Revolutionizing Retail With Smart Pricing and Promotion
Unlock your full growth potential.
- CIOs are navigating the growing complexity of available technology as they integrate smart pricing and promotion solutions with existing technology and platforms.
- CIOs are looking to set clear expectations around how advanced analytics technology can enhance decision-making and optimize pricing and promotions with the data sources available to the organization.
- CIOs are balancing the need for new technology and the cost of implementing it with the expected return on investment.
Our Advice
Critical Insight
CIOs need to be the champions of smart pricing and promotion technology as it empowers organizations to drive increased revenue potential through advanced analytics and automation. Additionally, this technology helps retailers stay ahead of customer trends, fostering increased customer retention.
Impact and Result
- Improve your pricing and promotion strategy by using this research to understand how smart pricing and promotion can help your organization’s success.
- Use our tools to evaluate the current state of your data and software tools to help you be competitive.
- Adopt a unified pricing and promotion strategy that consumes data considers supply chain, consumer trends and market changes.
Revolutionizing Retail With Smart Pricing and Promotion
Unlock your full growth potential.
Analyst perspective
Smart pricing and promotion to improve revenue
As data-driven strategies are increasingly evolving, smart pricing and promotion solutions for the retail industry have emerged, giving organizations tools for maximizing revenue, optimizing operations and improving the customer experience. Smart pricing and promotion solutions enable organizations to analyze real-time data and, using advanced AI modeling, provide the business team the ability to elevate their pricing strategies. Not only do smart pricing and promotions solutions elevate an organization’s pricing strategy, their AI engine and data outputs can be integrated and used to inform a variety of business operations including distribution planning and allocations. For technology leaders, smart pricing and promotion solutions offer a distinct opportunity to position their organizations for a competitive advantage and sustainable growth.
Donnafay MacDonaldResearch Director, Industry
Info-Tech Research Group
Executive summary
Your ChallengeNavigating the growing complexity of available technology as you integrate smart pricing and promotion solutions with existing technology and platforms. You need to set clear expectations around how advanced analytics technology can enhance decision-making and optimize pricing and promotions with the data sources available to the organization. You need to balance the need for new technology and the cost of implementing it with the expected return on investment. | Common ObstaclesSupport for building a robust pricing and promotion strategy that uses essential data needed for decision-making. The business is using Excel to collate their data for decision-making using siloed and fragmented data. You are thoroughly evaluating the existing technology stack to understand capabilities and limitations and enable the most effective technology solutions. | Info-Tech’s ApproachInfo-Tech will provide insight and tools into how to: Improve your pricing and promotion strategy by using this research to understand how smart pricing and promotion can help your organization’s success. Use our tools to evaluate the current state of your data to support a smart pricing and promotion solution. Adopt a unified pricing and promotion strategy that considers supply chain, consumer trends, and market changes. |
Info-Tech Insight
CIOs need to be the champions of smart pricing and promotion technology as it empowers organizations to drive increased revenue potential through advanced analytics and automation. Additionally, this technology helps retailers stay ahead of customer trends, fostering increased customer retention.
Right pricing is the cornerstone of success
Poor pricing leads to failure
47%
of products fail in the pricing stage.
Pricing research is highly valued
90%
of companies highly value pricing research.
Source: Hanover Research, 2023
“90% of online shoppers say they actively compare deals before making a purchase. 60% of shoppers say that pricing is the key factor when making a purchasing decision. And nearly 50% of consumers only purchase discounted products.”
Source: Prisnyc, 2024.
A successful marketing strategy has a robust price and promotion strategy
Every successful marketing strategy includes five core elements: product, place, price and promotion are the first four elements, with people (consumers) being the end focus.
Together these four elements deliver value to customers. This research piece focuses on price and promotion strategy, which plays an instrumental role in determining a product’s market success.
A good price and promotion strategy will do the following:
- Shape the perceived value of products/services.
- Drive awareness and engagement with customers.
- Provide product differentiation in a crowded market.
- Build customer loyalty.
“How much the customer is willing to pay for the product has very little to do with the seller’s cost and has very much to do with how much they value the product or service they’re buying. When considering your price, it’s important to realize that it’s not for yourself, but for your target customers.”
