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How Monitoring and Analyzing End-User Prices can Help Retailers and Brands Gain a Competitive Edge
15th May, 2024
By Vaibhav Khaparde
Retailers and brands are constantly engaged in a fierce battle over prices and discounts. Whether it’s major events like Amazon Prime Day, brand-led sales, or everyday price wars, they depend on pricing intelligence and digital shelf analytics to fine-tune their strategies. With a variety of offers such as sales, promotions, and bundles, determining the actual cost to the customer becomes a complex task. The price set by the brand, the retailer’s offer, and the final amount paid by the customer often vary significantly.
In their analysis, retailers and brands frequently focus on the listed price or the final sale price, overlooking a critical factor: the “end-user price.” This includes all discounts, taxes, and shipping costs, providing a more accurate picture of what customers are truly willing to pay at checkout.
Grasping this end-user price is vital for both retailers and brands. For retailers, it helps them stay competitive and refine their promotional strategies. For brands, it offers insights into competitive positioning, net revenue management, and shaping customer price perception.
However, emphasizing the end-user price is challenging, as it involves comprehending all the intricate elements of pricing.
How end-user pricing is calculated
The list price, also known as the manufacturer’s recommended retail price (MSRP), is the initial price set by the brand. This may not always be displayed on marketplaces, especially in categories like grocery. The selling price, on the other hand, is the amount at which a retailer offers the product, often reduced from the list price. The end-user price is the actual amount the customer pays at checkout, which includes taxes, promotions, and other factors that affect the final cost.
The process involves 3 key stages:
Step 1: Identifying and categorizing promotional offers
The first critical step in calculating end-user pricing is to identify and categorize the various promotional offers available for a given product that can reduce the final amount paid by the consumer. These promotions span a wide range of types:
Bank Offers: Involving discounts or cash back incentives when paying with specific bank credit or debit cards. For instance, a customer may receive 10% cashback on their purchase by using a specific bank’s card.
Bundled Deals: Combining multiple products or services at a discounted bundle price. A common example is a smartphone bundle including the phone itself, a protective case, and earphones at a reduced total cost.
Promo Codes/Coupons: Customers can enter promo codes or coupons during checkout to unlock special discounted prices or percentage-off offers, like 20% off a hotel booking, or even a special brand discount personalized for their needs (think loyalty offers and in-app promotions).
Shipping Offers: These include free shipping or reduced shipping fees for certain products or orders, such as free delivery on orders above a set amount.
TPRs (Temporary Price Reductions): TPRs play a significant role in the strategies of most retailers. Brands and retailers use them to encourage shoppers to purchase more of a product or to try a new product they wouldn’t usually buy. A TPR involves reducing the price of a product by more than 5% from its regular shelf price.
By accurately identifying and classifying each type of promotion available, brands can then calculate the potential end-user pricing points.
Step 2: Accounting for location and fulfilment nuances (delivery, in-store pickup) that impact final pricing
Product pricing and promotional offers can vary based on the consumer’s location or ZIP code. Additionally, customers may opt for different fulfilment modes like delivery, shipping, or in-store pickup, which can further impact the final cost. Accurately calculating the end-user price necessitates considering these location-based pricing nuances as well as the chosen fulfilment method.
In the example below, the selling price is $4.32 for one retailer (on the left in the image) after a discount for online purchase. In another case with Meijer, the item total shows $17.91, but the consumer ends up paying $15.74 after taxes and fees are applied (on the right in the image).
Step 3: Applying each eligible promotion or offer to the selling price to determine potential end-user price points
With the various promotional offers and discounts categorized in the previous steps, retailers and brands can now apply each eligible promotion to the product’s selling price. This involves deducting percentages for bank cashback, implementing bundled pricing, applying coupon code discounts, and incorporating shipping promotions.
For retailers, this step allows them to calculate their true effective selling price to customers after all discounts and promotions. They can then compare this end-user price against competitors to ensure they remain competitively priced.
For brands, by systematically layering every applicable offer onto the baseline selling price, they can accurately calculate the multiple potential end-user price points a customer may pay at checkout for their products across different retailers and regions.
Why the end-user price matters
Optimizing pricing strategies using the end-user price can benefit retailers and brands in several ways:
Price Competitiveness: By monitoring end-user pricing, retailers can adjust for discounts and promotional offers to attract customers, while brands can refine their pricing models to stay ahead in the market.
Customer Acquisition and Loyalty: Offers, promotions, and discounts directly impact the final price paid by customers, playing a crucial role in attracting new customers and retaining existing ones. For example, Walmart’s competitive pricing in groceries boosts customer loyalty and repeat purchases.
Consumer Perception: End-user pricing significantly shapes how consumers perceive both retailers and brands. Competitive pricing and promotional transparency enhance reputation and conversion rates. Amazon, for instance, is known for its competitive pricing and fast deliveries, which strengthen its consumer perception and satisfaction.
Sales Volumes: The final checkout price influences affordability and perceived value, directly affecting sales volumes. Both retailers and brands benefit from understanding this, as it guides consumer purchasing decisions and drives revenue streams.
Brand Perception: Consistent and transparent pricing enhances the perception of both the retailer and the brand. This not only strengthens the value proposition but also builds consumer trust and fosters long-term loyalty.
While the listed and selling prices are readily available, calculating the true end-user price is quite complex. It involves meticulous tracking and application of various types of promotions, offers, location-based pricing nuances, and fulfillment costs – an uphill task without robust technological solutions.
Track and Analyze end-user prices with DataWeave
DataWeave’s end-user price tracking capability empowers retailers and brands with the insights and tools necessary to comprehend the complexities of pricing dynamics. For retailers, it offers the ability to monitor end-user pricing across various products and categories compared to competitors, ensuring competitiveness after all discounts and enabling optimization of promotional strategies. Brands benefit from informed pricing decisions, optimized strategies across retail channels, and a strengthened position within their industries.
Our intuitive dashboard presents classified promotions and corresponding end-user prices across retailers, providing both retailers and brands with a transparent, comprehensive view of the end-user pricing landscape.
Within the detailed product view of DataWeave’s dashboard, the Price and Promotions panel showcases diverse promotions available across different retailers for each product, along with the potential end-user price post-promotions.
Harness the power of DataWeave’s sophisticated Pricing Intelligence and Digital Shelf Analytics to gain an accurate, real-time understanding of your end-user pricing dynamics. Make data-driven pricing decisions that resonate with customers and propel your brand toward sustained success.
Find out how DataWeave can empower your eCommerce pricing strategy – get in touch with us today or write to us at contact@dataweave.com!
