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Optimizing pricing and promotions in a digital world

From product-led to customer-centric strategies


Companies can distinguish themselves in a competitive market by offering personalized and dynamic pricing based on deep customer understanding. Today, tech-savvy customers are armed with multiple devices and looking for the best deal in-store, online and on the go. Increasingly price aware, price sensitive and even price influencers they expect companies to mirror this ability to actively compare their prices across all channels, in real time.

Developing and optimizing the right pricing and promotions strategy is hard to get right, but rewarding for those that do. Using advanced analytics technologies to understand buyers, companies can provide more compelling offers and product pricing, resulting in higher sales and profit margins. Knowing which pricing strategy to adopt, when, and why, helps companies to boost consumer engagement and loyalty.


Competitive price and convenience continues to drive omni-channel customers who move between channels with relative ease.

Take Jo, who wants to buy a dress. She is looking for quality at an affordable price.

  • Jo begins her search online, comparing prices.

  • One retailer offers her a personalized promotion and a further discount if she joins as a member.

  • She decides to try the dress on in store and is pleased to discover the discount is the same as online.

  • She registers in store and purchases the dress she saw online.


With omni-channel shoppers being able to research offers, compare deals and even influence the price, traditional sales strategies need to g ive way to new customer-centric pricing models. Big data infrastructure and advanced analytics are needed to replace manual, labor intensive and time consuming spreadsheets and unlock customer data.

Source: Customer Desires vs. Retailer Capabilities: Minding the Omni-channel Commerce Gap

Pricing Strategy Options

Companies can adopt a number of possible pricing strategies, depending on their customer base, offering and the market dynamics. Broadly speaking, there are three options:

Channel specific
Prices are channel- and product-centric; not shopper-centric.

Prices are shopper-centric and the same across all channels.

This strategy combines the benefits of a single price across channels, with time-sensitive promotions.

Five Factors

When designing, building and optimizing the appropriate pricing and promotions strategy, the following factors should be taken into account:

Customer Centricity

A leading European food retailer used a sophisticated modelling approach to understand consumer purchase behavior by channel. The company created and implemented a pricing model based on product category, position in the basket, brand and level of elasticity across channels.

The new pricing model helped the retailer move from one set of key lines to a multiple, more customer-centric and automated set of key lines.

Using an analytics-based pricing strategy, the retailer was able to increase the frequency of price updates in real time and gain a better understanding of the competition. The impact was a significant increase in sales and profit, and improved price perception among customers.