There's no area of your company -- or your future -- that isn't affected by pricing -- and, with pricing and assortment intelligence technology and price tracking capability developing at warp-speed, that becomes more and more challenging every second. Deloitte analysts in 2007 observed that companies that integrated their pricing efforts outperformed those who didn't -- and, perhaps most important, that "a one percent price increase, assuming no change in volume, could boost a company’s operating profits by 11.1 percent." (Deloitte, Getting Pricing Right; and The Problem With Pricing, It's You).
In order to achieve these percentages, retailers must set pricing strategy, utilize pricing technology, define and execute consistent pricing, oversee the flow of price information throughout the company, and measure and report on price performance.
Today's retailers also must factor-in today's ultra-connected consumer, the use of mobile devices, the demographics of the evolving "millennials" generation, the tools -- and the need for staff who speak the language, to help with analysis and technology, as well as deal with the customers. For a good review of these factors, check out our blog post, 10 Important Things “Retail Winners” Know About Technologies, Empowered Consumers & Product Assortment," (based on RSR Benchmark 2012 retail research).
Five peerless pricing procedures every retailer needs to use to become, and stay, competitive are: Strategy, Technology, Execution, Optimization, and Analytics:
1. Pricing Strategy: You have to create a set of strategies of how you want to maximize your profits, i.e. The principles behind your company's efforts to price goods and services comprise your pricing strategy. As we've discussed in many of our posts, pricing strategies may be defined for a combination of specific products, channels, customer segments, geographies, and more. Pricing strategy also means defining your position, such as, “Our products never go on sale," or "Everyday low prices."
2. Pricing Technology: Today's (and tomorrow's) pricing technology gives retailers capabilities they never had before -- for competitive pricing and for profit. A great deal of the information retailers need to compete is discoverable through competitor price monitoring, competitive tracking, and competitive pricing intelligence. A pricing intelligence tool provides the data you need to optimize and analyze, then make the best business, pricing, and promoting decisions for your company.
3. Pricing Strategy Execution: After strategy and technology comes execution -- the policies and procedures by which the company delivers its prices to the marketplace.
4. Price Optimization: “Optimization” means using information to achieve the most profitable price for a good or service. Using the information gathered through pricing intelligence solutions, companies can develop profit-boosting, logical strategies, such as discontinuing unprofitable products, changing pricing policies, and adjusting prices upward or downward to their most profitable levels,
5. Pricing Analytics: Pricing intelligence tools make it possible for retailers to analyze, understand, and chart how to price in order to meet and beat both competition and costs. This technology rapidly possesses more and more powerful analytics features for retailers to quickly judge how competitive their pricing really is. Based on historical information on customers, marketplace and competitors, retailers can use the collected data for product life cycle intelligence, industry benchmarking, and recommendative and predictive capabilities.
Bottom Line For Your Bottom Line:
With powerful price and assortment intelligence solutions, retailers can price-monitor their competitors' prices and assortment 24/7 -- and price more competitively on a regular, ongoing, and more profitable basis. Integrating the capabilities of your organization with the ongoing, effective use of pricing and assortment intelligence technology is the secret to your retail profit and success.