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Promotion Challenges Simplified for Retailers


Retailers need more certainty with promotional pricing strategies, despite their importance to their business. Every new advancement carries some degree of risk. What if the promotion is more expensive to conduct? What if the promotion generates a different amount of interest? Due to unrealistic expectations about how a campaign will operate, some retailers even continue to conduct price discounts at a loss to their companies. Because they could have sold their promoted products at a higher (albeit still discounted) price but chose not to, others will suffer as a result.

Challenges Faced by Retailers

Brand Positioning

An appropriate promotional pricing strategy goes hand in hand with how you want to position your product in the marketplace. Setting a high price can suggest premium value in your product, and the opposite is true; sometimes, lower prices can indicate that your product is inferior to other brands.

Pricing for different consumers

It could be advantageous for your business to set different prices for various consumer groups. One-time sales, for instance, typically have much greater expenses than recurrent customers. Implement a strategy for consumers who make frequent purchases, add-ons, or related items that are more valuable. Consider rewarding their business by providing privileged access to offers or memberships that inspire them to make additional purchases from you.

Competing against other retailers

Competitive pricing is frequently employed to meet tactical rather than strategy-focused needs. To comprehend the competitor’s price on specific SKUs and their overall pricing strategy throughout their brand, competitive pricing initiatives should be implemented. More consistent, accurate, and real-time data are produced through technological advancements. To ensure that their company’s value proposition remains relevant to your target market, a retailer might use predictive analytics, market trends, and an understanding of competition behavior. No one benefits when a price war is started in response to a competitor’s pricing except the customer.

Varying prices

You can improve your profitability by changing the prices of your products. Some strategies are:

  • Being a loss leader by offering high-profile products at a lower price to attract clients who will also purchase higher-margin goods
  • Adjusting prices to reflect the changing demand at various periods during the day, week, season, or year. Food vendors may offer discounts to move their remaining inventory.
  • Being aware of when to discount
  • To accomplish the goals of your business, discounting must be beneficial. For instance, clearance discounts might encourage the sale of inventory that is out-of-date or otherwise about to become obsolete, freeing up working capital and enhancing cash flow.

On the other hand, offering discounts could tempt people to try a brand-new item. However, the company risks misrepresenting your goods or producing one-time sales that would only happen again with the discount. It’s also critical to avoid creating a habit among your customers of simply visiting your store during sales and discounts.

Pricing for Different Channels

Because smartphones are available in stores, customers are better informed about prices and products. Even when in-store products are more expensive, executives are reluctant to have varied prices between online and physical locations.

Some companies, though, may have different charges for each channel. For instance, airlines offer varying rates for phone and online reservations. Executives must see the web and in-store sales channels as distinctive operations that serve customers with various wants and price sensitivity if they are to succeed in the current retail industry.

Promotional pricing is essential to your product offering because it is how your business makes money. A retailer’s success depends on its ability to recognize and comprehend the problems with pricing methods.

How to Solve Pricing Challenges?

Impact of the Promotions of One Item on Another

Businesses frequently produce products that can both replace and complement one another. Promotions running on one will almost always impact the demand statistics of another. For instance, advertisements for shampoos will have some effect on the demand for conditioners.

It is exceedingly tricky to foresee these shifts manually, but clever AI-powered promotional pricing can help.

Recording Data of Promotions and Special Events

Most event data typically lives in multiple spreadsheets, emails, and documents, making demand planning difficult. Because of this, it is inappropriate and inefficient to consider the effects of promotions when making judgments on inventory planning.

Demand planners can enter one or more event plans at a time into the pricing optimization software, which records details on the affected SKU segment, event type, event treatment, and date range.

Comprehending the Impact of Promotions

Demand planners often forecast promotional demand based on previous order quantities for comparable promotions. The demand planner’s experience-based intuition and more illogical personality traits play a role.

Pricing optimization software integrates various algorithms with historical event data and upcoming event calendars to find similar events and predict the increase in demand during the event duration. For the most precise demand estimates, pricing optimization software performs calculations in real-time. The collaborative plan is used to build inventory plans after the plans have been frozen, and it also enables demand planners to modify and improve them.

Connection Between the Effect of Promotions and Demand

While both artificial intelligence (AI) and human experience are good resources for decision-making, their combined influence is more significant. Despite the notion that an AI platform would predict demand simply on the data given, many unknowable factors may affect the actual demand. In this aspect, demand planners are faced with significant challenges.

After importing primary event data and the future promotions schedule, pricing optimization software sends the demand planners a promotional pricing uplift visual that displays the baseline and expected demand for a specific SKU for an upcoming event. They also have the option to use their judgment and business skills to fine-tune the answers the system offers


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