–Eric Dolansky, Associate Professor of Marketing, Brock University, quoted in BDC, 2024.
Increase revenue generation with smart pricing & promotion
Smart pricing and promotion leverages real-time data from multiple sources which is consumed by an artificial intelligence (AI)/machine learning (ML) engine to generate dynamic, data-driven insights. This allows for adaptive pricing strategies to be employed and gives retailers the ability to instantly respond to shifts in market conditions, competitor pressures, customer behavior, and inventory levels. The engine that drives insights is continually optimized, allowing for on-the-fly price and promotion adjustments. The overall value outcomes of smart pricing and promotion include:
- Increased revenue and profitability.
- Improved customer engagement, customer experience and retention.
- Enhanced operational efficiency.
- Higher adaptability to change, increasing competitive advantage.
“Dynamic pricing isn't just about adjusting prices — it's about seizing opportunities to maximize revenue and profit in real-time.”
Source: Simon-Kucher, 2024
Accelerate retail performance with the adoption of cutting-edge analytics models
The path to growth is by adopting AI/ML technology for insights and decision-making, where retailers who use AI/ML see higher growth in both sales and profits over their competitors who do not use AI/ML.
Retailers using artificial intelligence (AI) and machine learning (ML) technologies performed better than their competitors. Both in 2023 and 2024, retail companies using this kind of technology saw a two-digit percentage growth of their sales compared to the respective previous years. Similarly, their annual profit grew by roughly eight percent, outperforming retailers who did not use AI or ML solutions.
Source: Statista, 2023.
Competitive retailers are benefiting from smart pricing and promotion strategies
Using AI technologies for pricing and promotion is critical for retailers to:
- Gain a competitive advantage by being able to synthesize large amounts of data and leveraging advanced technologies to derive insights that better position products within the market.
- Integrate across business functions and identify real-time pricing and promotion decisions that are necessary to satisfy customer demand, manage stock position, and maximize profits.
- Invest early to achieve higher return on investment (ROI) as margin pressures continue to increase and AI continues to advance.
Business KPIs are directly impacted by pricing and promotion strategies
Smart Pricing & Promotion Strategy
Sales per Square Foot (SPF)
Measures the efficiency of the available space within a physical store. Business Value: Indicator of a location's performance & profitability.
Drivers to increase: Optimized pricing/promotions, product offering, effective merchandising and store layouts that encourage dwell times.Conversion Rate
Measures number of customers who visit the store/website and make a purchase. Business Value: Indicator of meeting customer needs & expectations
Drivers to increase: Personalizations, staff likeability, pleasing designs (product, store & website layouts)Average Transaction Value (ATV)
Measures the average customers are spending with each purchase. Business Value: Evaluate sales initiatives & effectiveness of pricing/promotion strategy
Drivers to increase: Special offers, product bundling, checkout flowUnits per Transaction (UPT)
Measures the average number of items purchased per transaction. Business Value: Indicator of sales revenue and profitability
Drivers to increase: Promotions, upselling, cross-selling & merchandisingSell-Through Rate
Measures the product sold vs. the beginning on-hand product for the selling period. Business Value: Indicator of market demand, seasonality and product preferences.
Drivers to increase: Change to price/promotion strategy, merchandising adjustmentTurnover Rate
Measures the cost of goods sold by the average cost of inventory of a set time period. Business Value: Indicator of product performance, profitability and market trends.
Drivers to increase: Effective inventory management systems, change to overall marketing strategy, merchandising adjustmentGross Margin ROI
Measures the gross profitability of owned inventory. Business Value: Key indicator of profitability and viability of products.
Drivers to increase: Optimize price and promotions, employ smart technologies for inventory management, improve forecast accuracy.Gross Profit Margin
Measures the efficiency of revenue generation of products/services sold. Business Value: Indicator of product efficiency and used to set pricing strategy.
Drivers to increase: Change to pricing and product strategy.Net Profit Margin
Measures the overall profitability of goods/services sold. Business Value: Indicator of overall financial health and informs marketing strategy.
