Pricing and Profitability Management: A Practical Guide for Business Leaders

Tips for Moving Forward

Advanced analytics and optimization techniques can provide companies with a substantial competitive advantage. As customer behavior becomes harder to predict, rival firms become more aggressive (and sophisticated) and channels begin to blur. Faced with these challenges, a company can lose its ability to leverage data into a more effective strategy and an improved capability. The latter problem has been mitigated in large part by better technology and data availability, more advanced techniques in statistics and econometrics, and new developments in management science. What has not been easy is melding these tools into a successful strategy to improve profitability. The specific tools outlined in this chapter are by no means a comprehensive list, but they do provide organizations with a sense of how analytics can effectively be used to drive the benefits they seek. Following are some key points managers should keep in mind—technically and organizationally—when using advanced analytics to improve price setting.

Structuring and Implementing an Analytics Initiative

• Develop a quantitative and qualitative fact base to drive improvement. By drawing on a solid foundation of information, suggested improvement opportunities will seem more credible to the organization and more likely to be implemented successfully.
• Create a transaction-level data set based on a sales or transaction-centric timeline.
• Analyze transactions in detail to uncover immediate savings. Understand ...