Let’s delve into how they specifically help the business optimize their pricing and promotional strategies:

Consider what most customers do when they want to shop for a new product. If you want to buy a TV, for instance, you will most likely surf multiple websites, in order to determine the right price you’d want to pay. Whether you choose to buy in store or online, you conduct your due diligence in obtaining information on the right price.

In another scenario, a customer goes to a retail outlet to pick up a beverage and sees there is a promotion from your competitor with an attractive product packaging and a price point well below of what you are selling at, and ends up buying your competitor’s product.

With the current business environment, the information access buyers have and the competitive scenario, it is evident that smart pricing strategies can create a make or break situation for CPG businesses. When businesses fail to set the right price consistently, it tarnishes their reputation and can seriously affect business in the long run.

Price plays a vital role in chartering the brand image and its value proposition. In order for a brand to ensure long term customer loyalty, it is important to build a connection with its buyers through the way its prices are set. For example, brands like Apple and Lulemon are able to charge premium prices because of the way the brand has been positioned in the market. Pricing, as is obvious, is a key factor in increasing profits and in ensuring consistent business growth over time.

As the internet makes buyers more aware, they are comparing prices on various channels and between competitor products before making a purchase. This means, businesses themselves have to be on top of their game in order to ensure that they are delivering value to the customer, in terms of pricing excellence. But this is where CPG companies typically fail. They aren’t monitoring competitors’ pricing on a frequent basis, they rely on manual data or worse, their instincts to make price setting decisions, they don’t customize pricing based on region, store or target segment. All of these practices result in suboptimal pricing, discouraging buyers from making purchases, and instead of going to the competitor.

Several companies aren’t tapping into the potential of establishing a well defined pricing strategy that aligns with their branding goals. And this is largely because these businesses are not adequately equipped to gain visibility into how profitable they actually are and won’t have insights to the price points of the competition.

Read More: 4 Best Practices For designing a winning CPG pricing strategy

This is why leveraging advanced analytics is crucial…

When companies do not have access to data-driven and centralized pricing analytics, they use instincts to make decisions that results in missed opportunities and makes them vulnerable to needless compliance risk.

Since advanced analytics analyze a vast amount of data to deliver recommendations, they are able to provide CPG companies with accurate pricing suggestions for each category, region and product and comparisons of the same with external data like Promotions & Pricing data of competitors from market research companies like Nielsen or IRI. This helps businesses build resilient price-pack architecture.