Given the seasonality of purchases and heterogeneity of the customer’s pricing power, many companies use promotions to attract buyers.
Price promotion should be used carefully. If they are used too frequently, it can have cease to be effective as customers begin to take promoted price as the list price.
What is Price Promotion Tool ? Pricology’s Price Promotion Tool helps the clients develop the rules to conduct effective promotions. The tool identifies the items that should be promoted. It also suggests the amount of discounts.
How is it done? The price promotion planning begins with the understanding of price elasticity of the individual products. In case the assortment is large, the products with similar elasticises are grouped together.
Competitor’s offering and prices in the vicinity are also captured in the tool. Additional factors like seasonality and lift of the products are assessed as well.
In order to calculate the cost benefit of a promotion, we need to have a realistic assessment of promotion costs. The cost of promotion is not just the discount offered but also cost of changing the labels, cost of additional staff and that of the communication and advertising.
All these data points are passed on the the promotion engine, which uses a set of proprietary algorithms to suggest items to be promoted along with the discounts and cost benefit analysis.
How does it help the clients? The Promotion Management Tool serves as an effective guide in planning the promotions. It suggests the items that should be promoted along with the discount percentages. The tool helps the managers predict the impact of promotion on profit and revenue. It also identifies the key project management activities, workflows and metrics related to a promotion campaign.
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