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Business Tip 4
Case History - Price Increase
Top Line
A major paper goods manufacturer uses XP3 to
identify price elasticity, communicate increases to retail
partners and track progress against goals.
Situation
Recently, a major paper goods manufacturer came to Interactive
Edge looking to automate the process associated with a retail
price increase. This process consisted of three major components:
- Identify price elasticity of various brands by geographic
region
- Communicate proposed price changes to retail partners,
as well as expected results
- Track retailer compliance and performance vs. goals
Goal
Success in this project was defined as automatically generating
presentations which applied internal warehouse and syndicated
sales data to a price elasticity model, which had been developed
by a supply chain management consulting group. These presentations
were to accommodate eight brands across three product types
and display information for the manufacturer's top 25 retail
partners. After the initial deployment of these presentations,
data updates were to occur at predetermined intervals to track
compliance and performance at each retailer.
Action Taken
Using XP3, Interactive Edge loaded and integrated
the manufacturer's internal shipment data and syndicated sales
data. This data was plotted applying factors determined in
a study performed by a third party supply chain management
consulting group. The resulting 'indifference curves' were
used as a tool to estimate reasonable price thresholds for
each of the manufacturer's retail partners.
Once the price increase was determined, XP3 was
used at retail to demonstrate sales potential across several
different scenarios, gaining buy-in at the manufacturer's
customers. Timing for targeted price increases were agreed
upon at each of the organization's top retail partners.
Over the next few months, management at the organization
used XP3 to track retailer compliance with the price increases.
Comparisons were also drawn against sales goals determined
by the elasticity model developed in the first phase of the
project.
Key Benefits
- Using XP3, the manufacturer was able to effectively
implement a price increase across multiple product types
at its top customers.
- The manufacturer was able to systematically recommend
the proper pricing and track progress against goals, insuring
profitability for both the organization and its retail partners.
The data, products and accounts depicted in this example are fictitious. Any resemblance to actual data, products or accounts is purely coincidental.
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