Pricing Analytics: Why It is Becoming a Business Imperative?

Pricing Analytics

Pricing Analytics

How can pricing analytics help retailers generate more marketing revenue?

Today’s market is very complex and competitive. Increasing market competition and staying relevant and competitive has enabled CPG and retail companies to continue to explore new approaches that can help drive more revenue. Companies nowadays are increasingly focusing on predicting and speculating about their customers’ motivations, needs, values and willingness to pay. With all these, they are missing out on real opportunities to bolster their revenue, lower acquisition costs, and tackle churn. This is where pricing analytics comes in. It can help businesses understand how price changes will influence and affect their overall business and optimize their pricing strategy for maximum gains.

Major key market players already capitalize on pricing analytics based on customer demand and behavior. For instance, ride-sharing companies. These companies charge higher prices during peak times than normal times and days. This pricing model is typically made in concern with the algorithm which manages supply and demand. Walmart, in another example, applies the ‘Everyday low Pricing’ strategy to offer low prices to its customer. The strategy helped the retail giant to fortify their sales and customer loyalty.

Certainly, pricing analytics help retailers and marketers to drive more revenue, but creating optimized pricing and promotion strategies is challenging, especially in a digital world where customers use omnichannel and have access to compare prices and deals. Leveraging analytics solutions can be effective for companies to get their pricing right. Many large companies have even formed pricing sciences divisions in their organizations.

 

Significance of Pricing Analytics

The right amalgamation of pricing and analytics provides CPG and retail business with a mechanism to highlight such insights, allowing marketers to improve business value. Pricing analytics can also help them better understand the factors that affect profitability at a granular level. Thus, as a slight change in pricing can draw big profit margins, pricing analytics will impact businesses and boost revenues in many ways.

It has the potential to assist marketers to learn about their customers through simple analytical tools that visualize customer segmentation and key drivers of past performance. It leverages customer insights to set an optimal ideal price and perform analyses to see how customers respond to different pricing options. Using pricing analytics tools, organizations can envision extra revenue and quick wins while detecting faults. They can also drive promotional effectiveness by identifying market dynamics and analyzing customer data to foresee chances of high profitability.

 

Turn Data into Profits

Modeling better pricing requires an understanding of data. Looking at smaller, germane deal samples is essential, as the factors tied to any one deal can vary, rendering an overarching set of deals useless as a benchmark. According to McKinsey, setting the best prices is not a data challenge; it is an analysis challenge. Forward-looking B2C companies are aware of how to interpret and act on the voluminous amount of data they have. But these companies only manage data, instead of using it for business decisions. Having the right analytics in place can assist them to recognize how factors that are often overlooked like the broader economic situation, product preferences, and sales-representative negotiations, unlock the key enabler of prices for each customer segment and product.