When people think about pricing analytics, what often comes to mind is a whole host of tactical activities—things like identifying discount outliers, evaluating and analyzing specific deals, and monitoring and reporting price and margin trends.
But a new guide in the PricingBrew Journal, Driving Strategic Decisions with Pricing Analytics, makes the assertion that in the right hands, pricing analytics can serve a much more strategic purpose. That is, pricing analytics can be used to inform and answer a number of crucial questions related to the company’s overall strategy:
- Which customers should we be targeting?
- What products and services should we offer?
- Where do we have competitive advantages?
- Where can more profitable growth to be had?
- Where should we be focusing our resources?
As for why pricing analytics is uniquely suited to answer these more strategic questions, the guide makes a compelling case:
Pricing performance is the ultimate signal as to what’s working and what’s not. In a sense, pricing performance is a strategic scorecard. Everything a company does to serve customers and differentiate themselves from the competitive alternatives all comes to head when the prospective customer has to make an investment decision.
Now, saying that pricing performance is the ultimate strategic signal may seem like a bold assertion. But it makes a lot of sense when you consider that pricing performance plays out very differently depending upon whether or not you’ve got the right strategic recipe.
When you’re targeting the right customers, offering the right products, and you have a competitive advantage or meaningful differentiation, stellar pricing performance comes somewhat naturally, and without much intervention or handwringing. On the other hand, when you miss the mark from a strategic perspective, it’s much more difficult to achieve solid pricing performance.
The guide goes on to explain how to analyze your price performance with three strategic considerations in mind, and how to leverage your price segmentation to identify your company’s strategic “sweet spot.”
Even if your overall strategy is fine and everything is working great in your company, Driving Strategic Decisions with Pricing Analytics is a refreshing illustration of just how much more pricing analytics can contribute.
