Why Pricing a Whole Category Together Makes More Money
Retailers want to maximise profit from their product categories. This research shows how they can achieve it.
Manish Gangwar
Associate Professor of Marketing and the Executive Director of ISB’s Institute of Data Science (IIDS). He specialises in advanced analytical methodologies, including machine learning, econometrics, data science and game theory. His research covers competitive promotions, omnichannel retail, dynamic pricing, and the use of AI in marketing.
Video Summary
In this episode of The Big Picture, Professor Sudhir Voleti explains why the common retail strategy of everyday low pricing (EDLP), used by players like Walmart, doesn’t work for all customer segments. Retailers want to predict sales and revenue, but to do that, they must account for how products compete with each other and over time. Borrowing from his research work, he discusses a demand model which encapsulates these dynamics. Applied to a beer category, it helped a retailer improve profits by 3.3%. “That’s big,” says Professor, “in retail where margins are wafer thin.”
Authored by ISB Editorial