Outperform competitors and negotiate suppliers with Competera repricing scenarios

# [White Paper]Pricing Scenariosto outperform competitors and negotiate suppliers

We’ve already uncovered scenarios for profits and turnover increasing. In this white paper, we discuss the algorithms that retailers use to outperform their competitors and to negotiate suppliers.

Competitive Pricing Scenarios
• Minimal by Key Competitor
• Cheaper Than a Rival's Promotion
• Below the Competitor's Minimal Price
Competitive Pricing Scenarios
• MAP and Minimum Competitors' Prices
• Non-competitive Purchase

At the end of this white paper, you’ll find a list of data that retailer needs to deploy scenarios efficiently; the tools to work with pricing; and useful materials on this topic.

### Competitive Pricing Scenarios

#### Minimal by Key Competitor

the prices are equal
to the key competitor’s prices
while
the prices are equal
to the key competitor are in stock
else
the prices are equal
to the next key
competitor’s prices in a row

The script helps to work effectively with key competitors’ prices. The product prices are equally set by one of the key competitors while it has the goods in stock. If the products of this competitor are not available for buying, the prices are set at the level of the second key competitor; when the second competitor is out of stock, prices are adjusted by the third, etc.

#### Cheaper Than a Rival’s Promotion

the prices are equal
to the key competitor’s prices
while
a competitor with a
minimum price doesn't run
a promotion
else
decrease
the price by N%

The cost of the items is set to the minimum level among competitors. If a rival with a minimum price runs some kind of promotion (free gift, discount, etc.), we decrease the price by N%. With the support of an active advertising campaign, this scenario helps the retailer gain a part of the competitor’s audience.

#### Below the Competitor’s Minimal Price

the price is set to the minimum
level among competitors
and
decreased
by specific \$ or %
while
new price differs
from the previous one
by less than 25%
else

In this scenario, the price is set automatically less than the minimum price among competitors. In a case when the new price differs from the previous one by more than 25%, the manager receives alert about deviation. The scenario helps the retailer stay competitive and keep profits if one of the competitors starts aggressively dumping at the same time.

### Pricing Scenarios for Negotiations With Suppliers

#### MAP and Minimum Competitors’ Prices

set MAP
while
N or more of competitors do
not comply with the MAP
else
set a minimum
competitive price

If the MAP is above the minimum price among competitors, the algorithm suggests setting the MAP for the product. A more detailed repricing algorithm can be set. E. g., if N or more of competitors do not comply with the MAP, the script suggests setting a minimum competitive prices.

#### Non-competitive Purchase

if
minimum competitor’s
price is lower than retailer’s cost
then
send a
“non-competitive purchase”

Helps to identify unprofitable prices set by suppliers. If the competitor’s minimum price is lower than retailer’s cost, the retailer receives a “non-competitive purchase” alert. It’s a useful alert for supplier’s prices negotiation.

collect minimum
supplier’s prices
and
decrease them by 3%
(conventional number)
and
create a letter with the
desired cost prices for
sending suppliers

This scenario helps not only to collect non-competitive purchases data (see the previous scenario) but also to obtain the readymade desired purchase prices for sending them to suppliers.

#### Data for working with scripts

In order to effectively work with the pricing scripts, you need high-quality (without errors), relevant (freshly collected at the time of the repricing) and correct data collected on aggregators and on competitors’ websites.

So, to work with the scenarios discussed earlier, retailers need the following information:

• Product data: stock availability, price, cost, KVI-positions

Item
Stock attribute
KVI tag
Cost, \$
Multicooker Redmond RMC-M92S
in stock
YES
95
LCD TV Samsung UE43KU6000
in stock
NO
700
Notebook Apple MacBook Air 13'
low in stock
YES
925

• Business goals data: minimum markup, planned markup, turnover and margin plan, etc...

Item
Stock attribute
KVI tag
Cost, \$
Minimal mark-up, %
Planned mark-up, %
Planned turnover, units
Planned margin, \$
Final price, \$
Multicooker Redmond RMC-M92S
in stock
YES
95
12
18
150
3000
115
LCD TV Samsung UE43KU6000
in stock
NO
700
3
6
75
3375
745
Notebook Apple MacBook Air 13'
low in stock
YES
925
5
8
120
9000
999

• Competitor’s data: prices, stocks, promotions

Item
Stock attribute
KVI tag
Cost, \$
Minimal mark-up, %
Planned mark-up, %
Planned turnover, units
Planned margin, \$
Final price, \$
Competitor 1 price
Competitor 2 price
Competitor 3 price
Promo attribute
Stock attribute
Multicooker Redmond RMC-M92S
in stock
YES
95
12
18
150
3000
115
120
111
115
mark-down
in stock
LCD TV Samsung UE43KU6000
in stock
NO
700
3
6
75
3375
745
750
735
720
low in stock
Notebook Apple MacBook Air 13'
low in stock
YES
925
5
8
120
9000
999
995
1019
999
no promo
out of stock

By integrating this data into the scenario and analyzing its performance, you can build a Price Index report to understand how the value of the product affects its sales. It will help you track the effectiveness of your pricing and the impact of competitors even more effectively.

#### Tools for working with scripts

The simplest tool for working with pricing scenarios is, of course, an Excel spreadsheet. However, since this tool has far more disadvantages than advantages, it’s much more efficient to use services specifically created for this purpose.

The Price Management product, as part of the standalone pricing platform, Competera, integrates all of the internal and external data that was received and visualizes them by repricing the goods according to the pre-set rules in the scenarios and notifying managers about the opportunities to optimize pricing as well as the failure of scenarios. For most scenarios, you need to install limiting scenarios that will monitor the correctness of their execution. To calculate the payback rate of such a tool, contact our pricing experts.