People often mistakenly think that Price Optimisation is the same as price manipulation. Nothing could be further than the truth.
It is often said the price of a brand defines it, so price is important to a brand’s identity.
It is about maintaining a competitive position and not devaluing your brand
Whatever your pricing position, you need strategies to defend it in the face of competition. How you do that across 100s or 1000’s of products you sell is part of the ‘magic’ of price optimisation.
It is about maximising cash margin from any given category
Not all products in a category perform equally. Some are leaders, others are sell-along products, some are price elastic, others are not. Some create cannibalisation and others have halo effects. And often within any category or across categories you have PRICE RELATIONSHIPS AND PRICE ARCHITECTURES.
Price Optimisation is about maximising the cash margin from any one category
Pricing is often used to drive sell-through
If you have overbought, then the answer is to promote or markdown in order to sell-through stock. We help retailers minimise the level of discount needed to achieve a given sell-through target, through optimisation of PROMOTIONS AND MARKDOWNS.
When pricing you need to stay compliant
Compliance is often driven by the brands you represent or by markets you operate in and regulation in those markets or for rules you have defined for pricing relationships or price architectures. Even truer if you are doing ‘differential pricing’. When you make price changes you need to make sure you stay compliant with YOUR RULES and/or external rules.
In some territories you can operate ‘differential pricing’
This is very common in Spain, Portugal, Italy, France, South and North America where the same product can be priced differently in different locations. Of course it makes pricing even harder, and Price Optimisation more critical.
It's all about driving sales and maintaining market share
Get pricing wrong and you will lose sales and market share. Get pricing right and you will maintain sales and market share even in a competitive environment. People think its all about ‘product pricing’, but more and more its about ‘customer pricing’. As we get more customer information the smarter we can be in choosing the right pricing strategies.
Price optimisation can have a huge impact. For example, with this strategy we have helped a grocery retailer significantly move margin over a period of time.