Tag: pricing strategy

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Unleashing the Power of Pricing Analytics in Retail | A Customer Success Story

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.

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. (more…)

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5 Best Pricing Strategies to Consider for Your Business

Do u feel that choosing the CTA QZright pricing strategy for your brand is a daunting task? Rest assured, you are not alone in this dilemma. A considerable amount of calculations and brain-storming are involved while setting up the price for a product or service. Companies evaluate various factors such as the costs involved, ROI, competitor pricing, and profit margin to name a few while comparing the types of pricing strategies that are best suited for their offerings. The pricing strategy that you set also has a great impact on the positioning and marketing of your brand. So, it is crucial for companies to carefully evaluate the different types of pricing strategies and weigh the pros and cons of each before finalizing the most suitable option.

Types of Pricing Strategies

The following are five common types of pricing strategies that are followed by top companies while fixing the prices for their offerings:

Penetration pricing

In penetration pricing, brands make the market entry at a comparatively lower price than the competitors. These types of pricing strategies are used to attract more customers and to make the customer switch from current brands existing in the market. Penetration pricing strategies primarily target price-sensitive customers, whose buying decisions are largely based on the product prices. Once companies manage to capture a considerably good market share with penetration pricing, they can slowly start increasing the prices.

Price skimming

These pricing strategies are used by companies while entering into a new and unique market. In the initial stages, the products are priced on the higher end. The whole idea behind such pricing strategies is to maximize the profits for early adopters before competitors enter the market and make the product more price sensitive. By initially pricing the products on the higher end, businesses can not only recover its development costs but also gives the product a perception of being an exclusive and premium product.

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Why Does your Company Need Pricing Analytics?

You set MRSP of $100 for a product and you feel that the sales are not quite picking up. So now, you lower the price and find out that the sales are increasing. You reduce the price further in hope of sales skyrocketing, it increases, albeit not as rapidly as it did before. Now multiple questions arise in the head of the marketer. But the vital question to ask here is, what is the perfect price point to maximize profit. The magic number is not that easy to generate, even if it was, there are multiple variables affecting it on a daily basis. However, companies can get as close to the magic number as possible, for which, pricing analytics is essential. Apart from getting the perfect number why do we needRequest Solution Demo to use pricing analytics?

Analyzing customers

Although there is an abundance of information available to customers today, most companies are still unaware of the habits of their customers. Companies resort to a customer segmentation method, which can help a lot but pricing data goes further. For instance, manufacturers can see improvements in their margin by aligning their pricing along the customer segments. Analyzing past performance can go a long way in improving the present and the future.

Identifying Pricing Opportunities

‘Quick wins’ is one of the ingenious ways of making a profit in a short amount of time by adjusting prices. It can also help identify extra revenue gaining opportunities by fixing the most obvious cases of price misalignment or leakages. Companies can save millions of dollars by identifying pricing opportunity by highlighting unprofitable accounts and realigning the discounts. Although the term may incorporate the word ‘quick’, it often builds the base for long-term pricing efforts and margin increment.

Promotional and pricing planning

Marketing promotion and pricing are usually pre-determined and don’t follow a particular strategy. However, companies employing a pricing strategy closely monitor the market and anticipate the impact of price change or a promotional campaign. Such companies use predictive models to create a forecast and measure the deviations against actual results to keep everything systematic. Using such pricing analytics models allows companies to save millions of dollars by putting an end to ineffective promotions and also give accurate insight on pricing.

Price optimization

With the advent of ERP tools, it is now easier to just implement full-fledged profit optimization tools and manage prices and promotions accordingly. However, one should keep in mind that actually optimizing the pricing is not as straightforward as it looks. Having a sound pricing strategy for a long time helps companies to integrate pricing analytics seamlessly to facilitate price optimization.

Convincing stakeholders

Often, the marketing department has a hard time convincing their marketing plan, promotional plan, and marketing budget to their stakeholders. Pricing decisions are even more problematic when it comes to taking approvals from stakeholders from the sales, finance, marketing, and production department. However, backing such decision with pricing analytics data can change their mindset and facilitate the approval process.


