, goods, and services in sets that have mutually complementary functions, selling regular subscriptions, and selling online outside of your City.

Price negotiation is necessary to achieve price pass-through. In price negotiations, advance preparation is extremely important. The first step is to present objective evidence, such as cost calculations and market trends, in order to reach an agreement with the ordering company. In price negotiations, it is also necessary to emphasize the importance of the relationship with the other company. In order to build a long-term business relationship, it is important to aim for an agreement that is acceptable to both parties.

Finally, negotiation techniques are also effective in price negotiations. For example, "give the other company several options," "negotiate with a good understanding of the other company's position," and "divide negotiations into short-term and long-term time frames. In order to promote price negotiations, it is generally effective to utilize public support systems. Fukui Prefecture has set up a consultation service at the Fukui Prefecture Subcontracting Kakekomiji and Fukui Prefecture Yorozu Support Center to support price negotiations by small and medium-sized subcontracting firms. In addition, every September and March are designated as "Price Negotiation Promotion Months," and companies on the ordering side are encouraged to cooperate in passing on prices to their suppliers. In times of rising prices, companies that do not have the ability to determine prices are unable to raise product prices even when raw material and labor costs rise, resulting in lower profit margins and, in the worst case scenario, the threat of bankruptcy. To avoid falling into such a situation, it is important for companies to actively collect, analyze, and implement information on advanced approaches taken by other companies on a regular basis so that they can respond flexibly.

In order to survive in this era of rising prices, companies must improve their ability to absorb knowledge that will enable them to collect, analyze, and implement information and respond to change. Companies that feel a strong sense of closure in their current situation and companies that want to be reborn as high value-added companies are encouraged to attend the 3. Thinking about value-added enhancement, please join us for the "New Initiatives" section of the Price Seminar for working on new products, goods, and services. We look forward to seeing you there.