Professional Pricing Society: Pricing, Big Data and Marketing: A Powerful Trifecta

October 24, 2014-

By Sebastian Mamro

Marketers have a wide choice of new software solutions that can help them be more productive, including auto­mated lead-generation systems, customer tracking and social media tools. Howev­er, when it comes to leveraging big data to enhance revenue and profits, market­ing professionals often overlook one of the classic four pillars of the marketing mix—price. Yet those marketing execu­tives who learn to harness the wealth of big data they already possess can gain substantial advantages and outperform their markets.

While the marketing function in global businesses is often responsible for set­ting list prices for products and servic­es, few marketers excel at the task. For distributors and retailers, this can mean a constant struggle to manage prices for thousands of SKUs, as well as associated discounts and promotions. Those sug­gested list prices can also be discounted during the sales process to close deals and maintain customer relationships.

Unfortunately, there is an unequal bal­ance of power in the battle to maintain prices and margins in today’s highly competitive global marketplace. That’s because marketing and sales teams fre­quently don’t utilize the kind of big data tools and insights their customers’ pro­curement departments possess when ne­gotiating prices and contracts.

By adopting big data solutions to look across internal ERP and CRM data, as well as external marketplace informa­tion, you can free your marketing and sales functions from time-consuming, manual spreadsheet updates and other inefficient pricing practices. Analytical tools can efficiently process vast amounts of data to identify customer segments and provide insights into specific cus­tomer buying behaviors. Using informa­tion this way can also identify the key drivers or variables that influence buyers, and determine their willingness to pay a certain price for a given set of products and services.

As a result, you can begin to harmonize pricing practices across your organization and align marketing and sales resources to achieve strategic as well as tactical goals. Instead of constantly reacting to price changes in the marketplace, you can test various marketing scenarios and take a more proactive approach to deci­sions. Harnessing the knowledge locked in your big data translates into the power to price more efficiently and profitably.

Let me offer an example. A global chem­ical company based in Europe was able to analyze and interpret available inter­nal data, as well as external marketing information. With these combined re­sources the organization integrated pric­ing and competitive and transactional data in one centralized location.

The chemical company gained imme­diate value. By allowing the company to organize incoming data and identify key customer segments, they found 10 key value-based customer-behavior driv­ers. Collecting this vast amount of data from various sources and putting it to­gether meant that the company could determine list prices, which they could adjust to help achieve strategic margin goals. In addition, big data enables the company to execute more informed pric­ing decisions in conjunction with field sales operations, providing specific pric­ing guidance during contract negotia­tions. None of this would be possible us­ing traditional pricing and sales methods that frequently rely on outdated, manual spreadsheets.

Today, marketing and sales executives can use pricing technology solutions to simulate pricing and promotion cam­paigns as a predictive tool. Exploring and then choosing optimum pricing strate­gies, marketing and sales professionals can execute their campaigns then moni­tor and measure the results by regional markets, individual sales people and cus­tomer accounts.

In the case of our global chemical com­pany, a pricing initiative led by market­ing and sales executives established a new process for setting prices that incor­porated a wide range of variables, includ­ing product bundling, freight and han­dling costs, payment terms, discounts and rebates, and exchange rates across global markets. Given the growing com­plexity and competitive nature of global markets today, marketing and sales ex­ecutives owe it to themselves and their companies to learn how to exploit the potential of big data in making better pricing and business decisions.