The ROI of Pricing: Measuring the Impact and Making the Business Case by Unknown

Author:Unknown
Language: eng
Format: mobi
ISBN: 9781135051815
Publisher: Taylor and Francis
Published: 2014-01-23T14:00:00+00:00

• Formula:

where

GM$ = Gross Margin Dollars

Figure 6.3 is an example of a price management dashboard using the aforementioned metrics. Notice that the overall feel of the dashboard has been broken into three sections: current period, previous period, and the metrics we have discussed in this section. Please note Figure 6.3 has been split into two sections to enable readability.

Business analytics

Business analytics uses the available data and any externally available data to drive strategic plans, and determine operational and tactical actions. Business analytics includes typical mathematical modelling techniques such as segmentation, forecasting, and price-setting processes. Our focus is to present analytics to monitor an existing pricing action. In summary, after a pricing action is implemented, we wish to monitor its effectiveness and be alerted as soon as possible, in effect minimizing the risk that the pricing action goes awry. Armed with this type of information, effective decisions are made that limit the downside risk.

This section shows how business analytics can be used to model and track ROI associated with a pricing action. This section will define the business issue; define some terminology; describe how to select important drivers; describe a regression based signal decomposition method; and lastly we will touch on more advanced techniques of analysis of covariance and regime shift analysis.

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