October 4, 2015

Optimized Pricing Mastery: Tools Are Only as Good as the Analyst Who Use Them

Insider, Price Optimization

Fuel retailers used to choose sites based solely on gut instinct. Price changes were made with a toss of the coin. Those days are gone. The stakes are too high. Fuel retailers managing multiple brands and growing networks in markets with competitors on every corner turn to data science and automated tools to give them objective intelligence and crucial decision support.

When it comes to pricing, no matter where you go in the world, the basics are essentially the same. Something triggers the need for a price change, a decision is made about the price change, and the new price is sent to the site. Talk with pricing teams from Serbia, Italy, Germany, Finland, Spain, Malaysia or Mozambique, and you discover this—even though their ways of accomplishing that process are probably different. 

So the decision to go from manual, in-house systems to a third-party tool can seem like a shortcut to efficiency, consistency and predictable performance. Turn on the system and let it make all the decisions. Easy, right? But any pricing system—including Kalibrate’s—is only as effective as the analysts using it. 

A pricing system takes the emotion out of the process by prescribing optimized choices. But what is “optimized”? That depends on your analysts understanding strategy and building it into their thinking at every step of the way. A pricing system doesn’t make analysts obsolete. It should elevate their value and give them the objective intelligence and support they need to price consistently and confidently. 

 

KEY CONCEPT: 4 Stages of Pricing Mastery

Stage 1 – Beginner Analyst can execute manual pricing: At this stage, a pricing analyst understands how to create and deploy prices, possibly from a spreadsheet system or basic pricing software that is not adaptable or scalable. This is the first step in taking the emotion out of pricing decisions. 

Stage 2 – Learner Analyst is in control of simple rules-based pricing: With a software tool, rules-based pricing enables an analyst to work from more than gut instinct. The analyst can set more prices faster. This is the entry point for becoming competitive in dynamic pricing.   

Stage 3 – Achiever Analyst can confidently execute optimal prices: Optimal pricing is a step up in sophistication from simple rules. Pricing analysts use their pricing tools to balance a number of competing market forces—like traffic, competitor pricing and consumer buying patterns—to dynamically generate the right price at the right time of day at the right location. Many fuel retailers who achieve this stage are content to rest on their laurels. 

Stage 4 – Master Pricing Analyst becomes a strategic asset to the company and can quantify incremental impact to the bottom line. Optimal pricing can be pushed one step further to drive more business value. Pricing practices can be consciously aligned with the company’s overall strategies. Pricing insights can inform location strategies and contribute to necessary innovations to respond to changing market conditions. 

A pricing team operating at their highest potential become undeniable assets to their company. They realize maximum benefit from their company’s pricing investment and can anticipate what they will need when—inevitably—the next wave of change arrives.

 
Share this: