About the Client
A major brand in the home furnishings retail sector in Germany.
The Business Challenge
An uncertain economic environment, the rise in new product launches, technological disruptions, and a highly informed and demanding customer base are just a few among the many challenges faced by retailers today. To thrive and stay prepared for the future retailers should consider tapping into the vast datasets to answer crunchy questions that are essential to improve performance in these demanding times. Also, these challenges are directly linked to pricing analytics and the strategies adopted by businesses, which in the real world is a powerful lever that improves a company’s top-line and bottom-line performance. With the proliferation of shopping channels and a decline in customer spending, effective pricing strategies have become a target source for retailers looking to grow organically. While retail industry players realize the critical importance of pricing analytics to drive profitability, identifying the pricing strategies that drive growth still seem to be a daunting task.
Achieving long-lasting success requires businesses to cope with dramatic changes in their competitive environment. That’s where pricing analytics can help them stay ahead of the curve and sustain performance. Unsure of where to start your pricing analytics journey? Get in touch.
The client, a leading player in the German retail industry found itself struggling to improve profitability and demand in a highly complex environment. Hence the retailer approached Quantzig to leverage its pricing analytics expertise to test their in-retail market price elasticity. They wanted to evaluate their pricing strategies to determine the extent to which it had been a drag on their performance. Like the client, many retail companies have reached a point where they realize the importance of data in making decisions, but many haven’t yet stepped up to the challenge of managing data needed to get the pricing right. However, until you do step up, your business may not be able to capitalize on the full potential of pricing analytics.
Top Challenges Faced by the Retailer
Problem Statement 1
The multi-channel business environment coupled with their inefficient pricing strategies was a major roadblock that prevented the client from gaining detailed insights into the internal and external factors affecting productivity at a granular level. Which was also a reason why they failed at distinguishing the most profitable customer/region from the rest.
Problem Statement 2
Owing to competitor price shifts and the dynamism in market prices the retailer found it challenging to retain the original prices of their products.
Problem Statement 3
The lack of dynamic pricing strategies further contributed to huge loses in sales leading to a sharp decline in their market position. Hence the client wanted to leverage pricing analytics to understand the factors affecting their market value.
A commitment to pricing improvement seems easy to make but is challenging to execute. Even well-established retail companies can find themselves coming up with excuses to delay, defer, and deny. Request a FREE proposal to know more about our pricing analytics solutions.
Solutions Offered and Value Delivered
The pricing analytics experts at Quantzig adopted a multi-faceted approach to competitive pricing, integrating the core pricing competencies such as- pricing structure, strategy, execution, governance, advanced analytics, and technology. Guided by robust pricing strategies, our advanced analytics solutions can help identify determine unmet customer needs for retailers to fulfill.
Based on the retail firm’s pricing maturity, the price recommendation offered by our experts revolved around the following phases:
The first step revolved around building a pricing structure and a and roadmap to shore up their current competitive pricing capabilities and progress to the next desired state.
The second phase involved the development of pricing analytics models to effectively manage the enormous amounts of diverse datasets required to get the pricing right. The construction of models to measure price elasticity across 12 different SKU’s, helped reveal the price inelasticity of their products.
Our findings revealed that the overall pricing strategies adopted by the client were inelastic however the pricing strategies for their premium product were found to be highly elastic due to which the price increase in their SKU’s did not drive profitability. Hence, we helped them develop a dynamic pricing strategy aimed at improving profitability across their organization.
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To help the client tackle the challenges we deployed a dedicated team of pricing analytics experts who offered customized pricing solutions aimed at improving profitability. By combing our advanced analytics capability with robust pricing strategies we were successful at developing pricing analytics models that acted as a catalyst for leveraging profitability. In addition to clearly understanding the external and internal factors affecting profitability, the client witnessed a massive turnaround with actual sales exceeding the predicted value by over 15%. The pricing recommendation offered by our pricing analytics experts also enabled them to improve agility in responding to a dynamic competitive environment.
What is Predictive Pricing?
Predictive pricing is a competitive pricing strategy that revolves around assumptions on how competitors are likely to price their products in the future. With such predictions and robust pricing analytics solutions, businesses will be better positioned to price their products faster than their rival, acquiring a top position in the market.
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Why Quantzig’s Pricing Analytics?
Quantzig is a leading analytics service provider, that offers customized solutions to improve organizational growth and profitability across industries. For more than a decade now, Quantzig has been successful in offering customized pricing strategies and pricing analytics solutions that drive overall performance. Our advanced analytics solutions have enabled us to help our clients right from the phase of understanding their datasets to the deployment of pricing strategies. What’s differentiates our services is that we go a step ahead with our pricing analytics services helping our clients to fine-tune the business models and improve organizational performance.