Is your pricing strategy not working? These could be the 4 reasons.
- Choosing a pricing strategy is one of the biggest challenges for any business, as it is the result of complex calculations, research, understanding, and the ability to take risks.
- And even so, once the pricing strategy is defined, it is possible profitability is stressed, out of stocks occur, or its implementation is out of time compared to the competition.
- Here are four possible reasons why your pricing strategy is not working:
- It is essential to understand that retailers are constantly changing their prices.
- Stay ahead of the game by consistently analyzing competitive pricing to find new opportunities for pricing optimization.
- Competitive analysis allows predicting market responses, changes in competitor strategies, and could minimize risk. And through automation and data processing, you can reduce errors in your competitors' price analysis and make sound decisions that prevent your pricing strategy from not working.
- At Prisma, we advocate using a combination of business rules, machine learning, and A / B testing, among other techniques, to deliberately design your pricing strategy and achieve your desired competitive positioning while increasing margins.
- Each SKU or product category has a unique pricing elasticity and thus ad hoc pricing strategies are a must. For example, the demand for a product may or may not vary based on price changes made by the competitor. Setting prices based on the competition is important, but it is not the only aspect that goes into play.
- Retailers must strategically decide which prices should increase and which ones should down. Also consider implementing differentiated prices by: customer segment, sales channel, by category and by product, this will enable you optimize your margins and improve your price image.
- Competitive pricing doesn't necessarily ensure that your sales volumes will be at a desired point.
- If sales volumes are down, check if you are offering the right incentives to your customer base.
- Avoid this by taking specific actions that can increase the value of your products and the willingness to purchase them and to position your image. Some of these best practices include: free shipping, offer "last mile" services, pick up points, give away product samples or offer next purchase discounts.
- All in all, it is not only necessary to monitor competitive pricing but also the incentives they offer to avoid flaws in your pricing strategy.
- More and more, retailers are required to have competitive promotional intelligence.
- Through it, identify trends such as promotional frequency, timing, sources, promotional types, KPI performance, among others.
- By analyzing and understanding the results of past and present promotions, more efficient and personalized promotions can be designed.
- Prisma's Promotions module includes the possibility of identifying promotional overlap, measuring the cannibalization effect, pre and post promotion sales, Marketing ROI, and measuring the incremental profitability of each promotion.
- Implementing the usual “same old” or “what worked in the past” does not guarantee the same results. Retailers must be proactive and stay up to date in this dynamic environment.
- To maximize the effectiveness of your pricing strategy, design data-driven strategies and avoid being guided by past actions or intuition. Having a systematic process for measuring results and evaluating impact is also a must.
- Price optimization is a continuous process that must be constantly adjusted in order to stay ahead of the competition and meet customer needs.
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