How retailers can improve price perception—profitably
New methodologies, powered by big data and advanced analytics, can help retailers attract value-conscious consumers without sacrificing margins.
As retail executives know all too well, most pricing decisions require a trade-off between margin and price perception. To avoid a “race to the bottom”—the self-defeating exercise of trying to beat every competitor’s price on every item—retailers must hone their ability to make smart pricing investments. Indeed, the savviest retailers identify key value categories (KVCs) and key value items (KVIs)—those product categories and SKUs whose prices consumers tend to notice and remember. If a retailer can do this accurately, it can price those specific products competitively while charging higher prices on other items. McKinsey – Read more…
As retail executives know all too well, most pricing decisions require a trade-off between margin and price perception. To avoid a “race to the bottom”—the self-defeating exercise of trying to beat every competitor’s price on every item—retailers must hone their ability to make smart pricing investments. Indeed, the savviest retailers identify key value categories (KVCs) and key value items (KVIs)—those product categories and SKUs whose prices consumers tend to notice and remember. If a retailer can do this accurately, it can price those specific products competitively while charging higher prices on other items. McKinsey – Read more…
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