The Right Price · The Right Price Santiago Gallino –Tuck School of Business Toni Moreno...
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The Right Price Santiago Gallino – Tuck School of Business Toni Moreno – Kellogg School of Management July 2013 – LBS – London, UK January 2017
Transcript of The Right Price · The Right Price Santiago Gallino –Tuck School of Business Toni Moreno...
TheRightPrice
SantiagoGallino– TuckSchoolofBusinessToniMoreno– KelloggSchoolofManagement
July2013– LBS– London,UKJanuary2017
29May2017 2RetailFundamentals
LearningModules
1.Demandforecasting
2.InventoryDecisions
3.AssortmentPlanning
4.PricingDecisions
5.Theomnichannelcustomer
6.Fulfillingomnichanneldemand
7.Omnichanneljourneys
8.Supportinganomnichannel
strategy
29May2017 3RetailFundamentals
M4.3Opening1
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M4.3Priceelasticity2
QuantitySoldatDifferentPrices
Ifcustomersareverypricesensitive,salesdecreasesignificantlywithpriceincreases
29May2017 5RetailFundamentals
M4.3Priceelasticity2
Elasticity=percentchangeinquantitysoldpercentchangeinprice
Acommonlyusedmeasureofpricesensitivity:
29May2017 6RetailFundamentals
M4.3Priceelasticity4
Acommonlyusedmeasureofpricesensitivity:
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M4.3Priceelasticity2
• Ingeneralwewouldexpectthatpriceelasticitywillbenegative
• Buttheremightbesituationswhenproductswithpositivepieceelasticity
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M4.3TheOptimalPrice3
QuantitySoldatDifferentPrices
Ifcustomersareverypricesensitive,salesdecreasesignificantlywithpriceincreases
ProfitatDifferentPrices
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M4.3DefiningpricesandPriceelasticity
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CustomerPriceSensitivityandCost
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M4.3Closing2
• Tolearnaboutpriceelasticityretailerscanlookathistoricalsales
• Differentproductshaveverydifferentpriceelasticity.• Andthepriceelasticityforaproductcanvaryfordifferent
customerssegments.• Youcanbegladlysurprisewhenyoudiscoverthatyoucan
increasethepriceofaproductswithoutaffectingsalesinameaningfulway.
29May2017 11RetailFundamentals
