PRICE ELASTICITY ANALYSIS AND DISCOUNT OPTIMIZATION


Given the challenging competition and the market conditions of today, the importance of pricing strategies and promotional activities increases further.

 

The conducted studies indicate that the commercial promotional expenses exceeded 1 trillion dollars in the world. However, only 32% of these promotion expenses return to companies.

 

Price stands out as the most important criterion when the decision making mechanism is examined in consumer behaviors. Since the price awareness of all customers increased significantly in the recent years, the pricing has a huge impact in competition.

 

The reaction given by a customer, who is aware of prices and changes in prices, to a possible price change of 1% is defined as price elasticity. The sales volume decrease in a product whose price had been increased due to increasing costs is calculated as the price elasticity of that product. A high figure indicates that product is impacted significantly from the price change and a low figure indicates that the top priority for purchasing this product is not the price parameter.

 

What are the questions that companies should answer in Price Elasticity Analysis and Discount Optimization?

How are your customers' reactions to price changes?
Which promotion brings more sales to which product? What kind of a discount optimization mechanism should you use to increase your market share and profitability?
Which competitor's promotions affect your brand? How can we come up with promotions that create a difference in the market?
What are the impacts of temporary price discounts on your sales and profitability? What are the reactions of your customers?

 

As Consulta, we support you in all the following areas with our consulting approach and analytical ability by drawing meaningful insights from your own data and business model.

Impacts of rival promotions and your company's response (responding to a 50% discount with Buy 2 Get 1)
Identifying sales increasing promotions (measuring contribution to the brand etc.) Temporary price discount strategies
Product - Price strategies (Right Product - Right Price)

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