Does a Retailer Need to Apply Consistent and Tailored Pricing?
“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business,” said Warren Buffett.
The only line we could add is that building the retailer’s pricing power requires consistency and tailoring.
Consistency Helps Nurture Brand Message
Nobody would ever say modern consumers are overly loyal. They change retailers with a single click, back and forth, with zero drama.
Therefore, if you were to create a strong and trustworthy brand, you have no other option but to choose a brand message and nurture it. Everything that happens related to your business communicates your brand. Your website design, promotions, support team, delivery, and prices...
Consistent pricing is a key to keeping a loyal audience no matter whether your online shop works as a discounter or as a premium seller.
Consistent pricing is retailer’s consistent brand message.
Consistent Pricing Builds Consistent Marketing
“Consistency in everything.” It might be the perfect brand message for every retailer out there.
Such an idea along with strong brand messaging changes everything, including how a marketing department creates its advertising messages and campaigns, and how relative prices and relative advertising are coordinated.
Consistency in pricing and marketing helps smooth out the consumer’s journey, choose and prioritize traffic channels consciously and control marketing ROI with ease.
This becomes even more important in the omnichannel commerce world. The user expects a consistent experience on every device he/she uses to surfs the web. A retailer is supposed to maintain the same price and message on a particular item across all these channels.
Consistent and Tailored Pricing Leads to Higher Retailer Profits
As mentioned above, consistency helps grow retailer’s ROI. Here the retailer faces the second component of success: tailoring.
Consistent pricing should be tailored to:
- The retailer’s business context, objectives, and work flow
- The competitive landscape
- The shopper elasticity
Association among these three factors should be strong enough to provide the retailer with pricing and revenue optimization, and so a statistically significant ROI.
Consistent and Tailored Pricing With an Automation and Tools
Even hiring an octopus, unless it was Dr. Octopus, wouldn’t help you manage prices on all your products manually. Modern retail requires using an automated price management tool.
Category and Pricing Managers need to set the right prices for their product at any given moment in time. To complete this task, they want to know the audience demand, and competitive landscape details such as prices, promotions, markdowns, and stocks. Then when there is enough qualitative data, the retailer can begin to use it, and carry out its consistent pricing strategy.
Despite this consistent pricing usage, the retailer always has room for price experimentation and A/B price testing, using different pricing rules and scenarios against competitors.
Pricing Automation and Optimization Tools Uncertainty
There are a few issues retailers face when investing in pricing intelligence software:
- Uncertainty on just how exactly this competitor price monitoring software can snatch and crunch data
- Uncertainty on the logic behind repricing algorithms, suggestions, and recommendations
- Inability to easily change these algorithms
With that said,
Always consider the consistent and tailored pricing approach, when choosing a software tool for automated pricing that will suit your needs the best.
Apply this same approach choosing a price optimization software vendor for your retail business.