5 ways to win the price sensitive consumer [for retailers]
DESCRIPTION
Price transparency and price sensitivity is an issue that retailers face on a daily basis. But how retailers win customers without racing to the bottom? This is what we uncover in this presentation with Nikki Baird of RSR Research, Tony Tomanek of Best Buy and Drew Williams of 360pi. Together, they reveal strategies retailers can take to win the price sensitive consumer by optimizing their pricing with competitive price intelligence solutions.TRANSCRIPT
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5 Ways to Win the Price Sensitive Consumer
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Speakers
Nikki BairdManaging PartnerRSR Research
Tony TomanekSenior Product SpecialistBest Buy
Drew WilliamsVP, Marketing360pi
Mark EmondPresidentDemand Spring
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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Join the Conversation
#5waystowin
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The Challenge of the Price Sensitive Consumer
NIKKI BAIRD
SEPTEMBER 2012
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My Job Today: Context• The world of pricing today: A study in
contradictions
• Throw in:
• Increasing promotion intensity• Channel conflict & transparency
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Downward Pricing Pressures
6
Need to provide more localized pricing
Respond to segment blurring (competition coming from unexpected places)
Increased promotional intensity of competitors
Need to provide consistency in price across channels
Need to protect our brand’s price image
Increased price transparency – the impact of comparative price shopping
Increased pricing aggressiveness from competitors
Increased price sensitivity of consumers
7%
16%
6%
28%
11%
38%
46%
14%
10%
32%
32%
38%
40%
48%
58%
9%
18%
22%
27%
42%
47%
51%
67%
Top Three (3) Strategic Pricing Business Challenges
2012 2011 2010
Source, RSR Research, April 2012
Even in a continued improving economy, Retailers obsess on the race to the bottom
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Mobile Price Comparisons: Mixed Messages
7
Beat it
Ignore it
Price match
Be "competitive"
We haven't seen it yet
6%
9%
11%
26%
43%
2%
7%
12%
39%
39%
What is Your Policy for Responding to Mobile Price Comparisons in Stores?
2012 2011
Source, RSR Research, April 2012
Oddly, the one place retailers do NOT race to the bottom
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The Volume of Price Changes Continues to Rise
8
Increased significantly Somewhat increased Stayed about the same Decreased
38% 38%
22%
2%
32%30%
28%
9%
61%
27%
12%
0%
How Has the Number of Price Changes Sent to Stores and Other Channels Changed Over the Past Three (3) Years?
2012 2011 2010
Source, RSR Research, April 2012
76% of all respondents continue to increase the number of price changes sent to stores and other
channels! 8
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Promotions as a Way of Life
9
We have become more focused on everyday low prices
Our strategy has not changed
We have become more focused on key items
We have become more promotions driven
11%
16%
26%
31%
10%
15%
15%
40%
12%
16%
18%
41%
How Has Your Company's Pricing Strategy Changed Over the Past Three (3) Years?
2012 2011 2010
Source, RSR Research, April 2012
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The Impact of Channel Proliferation Grows
10
Channel-specific promotions
Web as lowest price
Channel-specific pricing (web-only or store-only)
Returned to one price
No impact
14%
6%
16%
10%
30%
12%
14%
19%
21%
26%
How Has Channel Proliferation Impacted Your Pricing Strategies?
2012 2011
• # of retailers returning to a single price has doubled, from only 10% to a fifth of respondents.
• 34% of respondents report that their zone pricing plans have been damaged by consumer price transparency.
• Fashion retailers lagging behind in adjusting pricing strategies. Twice as likely as the overall to report channel specific pricing and promotions
• None say the web has the lowest price
Source, RSR Research, April 2012
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Commoditization and Margin Erosion Hits Retailers Hard
11
It's getting too easy for consumers to find competitive prices
We offer premium service that justifies premium prices
Consumers don't care about brands
The complexity of pricing and promotions creates unexpected conflicts and margin erosion
We offer premium brands that justify premium prices
We have to operate within an extremely price competitive environment
11%
11%
33%
44%
26%
5%
5%
16%
47%
7%
7%
14%
21%
21%
29%
Impact of Commoditization and Margin Erosion on Retailers
Retail Winners Average Performers Laggards
Source, RSR Research, April 2012
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Winners Grabbing New Sources of Information
12
Agree Neutral Disagree
62%
31%
8%
17%
56%
28%33%
44%
22%
"We are Collecting Data from New Channel Promotions and Using it to Make Better Pricing
Decisions"
Retail Winners Average Performers Laggards
Source, RSR Research, April 2012
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We’re Running Lots of Promotions, but……
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Agree Neutral Disagree
50%43%
7%
33%
50%
17%11%
22%
67%
Agree or Disagree: My Company Feels Confident that our Promotions are Effective Overall
Retail Winners Average Performers Laggards
Source, RSR Research, April 2012
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A Few More Words About Promotions
14
Agree Neutral Disagree
15%
63%
22%
My company currently targets our promotions at the appro-
priate level of granularity
Agree Neutral Disagree
20%
39% 41%
We have effective policies in place to manage different prices and promotions across channels
and touch points
Agree Neutral Disagree
37%34%
29%
We have processes in place to manage promotional planning across the various organiza-
tions within our companyWith all these
price changes and promotions, you’d expect someone to be a bit more
confident
Source, RSR Research, April 2012
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Principles to Keep in Mind
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Principles to Keep in Mind
• Simple does not mean clear
• Trust is hard to earn and easy to break
• Blurring between online and store when it comes to price – the store no longer stands alone
• There are two components to price transparency that are often overlooked:
• Availability of the item – both overall and the logistics of getting it• Reputation of the competitive price – a 5 star seller vs. a 1 star
seller
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Emerging Best Practices
1. Understand the impact of price decisions
2. Don’t price match – change the game
3. Set a reasonable number of price changes each week
4. Understand channel impact
5. Obtain a multi-faceted view of price
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Thank You!Nikki Baird: [email protected] 303-683-6613
Newsletter
Subscribe:
Further Information on Products & Services: [email protected]
www.rsrresearch.com
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5 Ways to Win the Price Sensitive Consumer
Drew WilliamsVP, Marketing
360pi
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What do we do?