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5 Reasons Why Snubbing Pricing Analytics is a Grave Mistake

Although big data and analytics have become routine phrases for modern businesses, most companies fail miserably when it comes to identifying practical uses for the plethora of data that they possess. Effectively leveraging the data that companies already own can help them quickly identify potential areas to adjust pricing strategies and capture opportunities. Without uncovering and acting upon the opportunities, several companies are leaving millions of dollars of profit on the table. This is where the role of pricing analytics comes into the picture. Pricing analytics enables companies, across all industries, to dramatically improve profitability & market share by defining optimal prices and pricing strategies. Pricing analytics leverages data to understand what drives the customers’ buying decisions and integrates this knowledge to meet the company’s pricingFree demo needs. Here is how deploying pricing analytics for your business will work to your advantage in the long run:

Identifying pricing opportunities

Utilizing pricing analytics tools often allows companies to uncover “quick wins,” or extra revenue and margin that can be generated over a short period by fixing the most obvious cases of price misalignment or leakages. Furthermore, by using pricing analytics, companies can correctly identify the pricing strategies that need to be adopted and the ones that need to be eliminated. Beyond the extra bucks generated in the short term, the quick wins are very often the first building block of a longer-term effort to realign prices and increase margins.

Planning pricing strategies and promotions

Planning and implementing pricing strategies that meet the overall business goals is highly crucial for a firm. Companies have to monitor the market closely and anticipate the impact of a price change or a promotional campaign. Pricing analytics solutions help them to correctly estimate the most feasible pricing strategies that would result in better returns. The right pricing analytics solutions also provide valuable information to businesses to plan their promotions within the budgets allocated.

Improves operational efficiency

Companies often face problems in understanding how to negotiate a price with logistic partners and pricing of resellers based on performance. Pricing analytics tools use data to identify the best prices and quotes that will help maximize ROI and profit margins. Pricing analytics solutions such as contract pricing, sale through pricing, and capacity curve based pricing help in overcoming such issues.

Getting stakeholders to buy into the pricing strategies

Generally speaking, this need applies to all companies, regardless of their industry, size or the degree of sophistication of their pricing strategy. As every pricing manager knows too well, getting all the internal stakeholders (whether from sales, marketing, finance or even production) to agree upon the pricing strategy and execute it accordingly can prove to be a significant challenge. The very fact of backing the approach itself with “cold hard facts” and robust analysis of the data can facilitate this process and get approval from the various stakeholders easily.

Optimize Pricing

Some companies implement full-fledged profit optimization tools by building upon the predictive pricing models they use to manage their prices and promotions. However, it should be noted that the shift from being able to predict what will happen to actually optimizing pricing is far from being straightforward. Businesses that successfully manage the change typically have sound pricing strategies in place for several years and at the same time excel at execution.


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Enhancing Sales Performance with the Help of Pricing Analytics for a Wine and Spirits Manufacturer

In a highly fragmented, technologically inclined market driven by digitally empowered customers with wafer-thin brand loyalties, pricing analytics turns out to be ‘the silver bullet’ to gain a competitive advantage. The lack of a good pricing strategy can create unique challenges and curtail business outcomes in the alcoholic beverages industry. At Quantzig, we help you navigate this competitive marketplace through our advanced pricing analytics solutions.

Maximizing business outcomes with the help of advanced pricing analytics solutions and custom dashboards

Analytics is undoubtedly the backbone of all pricing initiatives and strategies for marketing and promotions. An analytics powered pricing strategy not only helps discover the most profitable customer segments and product groups but also helps businesses to appropriately target them in the most cost-effective manner. Without such a data-driven approach, companies run the risk of missing opportunities to improve productivity, profit margins, and market share.

With the aid of analytics techniques, businesses conducting price change impact assessments can gauge how price changes affect their profitability. Using such an approach they will also be able to weigh up the pricing activities of their competitors and identify countermeasures to keep their marketing costs under control.

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What are the challenges?

