Harnessing the potential of big data in every aspect of a company’s operations is a highly attractive goal, but it’s one that can be difficult to achieve. IRI and Columbia Business School’s Center for Pricing and Revenue Management recently held their second annual education program on “Pricing Analytics” to discuss how leveraging big data to develop improved pricing strategies can create huge opportunities for organizations in any industry.
Those in attendance represented a diverse group of industries – CPG, financial services, ecommerce, healthcare, insurance, transportation. They also included representatives from many disciplines within these companies. Day one included a pricing simulation that looked at factors such as shoppers’ willingness to pay, quantifying demand and price elasticity, pricing in a world of active competition, and more importantly, strategies for applying this information with attendees’ companies.
Day two focused on the techniques and technologies of pricing. The CPG industry is blessed with better information about demand elasticity than many, but struggles with how to apply this information to drive ongoing pricing strategies. The session dove into how to get decision makers from across a CPG company to align on pricing since, within many companies, this does not occur in a systematic way today.
IRI and Columbia faculty discussed several critical pricing-related issues and involved attendees in hands-on discussions about applying solutions within their organizations. These included discussions about supporting better pricing and promotion decision with analytics, gaining buy-in for pricing analytics within an organization, translating pricing analytics insights into action and measurement, and the benefits improved pricing analytics provides to the CPG organization.
Attendees brought up issues such as a lack of alignment within their organizations about pricing strategy, concerns about communicating pricing strategy effectively with customers, how best to measure the impact of pricing strategies and the role of pricing in communicating the brand proposition.
An especially interesting session was the keynote presentation by Jeff Ansell, chairman, president and CEO of Sun Products Corporation. Jeff illustrated the critical role an effective pricing strategy can play for the success of a company.
He illustrated the perils of failing to address these points by using examples such as JC Penney and Netflix, where dramatic changes in pricing strategies not aligned with shoppers’ preferences led to unfortunate results.
Applying advanced analytics to big data can uncover new, important growth opportunities. Our program with Columbia is helping innovative industry leaders realize that effective pricing is an important cornerstone of long-term, sustainable growth.
We look forward to collaborating with Columbia again next year and hope more CPG leaders will attend!