A leading retailer wanted to make scientific pricing decisions to optimize its margins, sales and the price-perception of its retail shoppers. This meant being able to evaluate dynamic pricing scenarios to identify the most optimal pricing decisions for its products.
The client partnered with Fractal Analytics to create a robust and comprehensive tool to encompass a whole host of retailers and competitors pricing information, costs and margins. The solution included the creation of a simulator to measure the impacts of pricing decisions on margins and market share—at category levels and finer levels across various markets. 125 categories were analyzed over a period of 18 months. The client also overlaid Key Value Item (KVI) and price elasticity to fine-tune the decision making process.
The clients dynamic pricing model helped generate an incremental profit of $12MM (estimated) for the categories. By implementing rule based pricing, the client also increased customer traffic and enhanced customer value perception.