Owing to increasing competitive pressures and the rapidly changing geopolitical environment, pricing teams across industries are constantly pressurized to incorporate an analytics-powered strategy to optimize pricing analyticsthe adverse impacts of price changes and fluctuating demands. Changing market trends and shifts in customer demands are not just posing major challenges for companies but are also bringing about major disruptions on a global scale. To tackle such challenges, players in the wine and spirits market are on the constant lookout for better opportunities and new strategies to cut through the competition. In this pricing analytics success story, we have broken down some of the biggest pricing challenges faced by companies in the alcoholic beverages industry.

A leading wine and spirits manufacturer wanted to analyze the impact of different price points on the sales volumes across various channels. The client’s primary concern revolved around assessing the regulatory norms governing the market landscape. They approached Quantzig to leverage its expertise in offering actionable pricing analytics solution to transform their pricing strategy and enhance sales margins.

Key takeaways of this pricing analytics engagement

  • Gain comprehensive insights into the pricing strategies adopted by market leadersWP Cover Image
  • Learn how you can improve sales performance by leveraging pricing analytics
  • Understand the role of pricing analytics and price change impact assessments in simulating scenarios to gauge the impact of price changes on profitability
  • Establish a centralized and consistent approach to effectively monitor price changes
  • Learn how pricing and promotions based on data-driven insights can help you improve MROI

Download a free copy of this pricing analytics case study and gain in-depth knowledge on how we helped a client devise the right pricing strategy for alcoholic beverages.

Our domain knowledge coupled with pricing analytics expertise helps us offer customized solutions to enhance sales performance through a ‘data-driven + analytics powered’ approach.

Along with access to the right sources of data, beverage manufacturers should possess a range of competencies including the right domain knowledge, data mining expertise, and technology for business process excellence. Companies need to ensure that these competencies are in place to fully exploit the power of pricing analytics as a marketing tool.

Want to know how? Request a free demo and know how our solutions can help you devise the right pricing strategy for your products.

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Pricing Analytics Helps a Financial Services Client Reduce Total Marketing Investment by 15%

Over the past few years, firms providing financial services have implemented various strategies to maximize profits. Effective price analysis plays a major role in determining the future of firms in the financial sector.

To optimize the ROI, adopting efficient price analysis strategies would be a good strategy for the providers of financial services. Advanced pricing analytics aimed at business outcomes and customers forms the core of financial services management. It also includes price leveraging and profitability management.

To efficiently achieve their targets regarding cutting down on market investments, companies providing financial services approach experts in price analysis. Price analysis plays the main role in designing a better data analytic methodology for the financial sector. Hence, it is better to implement intelligent market investment strategies.

The Business ChallengeQZ_DEMO

A renowned financial services provider failed to cut down their total market investments in spite of rigorous efforts. The client had implemented various cost optimization techniques, but it did not help them achieve their goal of cutting down on market investments. Cost optimization is a significant challenge for companies providing financial services to its clients. Thus, the client wanted to optimize their investments and devise appropriate measures to keep track of the same. The client also wanted to assess their investment patterns and identify loopholes in market investments. In addition, the client wanted to provide financial services that were customer-centric and devise appropriate strategies to obtain better market value.

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Price Analysis Solution Benefits for the Financial Services Sector:

Quantzig’s price analysis solutions helped the client achieve a 15% reduction in the overall market investment. Price analysis also helped them obtain a detailed insight into their investment patterns and ways to improve their ROI. It also assisted the client in gaining a better idea of the market shares over a period. The reduction in the financial services client’s market investment was the primary deciding factor in determining their future benefits as well.

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Price Analysis Predictive Insights:

  • Facilitates meaningful comparison by quantifying net benefits
  • Advanced scenario modeling helps to avoid costly mistakes
  • Effective business decisions on high priority issues
  • Helps to plan pricing changes and promotions
  • Provides a better clarity on goals
  • Builds business intelligence
  • Maximizes profitability by making efficient tradeoffs
  • Provides a detailed cost structure analysis
  • Assists in achieving long-term profitability

 

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Pricing Analytics Engagement Helps an Industrial Parts Manufacturer to Minimize Raw Material Cost and Optimize Product Pricing

Over the years, the effective pricing of products and goods has become a major concern for organizations, especially for key players in the manufacturing industries. Therefore, to sustain themselves in the competitive environment and meet the right target customers, manufacturing industries across the globe have started leveraging price analysis solutions. Price analysis solutions help manufacturing industries assess customer behavior, preferences, and accordingly set pricing standards. Moreover, the price analysis solutions help manufacturing industries estimate the impact of pricing on sales volume and comprehend the price differentials across markets.

