USE CASES APPROACH
We don’t believe in the one size fits all approach in pricing. Our solution will provide you with a library of algorithms that optimise for different use cases. You can choose from: multi-product pricing, psychological pricing, cross selling, etc…
Cross-selling Use case
A major French retailer is optimizing his stand alone categories not distinguishing product drivers from add ons. We help him correlate the products attached to each other and price accordingly.
Challenges:
- Identify a cross-sell correlation between a driver & an add-on product at a granular level.
- Compute standalone elasticity of both the driver & the add-on product.
- Manage pricing of both drivers and add-ons in order to achieve the overall business targets taking into account the attachment rate evolution.
Methodology:
- Step 1: Identify all product combinations. What are the Drivers and the Add-ons and their correlated attachment rates per cluster.
- Step 2: Test multiple Price transfers from Core to Add-on products (e.g. Both Up, Both Down, Core Product Up & Add-on Down) to train the algorithms and build the dual elasticity curves.
- Step 3: Let the tool drive the correlated pricing optimisations to achieve the business targets set.
Achievements:
- Category managers have a clear understanding of what the product drivers and their add-ons are.
- Overall profit margin of the driver category and the add-on category increases YoY
