At the IRCE, I was able to sit down with Mihir Kittur, co-founder and Chief Innovation Officer at Ugam, a big data analytics platform that empowers commerce companies to make real-time actions that increase revenue performance. Ugam presented at the event to discuss pricing and how companies could avoid pricing wars. By utilizing consumer demand signals collected online and building them into their clients’ pricing strategies, Ugam has been able to improve category performance by optimizing assortment and content along with price.
Here are 7 Pricing Strategies Defined
- Competitive Price Monitoring is a method of tracking competitor prices to gain a better understanding of retailers’ price positions in the market. Price Intelligence and Competitive Price Monitoring are often used interchangeably.
- Competitive Price Elasticity is the measure of how your sales of a product responds to a change in a competitor’s price.
- Dynamic Pricing is the concept of pricing items based on variable market conditions. It’s the practice of determining prices dynamically (in a fluid manner) based on supply, demand, type of customers and/or other factors, such as weather.
- Price Intelligence is the practice of getting a better understanding of your price position in the market compared to your competition. It allows retailers to be aware of market-level pricing intricacies and have insight into and awareness of their impact on the business.
- Price Optimization is the application of analytics that predict consumer behavior at the micro-market level and establish product availability and price to maximize revenue growth. The primary aim is selling the right product to the right customer at the right time for the right price.
- Rules-Based Pricing is the method of assigning product prices based on rules/formulas. The system helps to instantly implement price changes at any scale and signifcantly reduces pricing maintenance. Dynamic Pricing is implemented through Rules-Based Pricing (i.e., “If competitor’s price drops to X, our price goes to Y,” “If a product is low on inventory, raise the price to Z.”)
- Smart Dynamic Pricing is Dynamic Pricing with an additional level of customer intelligence that factors in Social Signals (e.g., product reviews, Facebook likes, Twitter mentions, etc.)
You can read all about Pricing Intelligence (where I got these definitions) in Ugam’s Pricing Intelligence eBook, free for download.
Ugam’s Price Intelligence and Optimization solution is a SaaS-based solution that aggregates and blends real-time competitive data, e-demand signals, transaction data, retailer data, and third-party data to understand what a customer is willing to pay, and prices smartly in real time.