Energize Channel Pricing
The RML Approach
Segment Channels & Customers
Who are the unique channels and customers in the market?
Understand Channel Needs
What are the value drivers for each channel?
Create Optimization & Exclusivity
What are the right price gaps and products for each channel?
Execute, Monitor, Report & Adjust
What training is needed to create a sustainable change?
1. Segment Channels & Customers
Revenue Management Labs first identified six customer segments across the four primary channels:
- Power Sport
The cross-purchase habits of customers were evaluated by channel. The online channel habits showed that customers had a high propensity to buy multiple batteries of B1, B2, B3, and B4 (Figure 3). This process and insight was leveraged to determine which deals would be the most customer relevant by channel. In the case of the online channel, Blue line battery 2-for-1 or multi-purchase promotions drove significant volume.
2. Understand Channel Needs
To evaluate each customer group, MaxDiff analysis was performed. This helped identify the most important purchase attributes for each group (Figure 4). With a keen understanding of the relevant attributes, we competitively ranked our offer versus the competition by channel.
3. Create Optimization & Exclusivity
To optimize the pricing of the batteries within the three brands, it was necessary to examine customer and product elasticities. First, advanced analytics were employed to ascertain price elasticities (Figure 5). These insights were utilised to establish regular and promotional pricing guidelines.
4. Execute, Monitor, Report, Adjust
1. Each channel was provided with exclusive lines/products
(existing & new) to eliminate conflict within the market.
2. Consistent price gaps were developed between channels and product lines to reinforce brand positioning and achieve margin
targets (Figure 6).
+ 1.8% Margin Per Battery
The client received an implementation guidebook as well as the necessary tools to evaluate elasticity and channel pricing moving forward. After implementation, the customer experienced a 1.8% increase in margin per battery (Figure 7).