Pricing commodities: what you see is not what you get

Rival commodity companies of roughly the same scale now find themselves with cost curves of roughly equal slope. Volume, average cost, and market price are no longer the key drivers of profit, and chasing tonnage has ceased to be a viable route to profitable growth. Companies must instead turn to new approaches in sales and marketing. Many of these approaches have long been familiar to managers in consumer goods industries. Yet applying them in commodity markets can make a dramatic impact on the bottom line. McKinsey's experience has shown that unexploited pricing and marketing opportunities exist on the order of 5%-10% of return on sales.