You have a product, you know your costs, you have a feel for the market. Pricing? Well, it should be simple. Except it isn't!
The complexity of pricing lies in the fact that your sales territory is usually not a single homogeneous market but one that consists of many Micro Markets.
Each of the Micro Market displays a different Price Demand curve due to different factors at play in Micro Market conditions, including the following:
- Price Elasticity: To what extent does changes in prices impact the sales volumes?
- Price Volatility: How frequently do the prices (need to) change?
- Brand Positioning: How are your brand and competitor brands perceived?
- Stock Position & Shelf life: Stock positions of products for various competitors and shelf life, storage requirements.
- Running Promotions: Any running promotions in local market or wider territory.
- Cash factors: Cash flow requirements from specific markets.
- Local demand factors: Whether there is a sudden demand spurt for some duration.
- Local Distributor Standing: How credible and influential is distributor in positioning product.
- Seasonal Factors: Seasonal factors that play a part in driving demand up or down.
The complexity of pricing gets multiplied with number of different products and competing brands involved.
While the pricing is a complex subject as above would indicate, the impact of getting pricing right has direct implications on bottom line. Get it too high and you lose on volumes, get it low and you lose on margins.
It is possible to conceptualize the Price demand curve, however given the number of micro markets and changes in factors that drive the behavior means it is not possible to make decisions based on static data. In other words, practically, each micro market has its version of Price-Demand curve, and it changes as frequently as the underlying factors change.
Hence Price Tracking is a crucial function that needs to deliver dynamic, reliable, practical and real time intelligence to serve as the basis of Pricing decisions.
Following are some of the issues in Price Tracking:
- Authorization: It is important to allocate micro market wise authorization to ensure the pricing data collected comes from not only authentic source, but also authorized for that micro market.
- Enterprise Mobility: The price tracking relies on effective data collection strategies, making it as easy as possible for field warriors to report data and propagate it through as soon as possible. Hence enterprise mobility is a crucial element.
- Analytics determining patterns: The rich set of data collected must not only deliver business intelligence for strategic decisions, but system must recognize patterns via analytics and report operational intelligence for remedial actions.
- Data Quality: Even small percentage of bad data collected from field can compromise decision making and render whole exercise to lose its impact.
- Time based Alerting: Ensuring compliance for timely data collection requires automated solutions that incorporate monitoring and alerting on elements of information missed from the field.
- Data Access Security: The data collected is sensitive for decision making, and often requires access controls which may be complex and based on data itself. Such as restricting access to view data for a particular micro market to person responsible for it and above in sales organization hierarchy.
- Real time: Often Price tracking for volatile products requires near real time data for decision making, and volatility of prices is a strong factor that determines shelf life of data for pricing decisions.
Price tracking is only one component of Pricing. In volatile price conditions, not only right decisions for pricing need to be taken quickly, but these need to be propagated to field work force with due controls.
Following are the issues in Price setting:
- Pricing for large number of micro markets: The issue with pricing in a large sales territory often manifests in form of setting prices quickly, frequently for large number of micro markets. In such case, it can be tedious exercise to set prices for large number of micro markets, unless there are tools that make it an easy process.
- Real time price change alerts: Ensuring that real time data for pricing is available is only effective if the prices set can be propagated to field in real time too!
- Workflow controls: Need for ensuring that the prices disseminated to the field are correct cannot be overemphasized. It requires a maker-checker process, where prices set are passed through a workflow for approval before being disseminated to the field.
- Micro market pricing: One of the biggest challenge in Pricing is to set prices for different micro markets and then ensuring the right prices are alerted to the right micro market without disclosure of the wider prices (i.e. a field personnel only sees the prices set for him/her and for no one else).
- Authorization Controls: Setting prices requires authorization controls sensitive to Micro Market for which prices are being set. Thus ensuring that pricing decisions can be delegated to relevant sales organization personnel without compromising authorization controls built on Sales Organization structure is a key issue.
With MarketCLout TM*, we have a proven solution that addresses Price tracking and price setting issues:Authorization control for price tracking and setting:
- A fundamental problem of sales hierarchy management is controlling authorization of field force for channels, products or micro market level reporting as well as supporting workflows that support sales hierarchy for exception management, decisions. MarketCLout TM* incorporates features to maintain allocations of events, product types, channels and micro markets as well as access to reports, making it an effective controlling system.
- Pricing differently for micro markets is significant challenge, especially in high price elasticity and high price volatility products. Decisions need to be specific to micro markets, frequent and then must be propagated to the relevant field force, ensuring only the correct prices go to the correct personnel. This requires maintenance of sales hierarchy which MarketCLout TM* incorporates. MarketCLout TM* provides sophisticated features to enable decision making in a cascading hierarchy which eases the process of managing large micro market based decision making.
- Don't lose out seeing the wood for the trees! MarketCLout TM* automatically generates average prices, demand forecast views moving up in sales hierarchy of sales territory. Thus enabling decision making on broad analysis derived from detailed micro market level data, while retaining the ability to drill down at lowest micro market levels for issue analysis and remedial actions.
- MarketCLout TM* incorporates several validation, authorization and vetting rules to prevent from poor data (either due to typos or even due to deliberate mis-reporting for that matter) making through to system. Thereby assuring that your decisions are based on data you can trust.
- Data quality is crucial indicator of field force performance, MarketCLout TM* incorporates analysis of field data quality, thus offering insight into specific areas of problem for remedial actions.
- MarketCLout TM* automatically analyzes all your micro markets and raises alerts where price difference in comparison to any competitor breaches threshold, giving you ability to take immediate remedial actions. This information is available both via on demand reports or system generated alert.
- MarketCLout TM* enables you to maintain a realized value or net price (i.e. billing price - specific operational delivery costs to that micro market), thus giving you unparalled insight into analysis of various micro markets. The maintained operational delivery costs cover a range of factors and may be updated with sophisticated forms designed to support sales territories.
- MarketCLout TM* provides ability to manage price volatility of your context by letting you define price reporting frequency. For each elapsed pricing period, data is made available for analysis and decision making, thereby giving you decision making ability based on as recent as last elapsed period (minimum every 2 hours for highly volatile price scenarios).