Retail price intelligence solutions
for complete visibility and
smarter price decisions.
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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Why does Price Intelligence Matter?
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What can you do?
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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Multi-Faceted View of Price – 3 Inputs
Smarter Price
Decisions
Competitive Price
Intelligence
Demand Elasticity
Inventory Availability
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Competitive Price Intelligence – What will the Market bear?
Smarter Price
Decisions
Competitive Price
Intelligence
Demand Elasticity
Inventory Availability
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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How do we get it?
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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5 Ways to Win with Price Intelligence
• Gain complete visibility• Adjust according to your pricing strategy• High-level and product-level views
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
Set more competitive prices.
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At-A-Glance View of Prices
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
High-Level View
Product-Level View
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Product-Level View of Prices
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
High-Level View
Product-Level View
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5 Ways to Win with Price Intelligence
• Improve negotiating position with manufacturers
• Hold competitors who violate Minimum-Advertised-Price (MAP) policy accountable
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
Improve margins & lower prices.
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Time to chat with BowerRetailer is consistently overpriced compared to competitors on this particular manufacturer
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Identify MAP Violations
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• Gain insight into competitors’ product assortment
• Discover products your competitors are carrying that you are not
• Optimize product according to near real-time data
5 Ways to Win with Price Intelligence
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
Optimize product assortment.
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Improve your product assortment.
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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Improve your product assortment.
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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Improve Product Assortment
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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5 Ways to Win with Price Intelligence
• Ensure your prices are in fact the lowest
• Increase conversions• Ensure that manufacturers are
providing real promotions
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
More Effective Promotions.
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5 Ways to Win with Price Intelligence
Make more informed decisions.
• Isolate the issues on why you are losing a customer. Is it:• Price?• Assortment?• Other?
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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Summary
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
Make more informed decisions.
More effective promotions.
Optimize product assortment.
Improve margins & lower prices.
Set more competitive prices.
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Contact Me
Drew WilliamsVP, Marketing360pi
[email protected]+1 416-300-0543@360_pi
5 Ways to Win the Price Sensitive Consumer #5WaystoWin
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April 12, 202340Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best
Buy.
BEST BUY SDF &COMPETITIVE PRICE INTELLIGENCE
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41April 12, 2023
WHAT IS BEST BUY SDF?
• Assortment has nearly tripled in size over the past two years
• Ultimate inventory and replenishment model for the online space
Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best Buy.
• Supplier Direct Fulfillment• Orders shipped directly from manufacturer/distributor• Expanded assortment
• Assortment extends beyond traditional CE categories, including: • Furniture• Sporting Goods• Toys & Games
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CHALLENGE
• Expanded assortment significantly, but prices were not competitive
• Competitively shopping only 7% of total assortment
• Previous price intelligence tool only provided match rate of only 25% – 30%
42April 12, 2023
Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best Buy.
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43April 12, 2023
SOLUTION
Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best Buy.
• Find a better price intelligence solution
• Improve accuracy
• Competitively shop more of the assortment
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44April 12, 2023
HOW ARE WE LEVERAGING PRICE INTELLIGENCE?
1. Competitively shopping entire assortment, with a very high match rate
2. Price matching categories across entire assortment
3. Influencing pricing decisions across internal business teams
4. Provides a different perspective on promotions and their effectiveness
Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best Buy.
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45April 12, 2023
THE FUTURE OF PRICE INTELLIGENCE AT BEST BUY
1. Competitive pricing intelligence is an important element of a larger, comprehensive pricing strategy
2. Other elements include:• Inventory Levels (both online and in stores)• Page Traffic• New Categories
Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best Buy.
3. The ideal price intelligence solution is dynamic & takes the following factors into account:
•Competitive Pricing•Inventory Levels•Page Traffic•Profitability
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Q&A
Nikki BairdManaging PartnerRSR Research
Tony TomanekSenior Product SpecialistBest Buy
Drew WilliamsVP, Marketing360pi
Mark EmondPresidentDemand Spring
5 Ways to Win the Price Sensitive Consumer #5WaystoWin