The X Future
Cupertino, CA, USA
Use Case Collaborators
Devanshu Bansal
Cofounder
Champion
db@thexfuture.com
A machine learning tool that increases sales, protects margins and allows brands to reprice and carry out promotions with confidence.
Published
Last Updated: Wed Jun 08 2022
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Problem Statement
Product pricing and running an optimal promotion are one of the most critical decisions brands often take. As far as pricing is considered, a lot of brands currently rely on in-store testing, sales history for similar products, and traditional competitive analysis to determine pricing for their products. However, having a manual repricing strategy is not scalable for enterprise businesses. Human errors and inefficiencies multiply as brands grow, which draws resources away from important operations, to deal with increasingly complex issues. Alternatively, despite the advances in digitalization across all sales channels, trade promotions continue to remain something most corporations are not entirely certain of, as far as their effectiveness or achieved ROI is concerned. Lack of transparency regarding their concrete impact on sales and profitability can prove to be a huge problem, as trade promotions represent an important cost factor for any brand. In today’s data-driven world, brands require a strategy that creates value by intelligently linking pricing and promotions based on optimal price setting and an efficient promotion design. On the pricing front, brands need a strong automated e-commerce pricing strategy powered by an intelligent pricing engine which can deliver instant, exact, and optimized prices to their customers. To further maximize the effects of an optimal pricing strategy, brands need a promotion optimization tool that can prevent multiple pitfalls in planning and running promo campaigns, align their promo campaigns with strategic business goals, predict promo scenario outcomes and plan a market positioning with an AI & ML based approach. With competitors just a click away from everyone, brands imperatively need an optimal data driven pricing and promotion strategy that can successfully outsmart the competitors by offering goods and services at the best possible prices for any given circumstances, whilst aligning with business goals.
Description
Brands can develop an optimal pricing and promo strategy by adopting the following solutions:
- An AI-based solution that will continuously test untried prices and analyses how shoppers will react to each.
- An AI-driven tool that constantly monitors prices of competitors’ and identical looking products all over the web, revisits their historical prices, analyses their pricing trends and traces their price movements in real-time.
- A promotion analytical tool that derives actionable insights revealing expected horizontal and vertical sales cannibalization, targets and calculates promotion ROI on a SKU and category level, tests and predicts various promo scenarios, etc.
- An AI tool that derives a price by quantifying the value of the product, to the consumer by performing data analytics on target audience demographics, market position, price elasticity, etc.
- A repricing tool that uses AI to automatically re-prices on the basis of the brand’s sales velocity, stock levels, inventory visibility, pricing history and sell-through targets.
- An AI based pricing tool that will segment the brand's customer traffic and offer personally tailored prices and discounts to each customer, by factoring variables such as the type of customer, demographics, his shopping behavior, geography, etc.
By implementing the above solutions a brand will achieve the following:
- The ability to make instant data driven pricing decisions and take advantage of market gaps left by competitors, and convert all shoppers into buyers.
- The ability to track inventory status, product movements, day-to-day stock levels and make pricing decisions accordingly.
- The capability of creating a value-based pricing strategy that’s flexible, supports the brand’s image, and considers all external factors such as the target audience, greater market, and product specifications.
- The ability to execute a perfect product promotion by evaluating past campaigns and providing insights that will further optimize and contribute to the future promos' sustainability with the help of advanced ML based algorithms.
- The ability to extract direct and indirect competitor’s historical price data and uncover their long-term strategies and develop data-driven counter-strategies.
- The ability to quantify the sensitivity of the consumers to change in products’ prices.
- The ability to target each individual buyer with a price that matches their personal buying threshold in real-time, by analyzing individual based data combined with the broader market.