By: Gargi Sarma, June 19, 2023
The market is changing, so an approach that was previously effective could no longer be delivering the outcomes you're looking for. This might show up as shrinking profit margins, a subpar return on advertising expenditure (RoAS), frequent stockouts, and more. To stay on top of the game, it's important to be proactive about figuring out when and what adjustments you need to make.
Some people think that perception alone determines to price. Yet regardless of your company's age or size, pricing is still one of the most challenging responsibilities. Price managers search for strategies to make their companies viable and even flourish during adverse economic times. Businesses have been observed assessing the benefits and drawbacks of the psychological pricing approach at this point. If it is a feasible choice for them, they want to know.
Although it has its limits, intuition can be useful in price setting. Retailers can demonstrate the reasonableness or justification of their prices using data-backed proof. Moreover, as there could be variations in client preferences or competitive environments among different markets, it is difficult to reproduce price judgements made entirely on intuition across numerous regions or channels. Moreover, intuition doesn't take into consideration constantly changing client needs, supply constraints, or market developments, leaving price managers trying to stay current. Finally, relying just on intuition makes it challenging to spot chances that might result in bigger earnings or more sales.
Pricing plays a crucial role in organisations' efforts to boost their bottom line. Pricing involves striking a balance between being competitive and generating earnings, all while avoiding overcharging clients and fostering a bad pricing perception. So how should you make a decision while setting prices? Should you depend on intuition or analytics?
Analytics in Pricing Strategy
Although it has its limits, intuition can be useful in price setting. Retailers can demonstrate the reasonableness or justification of their prices using data-backed proof. Moreover, as there could be variations in client preferences or competitive environments among different markets, it is difficult to reproduce price judgements made entirely on intuition across numerous regions or channels. Moreover, intuition doesn't take into consideration constantly changing client needs, supply constraints, or market developments, leaving price managers trying to stay current. Finally, relying just on intuition makes it challenging to spot chances that might result in bigger earnings or more sales.
In order to maintain a competitive edge in the present market climate and to be ready for upcoming challenges, merchants must now incorporate analytics skills. For instance, a poll performed in August 2019 as part of omnichannel research by Salesforce and Coresight Research found that approximately 80% of retailers in Europe had already implemented sophisticated data analytics capabilities. Of these, 45% had fully integrated data analytics into every aspect of their business, while 34% had started to do so in certain areas. According to the poll, only 6% of merchants were not planning to use analytics.
The use of analytics capabilities by shops is significantly influenced by competition. Companies must provide themselves with the tools necessary to compete with best-in-class firms that are at the forefront of analytics technology research and development, like Amazon, in order to stay competitive and increase their market share. Figure 2 displays the number of patent applications filed by a sample of top retailers for the 12-month period ending September 9, 2019.
Technology in Pricing Strategy
When setting a price for an item, numerous aspects must be taken into account. The price will ultimately be determined by the product, the market, and the level of competition. A product's pricing should be set correctly to avoid negative business effects and unsold inventories. You should take technological variables into consideration when setting a product's price since they are important in all aspects of its production and sale.
The demand for a product might be impacted by the price that you decide on. As a result, only establish pricing after thorough research. The product's pricing will also affect how your company promotes it and who you should target with that marketing. You may employ cutting-edge technology, such as computerised pricing models, to assist your company in determining a product's demand and the best sale price.
What will the future of retail technology hold?
the growing integration of digital and physical commerce, notably with mobile point-of-sale equipment
Real-time sales analytics provide more effective delivery for decision-makers and sales representatives alike.
sales representatives' potential obsolescence?
enhanced mobile analytics for queue management and sales flow
expanded application of retail technology in training, staff incentive, and retention initiatives
AI: The online retail purchasing process has been changed by augmented reality or AR. Customers may shop as they would in the real world while online. A lot of businesses are utilising augmented reality in their retail apps to enhance the shopping experience for their clients, which has dramatically increased the number of repeat customers. Here, merchants make advantage of augmented reality to let customers try products on and see how they appear on them. For instance, a person can select several cosmetics and apply them to a virtual portrait to see how various hues would seem in real life.
Mobile POS usage in retail establishments: POS, would be a great addition to your current retail business if you are running one and want to offer your consumers more services. Due to the various benefits of POS, retail business owners may not only offer their consumers better services but also significantly increase their ROI. In the past, integrating POS into a retail operation required a significant hardware investment. Yet, the system may be constructed at a very affordable price with the use of sophisticated cloud computing. Many companies all around the world have started providing POS services to the public during the Covid-19 Epidemic.
IoTs: IoT is likely to be the next big thing in the retail sector. With an app, IoT enables remote control of a number of household items, including air conditioners, televisions, room heaters, lights, and fans. If your retail website or mobile app offers white goods, you should look into the idea of giving your consumers a better experience by integrating IoT services in your mobile app itself to operate various home appliances through their sensors.
Voice Commerce: Nowadays, we can use our voice to search for information without opening a specific app or website thanks to virtual assistants like Amazon Alexa, Google Home Assistant, Microsoft Cortana, etc. These programmes decode our speech and provide pertinent results. In addition, the popularity of smart speakers is growing year after year. By 2025, Statista projects that the market for smart speakers will generate 35.5 billion dollars in sales.
Conclusion: As the cornerstone of AI, the technology that enables retailers to improve communication, adopt price-optimization strategies, rationalise inventory, and provide consistent shopping experiences across channels, as outlined in Coresight Research's CORE framework, retail analytics is a crucial part of the industry's digital transformation. We anticipate that as data-intensive technologies like AI, IoT, and 5G become more widely used, merchants will increasingly rely on retail analytics. It will be necessary to be able to manage enormous datasets and continually improve data analytics capabilities in order to adopt these developing technologies. Sources: https://econsultancy.com/why-your-retail-pricing-strategies-arent-working/ https://taylorwells.com.au/psychological-pricing-strategy-advantages-and-disadvantages/ https://intrics.io/a-shrewd-look-at-pricing-intuition-vs-analytics-for-grocers/ https://smallbusiness.chron.com/technological-factors-impact-pricing-strategies-22398.html https://coresight.com/research/how-data-analytics-is-driving-digital-transformation-in-retail/ https://www.gurutechnolabs.com/technology-trends-in-retail/ https://blog.atrivity.com/retail-technology-state-of-the-industry Contact Info: Website: https://www.rapidpricer.com/ LinkedIn: https://www.linkedin.com/company/rapidpricer/ Email: info@rapidpricer.nl
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