Drivers to increase: Increase sales through optimized pricing strategy, reducing expenses through vendor relationships, expansion to capitalize on economies of scale.Customer Retention
Measures the ability to keep customers and convert them into repeat buyers. Business Value: Overarching KPI in introducing a smart pricing and promotion strategy by driving brand loyalty.
Drivers to increase: Using smart pricing and promotion software; build customer habits through personalization, maximize communication, provide quality customer experiences.
NOTE: Not an exhaustive list of KPIs
Performance metrics must reflect your goals
Metric | Description | Specific | Measurable | Achievable | Relevant | Time-bound |
Inventory turnover ratio | Measures how often inventory turns to track how well you are capitalizing on market demand | Implement a data-driven pricing strategy to influence how quickly product sells | As a ratio, total cost of inventory sold/average inventory sold | Increase/decrease over/under stock by 20% | Reduce overstock/understock, free up capital and storage, and capitalize on market demand | Achieve improved inventory performance within 12 months |
Conversion rate | Number of customers converted in-store and online from visitor to purchaser | Implement a data-driven pricing strategy focused on personalization to increase conversion | As a percentage, the number of purchasers/number of visitors | Increase overall conversion rates by 15% | Increasing conversion rates increases sales, maximizes impact of pricing strategies | Achieve improved conversion rates within six months |
Physical/digital traffic | Number of customers who visit physical stores and/or digital stores | Implement a data-driven pricing strategy with targeted promotions | The total number of visits either in-store or digital | Increase physical store traffic by 10% and digital by 20% | Increase the amount of traffic across all channels, supports sales growth | Achieve improved traffic within six months |
Average transaction value (ATV) | Increase the average transaction value per customer transaction | Implement a targeted pricing strategy to increase overall units on every transaction | As a percentage, total sales/total transaction count | Increase average transaction value per customer by 10% | Increasing the ATV contributes to revenue growth | Achieve improved average transaction value within six months |
Sales per square foot | Increase sales by square foot of a physical store | Implement a data-driven pricing strategy with targeted in-store promotions | As a percentage, total net sales/total square feet of the physical store | Increase sales per square foot by 12% | Increasing sales per square foot improves the effectiveness of the retail space | Achieve improved sales per square foot within nine months |
Customer retention | Repeat buying from the same customer | Implement personalized, loyalty-based pricing and promotions, increasing repeat buying | As a percentage, total customer - new customers/total customers | Increase customer retention by 15% | Increasing customer retention is less costly than finding new customers | Achieve improved customer retention within 12 months |
Gross margin return on investment (GMROI) | Profit return for every dollar invested in inventory | Implement a data-driven pricing strategy to improve overall GMROI | Total gross profit/average inventory cost | Improve GMROI by 5% | Increase GMROI helps retailers maximize profit by generating a higher return on inventory investment | Achieve improved GMROI within nine months |
AI-powered pricing capabilities outperforms all other pricing strategies
Measurable impact of smart pricing and promotion technology
Experience-Based | Rule-Based | Analytics-Enabled | AI-Powered | |
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Source: BCG, 2024
Dynamic pricing directly correlates to revenue potential
Adapting price to market fluctuations increases profits
Source: Bright Pearl, 2023
AI changes not only the way retailers make decisions but also the quality and range of those decisions.
Source: BCG, 2024
Build a robust data foundation for success
Activity: Data Quality Assessment
60-90 minutes
The Data Assessment Smart Pricing and Promotion tool is to be used to guide retailers in understanding the data points needed to support a comprehensive smart pricing and promotion solution.
The workbook contains five worksheets:
- Instructions
- Terminology and Definitions (used in the Data Quality Assessment tab)
- Data Quality Assessment
- Data Quality Visual Output
- Data Quality Go/No-Go
The tool is directional where not all data points are required and/or not all source systems are used by retailers.
Download the Data Assessment Smart Pricing and Promotion tool
Start a Data Quality Scorecard
Input
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Materials
| Participants
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Activity example output
The Data Quality Go/No-Go provides retailers with a consolidated visual of the quality of data for each data source needed to support the key capabilities of a smart pricing and promotion solution.
