Inflation is an ongoing phenomena. However, the prices of products can not change every day, unless you are dealing in commodities. The pricing managers usually review prices once in year. As usual there are fears of customers drifting away, if the price increase is too high.
To this complex mix let us add issues like recession and intensity of the competition.
A pricing manager needs a set of thumb rules that help him increase the prices in a differentiated manner. This increase should be such that it has minimal impact on the financials of the company.
What is Price Updater Tool ? Pricology’s Price Updater Tool helps the clients develop the rules that can be used to conduct the price changes. These are rules based market factors such as price perception, competitor’s prices, inflation, elasticity, lift and value gap relationship between products, value gap between channels.
How is it done? One of the key ingredients of price updates is the understanding of price elasticity of the individual products. In case the assortment is large, the products with similar elasticises are grouped together.
Another key data point is the value difference between competing products as perceived by the customer. These value differences help us find the new prices with reference to an anchor product.
We also capture the inter-relationship between product sales. So any product that increases the foot falls need to be looked at carefully before we increase its price.
All these data points are passed on the the price updater engine, which uses a set of proprietary algorithms to suggest price changes and the consequent impact in terms of sales and profits.
How does it help the clients? The Price Updater Tool suggests price increase along with number of tranches in which the changes should be made. It also suggests the items whose prices deserve a higher manual scrutiny.
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