To arrive at the most appropriate retail strategy, it is critical that retailers accurately identify the key value categories (KVCs) along with the key value items (KVIs). Often it has been observed that retailers prefer to rely on the commercial intuition of experienced category managers, rather than taking KVCs and KVIs into account. Thus, the problem does not lie in the lack of data, rather in employing the data-rich environment in the best possible manner.
The most effective tool to boost the consumer price perception is dynamic pricing. And even though it might sound cliched, Amazon is one retailer which is known to have leveraged dynamic pricing to its advantage. What Amazon’s success clearly proves is that not just the online portals, but brick and mortar stores as well can adopt dynamic pricing solutions to build the right price perception.
The Right Way Forward
The insights from KVIs and KVCs are essential to arrive at actionable plans in building the right price perceptions. The process should begin with the identification of products and customers that pose good value for money. Identifying the right products and customers helps to sort the stock in terms of units and rank them accordingly.
Can Big Data help in better pricing decisions?
At a time when big data is seen as magical solution for almost every problem, it is natural for industry experts to consider if it can help retailers as well. And the happy news is that when employed in the right manner, big data can improve your pricing decisions amazingly.
By taking all kinds of information into account, big data enables retailers to go into the nitty gritty of pricing decisions. So, what was until now done in a rather intuitive manner, has a clear framework set for it. Also, rather than being overwhelmed with the amount of data received, it is advisable to hire or build the most appropriate workforce which can understand and effectively employ the data analysis to influence the pricing decisions and build profitable price perceptions.