Quantzig’s price analysis solutions assist clients in the manufacturing industries to predict the position of the products against their competitors. Also, the client can effectively estimate price-change triggers based on customer behavior to maximize profitability and revenue. Furthermore, the price analysis solution offered  by Quantzig also helps clients to assess the pricing patterns based on geography.

The Business ChallengeQZ_DEMO

A leading industrial parts manufacturer sourced its raw materials from multiple locations across the globe to gain cost efficiencies between various geographies. They also wanted to improve process performance, reduce the cost of goods sold, identify unproductive services to gain an edge in their price negotiations and maximize margins by minimizing raw material costs. Moreover, their existing portfolio of engineering products was extremely complex and was purchased in small volumes. As a result, the client faced challenges in getting competitive bids from suppliers as there were very few to cater to such specific raw material requirements.

Our Approach

To cater to the client’s detailed category requirements, Quantzig’s team of price analysis experts built a dashboard and identified the required variables from the supply chain, finance, and marketing data marts. They also analyzed primary and secondary processes to understand the number of features of each product, processing time, and raw material costs. Additionally, the price analysis experts compared and analyzed the cost behavior of various products in terms of process, equipment, overheads, and production volumes using statistical graphs.

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Price Analysis Solution Benefits for Manufacturing Industries

Based on their business requirements, the client collaborated with the Quantzig team to develop a solution to improve marketing strategies, price points, enhance product features, and offer customer feedback. The price analysis solution helped the client identify viable alternate materials based on costs to optimize the pricing and make necessary trade-offs wherever possible. Additionally, the client was able to identify the key cost drivers in the early stages of the product’s lifecycle. This helped in minimizing the total costs by 11% and increase profit margins by 6% for the producer.

Price Analysis Solution Predictive Insights:

  • Gain better insight into the cost drivers of products
  • Determine optimal price gaps with respect to competitor products
  • Identify the impact of discounted prices on the sales
  • Leverage the relative price points in the portfolio

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Why it’s Time to Adopt Pricing Analytics

A modern-day consumer has multiple options to choose from the competitive market. Innovations brought about by a brand is being easily imitated, and the level of product differentiation is declining. Companies these days are battling out on the price front with competitive pricing, seasonal discounts, promotional coupons, and flexible financing. However, competing on the price directly affects the revenue, so companies should look at different avenues to maximize revenues from pricing.

Organizations have a large repository of data available to them including historical price and sales figure, price and demand fluctuations, seasonal demands, consumption patterns, and price sensitivity data. The problem arises when companies do not have the necessary time, resources, or expertise to materialize the data into strategic decisions. Pricing analytics assists the company in making effective pricing decisions to increase the profit margin; thus, contributing to the ROI.Ask An Analyst

Optimal Attainable Pricing

With the help of historical data, price sensitivity data, and consumer behavior data the price point of each product could be dynamically set to attain the best price possible. Budget airlines have been using pricing analytics and big data analytics to increase the revenue from each passenger by dynamically changing ticket prices every minute. For instance, the analytics tool can identify that historically there has been a surge in the demand on a particular date, and increase the ticket prices accordingly. When the seat remains unsold, the tool will automatically analyze the demand and reduce ticket prices to ensure sales.

Promotional Planning

Companies can get valuable insights on their historical promotional efficiency and make adjustments to their new promotional campaigns. Pricing analytics tools are so complex that it can test out the effect of promotions on the demand on a smaller scale. Then, by running the predictive analytics tools, it can automatically provide promotional offers for a price-sensitive segment and roll out premium promotions for value-seeking customers.

New Product Pricing

The problem with new product pricing is that if the product price is too high, it won’t sell and if the price is too low, companies lose out on revenue opportunities. Companies rely on traditional methods of pricing by taking into consideration prices of similar products and pricing it lower than those products. Using pricing analytics, companies can set the best price point for the new product in order to maximize revenues and employ a better price skimming strategy.

