Retailers have an ace up their sleeve that they often choose not to use: finding the right balance that links promotions and prices. In fact, managing to create price and promotion strategies that aim to balance volume and profit, is an aspect that cannot be underestimated.

Why?

Because it builds capacity. Retailers who find the right balance between short-term actions to create better pricing strategies and promotions can build the capabilities that will sustain their growth and long-term success at the same time.

Now let’s get down to business to see what we’re talking about. Let’s imagine that we are faced with an article that has just been subjected to a price increase by the manufacturer. The same article has also just been put on promotion by marketing. Do you say that it is an absurd situation, that it is difficult to occur? Absolutely not. It happens much more often than we think.

The lack of coordination between the two areas is unfortunately widespread and counterproductive for many retailers, who find themselves with promotions that do not generate any profit, or at least do not reach what they hoped. Dealing with this kind of scenario is not easy, as we often find ourselves in a situation of absolute reactivity.

According to Retail Insight, 65% of consumers are constantly looking for promotions and discounts when they shop.

But this does not mean that the race to the bottom is the road to success, To make better decisions that maintain a link between prices and promotions, retailers should be able to identify the optimal balance of each product.

How to find the necessary balance between prices and promotions?

Strategies that bring results tend to be those that consider price and promotion together. If you stop considering them as separate challenges and maybe collaborating with the manufacturer, you could achieve effectiveness and results.

In fact, retailers who take this path, have the real chance to increase ROI and encourage exponential growth at an affordable cost.

In our experience, we can say that in order to be able to develop a winning strategy and that it has a solid balance between prices and promotions, data analysis plays an essential role. For example, transaction histories are critical to understanding price analysis at the SKU level.

But data combined with analysis methods alone are not enough: the right mix must emerge, created by analytical approaches with the skills and experiences of individual managers.

The thread between prices and promotions is woven with data, but also between people.