PRICING ANALYTICS
Our Approach
Price as an instrument and its effect on profit is often viewed through a flawed veil. The notion that few levers have as much power to influence profitability as pricing, is only a half-truth. Profits may respond with sensitivity such that a small change in price will result in a disproportionate change in profit however the opposite may also be true. The ability to analyze price strategy in relation to elasticity and cross-selling is critical. Utilizing our ROI Insight™ we help clients position themselves and their products with the optimal pricing strategy taking all the variables in to account.
Pricing Analytics Helps Our Clients Get Answers to the Following:
To what extent is promotional pricing used? What impact is the strategy having on revenue and profitability? What is the optimal level, frequency and duration for promotional pricing?
What is the optimal level of pricing and pricing cadence for a product?
How will sales and profits of different consumer segments be impacted by price variations? How do we optimize for each segment?
How will pricing changes affect not only the purchase of the product but other consumer behavior such as overall basket size, basket composition, frequency of visits, and interval between visits?
What is the impact of the pricing level, pricing duration and pricing frequency of a product on other categories or products? Is there a halo or cannibalization effect?
Promotion Mix Modeling
We work with clients in the following ways:
Analyze the effect of pricing decisions on the volume sales of the promoted product as well as the impact on other products in the consumer's basket.
Determine the impact of promotion pricing for a particular product for the size and nature of the consumers basket composition.
Asses the implications of product pricing on "pulling feet" in to the store, frequency of repeat visits and the duration of visits.
Evaluate the impact of pricing of product X on substitute and complimentary products.
Pricing Elasticity and Optimization
We work with clients in the following ways:
Determine the optimal price for a product where profitability is maximized given its price elasticity and cross price elasticity of substitutes.
Evaluate the effect of promotional incentives such as supplier rebates on determining the optimal price in relation to profit. This would be in the context of price elasticity modeling.
These variables typically need to be analyzed holistically since one factor directly affects another. Our proprietary ROI Insight™ analytics modeling informs these results.
Sample Case Studies
Assisted an international leading mass retailer in understanding the impacts of pricing strategy on their market entry into a new geography given its impact on consumer behavior and resultant product sales and profitability. The results helped to inform and shed light on an internal debate that the company had regarding the value of certain price promotions related to specific products.
Assisted a retail chain to understand the impact of different price frequencies and price elasticity of various products and its associated implications for how to optimize profitability.
Utilized Loyalty data to analyze frequency of consumer visits, interval between visits and the impact of tactical Marketing decisions on the consumer's basket.
Technology and Systems
Backed by our technology and systems we mine and analyze multi-terabyte sets of data using distinctive methods that require immense computer power. A solid team of analysts, statisticians and programmers combined with our proprietary ROI Insight™ models help predict and align the greatest returns and value with our clients goals.