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Pricing Analytics Study Helps a Food and Beverage Company Build a Strategic Pricing Framework

With rapidly changing tastes and preferences of the consumers, the food and beverage companies are focusing on innovations to shift towards a health conscious and customer-centric environment. To sustain themselves in the competitive environment, it is necessary for food and beverage retailers to understand their customers more than their competition. Companies in this market space are augmenting the adoption of automation, intelligence, anddemo advanced analytics to drive better business performance and competition in the market. The use of pricing analytics also helps the companies identify the target customers and surface customer insights into the products that are aligned with their cultural identity. Consequently, companies in the food and beverage industry also leverage the use of analytics to understand the efficacy of marketing.

Quantzig’s pricing analytics solution helps the client’s cope with the pressures of competition and consumer price sensitivity. In addition, pricing analytics also helps the client increase customer loyalty and improve the pricing performance of the organization.

The Business Challenge

A global conglomerate was facing challenges understanding the landscape, consumer preferences, and competitors in the retail space. The client also wanted to overhaul its revenue management and pricing capabilities to enhance its position in the global retail landscape. The client was also facing challenges understanding the retail landscape in terms of fluctuations in commodity prices and competitors price shifts.

Our Methodology

To understand the pricing methodology, Quantzig’s team of experts collated information obtained from various sources and created a robust framework to leverage these assets. The team further developed an overarching strategic pricing framework and integrated technology and processes to operationalize the framework across the enterprise.

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Pricing Analytics Solutions Benefits

  • Develop a demand mode, which is capable of predicting volume changes
  • Analyze the demand for each brand to determine the consumers’ sensitivity
  • Deploy an optimization model to determine the pricing actions
  • Enable proactive pricing decisions based on the pricing changes

Pricing Analytics Solutions Predictive Insights

  • Improve the results of the company through advanced analytics
  • Improve profitability and increase the overall sales volume
  • Understand value potential and achieve an advantage in revenue management
  • Leverage the relative price points for each brand in the portfolio

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Pricing Analytics for the Pharmaceutical Industry

In the pharmaceutical industry, clinicians, KOLs, payers, and patients play a crucial role in building effective pricing strategy for new products. The pharma companies need a strong understanding of their customers and current market conditions before setting an optimal launch price. The implementation of pricing analytics tool offers holistic insights on the product value, competitors, payer strategies, and customers’ willingness to pay.

One of the major challenges that pricing managers in the pharma industry deal with is getting all the internal stakeholders to agree on the pricing strategy. With pricing analytics, this is tackled as the assessment is a robust way of analyzing data. Quantzig’s pricing analytics assessment identifies the value drivers for products in the same segment and understands how it was perceived to recommend the optimal price. It also offers a solution to get a 360-degree view of the client’s sales to optimize price points.

The Business Challenge

A leading pharma retailer in Europe was facing challenges in setting prices for its products. The client lacked a robust pricing strategy, and mechanisms to track, monitor and manage the prices across different websites in different geographies. They wanted Quantzig’s pricing analytics assessment team to benchmark prices of existing retail products across various categories – personal care, beauty, household, grocery – against competitor products in the same categories in the market and identify which products would form the key price benchmarks.

Our Approach

By assessing sales data, customer feedback, product data, pricing data, and social media data, Quantzig’s analytics team analyzed the business problem. The team captured price adjustments from different websites and systems for consolidation and aggregation to perform price optimization on client’s various products.

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Pricing Analytics Assessment Benefits

  • Shared real-time visibility of product prices, market share, and discounts
  • Created analytical capability to monitor and benchmark prices across geographies
  • Benchmarked product prices against competitor offerings to gain insights into industry standard pricing
  • Analyzed online data for 1000+ price points across the client’s business product portfolio

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Pricing Analytics Predictive Insights

  • Tracked the effect of discounts on sales and the performance trends for top products online
  • Analyzed sales sensitivity of each product based on unit discount
  • Developed pricing strategy based on comparable products from different brands online
  • Analyzed social chatter about products prices and performance
  • Forecasted sales for the client’s products based on current prices

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