At the start of a business venture, you can set revenue targets based on prior market research, estimated costs of doing business, desired profit margin, and a number of other factors. However, once you open a store and start interfacing with customers, you just might have to rethink all these objectives.
Price is a crucial part of marketing strategies, and in pursuit of growth amidst ever-changing consumer demands, it becomes a more complex aspect of the business. Even with digital technologies deployed, you can’t peek into every buyer’s head and fully understand how they came to that decision.
In order to anticipate every emerging consumer trend and react accordingly, it helps to be able to compare internal and external data and draw valuable insights from both sets. So how exactly can you use this more data-driven approach to achieve optimum pricing and better revenue management:
Localize pricesAs you reach out to a wider range of customers, you’re bound to encounter more fragments, each with its own unique needs. Different customer groups may expect different prices due to a number of factors. These can include the presence of numerous options to choose from, awareness of the environmental impact of products, work, and recreational culture, etc.
These render the conventional single pricing methods obsolete. Therefore, for any metrics you track, it is imperative to note the variations in figures and reflect these discoveries in pricing. Using artificial intelligence without leaving any room for nuance can result in extrapolations that are out of touch with the actual trends on the ground.
Avoid impulsive pricingIn past years, a retailer limited to physical walk-in traffic could easily come under pressure when a much larger retailer sets up shop within the vicinity. This would push many of them to try and match their prices with those of the new entrant in order to remain competitive.
Unfortunately, such reactive efforts are usually short-sighted and very misguided. Large entities may be able to sell at a lower price for a prolonged period due to economies of scale. In other cases, lower prices may just be a temporary customer acquisition move that isn’t sustainable in the long run.
Reactive pricing may also not take into account any seasonal changes or future trends that could prompt price hikes that unsettle customers. In that respect, retailers ought to transition from price-matching that is specific to a competitor’s price and adopt a more wholesome and automated matching method.
This can enable them to identify areas where they can be on par with or gain an edge over the competition.
How technology comes in· By using business intelligence tools, retailers can gain better control over the collection, processing, storing and retrieving of internal data. This in turn increases the data’s integrity, making it more suitable for guiding business decisions.
· Managers and directors who may not be so conversant in-depth data analysis and development of complex models can still spot patterns and correlations through user-friendly interfaces without coding.
· Technology can also offer more cost-effective alternatives to the slower manual sourcing of competitors’ prices and other external data. This allows for faster responses to changing industry trends based on more accurate information. Subsequently, retailers whose low investment budgets limit planning can remain competitive over longer periods.
With a SaaS platform like GoalProfit, you can take advantage of its data management capabilities and multiple pricing rules to keep track of numerous factors and apply them to various pricing strategies. You can also couple its reporting and collaborative approval features to achieve greater transparency.
To learn more about the price optimization tactics that GoalProfit can facilitate in the pursuit of incremental profits, you can book a demo here.