The Challenge

• The business had been successful with their traditional pricing strategy, managing menu prices through cost control measures.
• However, as the business continued to grow the client wanted a more precise and sophisticated pricing strategy that leveraged the rich customer data they had collected.
• The client was also concerned because they had attempted store tiering and other advanced analytics techniques before with little success.
• They needed a solution that was data-driven and supported by strong pricing methodology and research.

The Solution

1. Data Analysis

• Segmentation was key in this pricing strategy. To facilitate this, we conducted a thorough analysis of the client’s transactional data from the past year, trends in customer demographics and buying behavior. These trends created core customer segments.

2. Defining Optimal Price Points

• When combined with further Breakeven and Price Dispersion Analyses, Pricing Solutions defined optimal price points per segment and country. Similarly, price floors were established for any given customer groups.

3. Building Tools and New Pricing Structure

• Using this information we custom built a ‘Target Price Framework’ – a systematic price negotiation tool. It was a scalable solution; versions could be built for each country/region the client operated in. It could be used in the annual price-setting process as well as day-to-day negotiations of local Sales teams
• The Target Price Template was the first piece in the division’s pricing transformation; a new governance structure was the next. By embedding new pricing skills and knowledge in the corporate culture, the governance process would support long-term success and global consistency.