The Rise and Rise of Price Analytics!
Recently Netflix launched Rs 199 ($2.8) mobile-only monthly plan in India. CyberMedia Research (CMR) reported that after the release of the new mobile plan, Netflix now has the potential to reach 3.7 million subscribers as compared to the earlier number of 1.3 million subscribers in India by the end of the year. This increased subscriber count is the result of Netflix’s new pricing model which puts it directly in competition with Hotstar ($14.5 yearly) and Amazon Prime Video which are similarly priced in India.
This new improved pricing model considers some prerequisites such as growing smartphone users, inexpensive internet plans and increased appetite for video content in the country. According to a report by FICCI-EY 2019, more than 70% of the mobile data is used by Indians on entertainment which is possible due to the bombardment of cheap data plans. Ajay Arora, Director, Product Innovation, Netflix said “Our members in India watch more on their mobiles than members anywhere else in the world – and they love to download our shows and films. We believe this new plan will make Netflix even more accessible and better suited for people who like to watch on their smartphones or tablets – both on the go and at home”.
From the above example, it’s clear that pricing and advanced analytics play a key role in improving the subscriber count and profitability for Netflix. Because pricing and promotion strategies are challenging in an omnichannel ecosystem, brands rely on data analytics for pricing. By leveraging datasets such as product preference, POS, promotional data, marketing spend data, seasonality information, economic situation, sales negotiations and more, brands gain insight into their most profitable customer, region and more.
As price is usually the first thing noticed by the majority of customers, it plays an important role in establishing the brand image. Brands that effectively communicate price messages with shoppers enjoy long-lasting customer loyalty. In “Getting Pricing Right By Larry Montan, Terry Kuester, Julie Meehan”- research shows that price management initiatives can increase a company’s margins by 2 to 7% in the 12 months, yielding an ROI between 200 and 350 percent.
Traditional guidelines and practices for pricing can lead to missed opportunities, falling margins, low brand image and exposure to unnecessary risks. Maintaining price is important for the manufacturer as well because it directly reflects in relationship with the retailer and his margins. According to RSR Research “Pricing 2015” report, retailers see improving margins as among the “top three opportunities for pricing to contribute to business strategy.” Machine learning-based models on Price Elasticity Analysis, Markdown Optimization, Promotional Efficiency Analysis, Channel Efficiency Analysis, Competition Price Sensitivity and Price Optimization helps in not only understanding consumers buying decisions/patterns but also to reveal what drives prices for each customer segment and product.
Pricing Analytics also plays a pivotal role in marketing campaigns.