Example output and next steps based on example results:
- Green, GO
- Proceed with initiative and implementation
- Communicate plan with stakeholders
- Source vendors
- Yellow, Review to GO
- Identify issues and develop an action plan
- Implement remediations
- Reassess and validate
- Red, NO-GO
- Assess critical data issues and formulate a remediation plan
- Implement corrective action
- Engage with stakeholders
Additional Info-Tech resources to support GO, Review to Go, and No-Go activities:
Use The Rapid Application Selection Framework
Review Data Quality Problem Template
Build Your Data Quality Program
Smart pricing and promotion solutions should have some baseline capabilities
Smart Pricing & Promotion
Real-time data & performance tracking
Collect and analyze data in real time that allows for immediate adjustments and optimization of price and promotions in the market.Personalization & segmentation
Segment customers based on multiple criteria, personalizing pricing and promotions that meet the customer individually.Advanced analytics
Must be able to analyze multiple, large data sets and generate insights that can be used by the dynamic pricing engine.Dynamic pricing engine
Must have the ability to adjust pricing in real time, taking into consideration factors such as demand, available inventory, competitor pricing, and customer behavior.Omnichannel integration
Seamless integration between physical and virtual channels, providing consistent price and promotion strategies across the organization.Automation of price & promotions
Available tools that allow business teams to design, deploy, and manage price and promotions based on predefined rules.
Choose the smart pricing and promotion software that’s right for you
Take your time when choosing your system to ensure that it supports the goals of the business and integrates with other tools.
Competera
Source: Competera
98% Avg. data SLA
Enterprise-level AI pricing platform with competitive data matching, scraping, crawling, and reporting.
Claim to fame: 119M data points/month, track data in 34 countries, 2.5M product matches per month
Feedvisor
Source: Feedvisor
360deg Marketplace view
AI-driven and data-backed marketplace pricing and advertising optimization with robust reporting and analytics.
Claim to fame: Dominate seller marketplaces such as Amazon, Walmart, Shopify, and BigCommerce
Minderest
Source: Minderest
+99% Data quality
Suite of tools from price and promotion optimization to demand forecasting and marketplace monitoring.
Claim to fame: 10 years of experience with a global reach on e-commerce data monitoring
netRivals
Source: netRivals
900M Products from 31K websites
Dynamic pricing, price intelligence, competitor price monitoring, compatible to link to BI tools.
Claim to fame: Comprehensive market view with +32K stores and 3.8B images
Omnia Retail
Source: Omnia Retail
203% YOY growth Customer achieved
Automated and transparent ML/AI model that offers marketplace price monitoring, dynamic pricing and real-time insights.
Claim to fame: Serves 390 brands, 140M market price scrapes, 40M calcs per day
Price2Spy
Source: Price2Spy
+15% Margin gains
All-in-one solution that provides price comparisons, marketplace price monitoring, dynamic pricing, optimization, and reporting.
Claim to fame: Price monitoring and repricing module
Choose the smart pricing and promotion software that’s right for you (cont’d.)
Take your time when choosing your system to ensure that it supports the goals of the business and integrates with other tools.
Pricefx
Source: Pricefx
70x ROI
AI-based price management platform that offers price setting, promotions, rebates and channel management.
Claim to fame: Improve ROI, maximize margins, increase profitability gains.
Prisync
Source: Prisync
+3% to 20% Avg. sales & profit margin
Automated pricing software with marketplace competitor price tracking and monitoring with cross-channel price optimizations.
Claim to fame: User-defined, easy-to-use dashboard with excellent CX and reliable data.
Pros
Source: Pros
+10% Margin gains
AI-backed dynamic pricing and smart pricing optimization and enhanced selling workflows across multiple channel types.
Claim to fame: Captured the Airline price optimization market.
Quicklizard
Source: Quicklizard
+300% In productivity
AI/ML-powered dynamic pricing platform with optimized predictive pricing, automated omnichannel capabilities.
Claim to fame: 100% open platform, AI-based, omnichannel alignment.
Retalon
Source: Retalon
+15% Gross margin
AI-based solution offering analytics, dynamic price optimization, promotions and markdowns.
Claim to fame: Additional products suite: planning, inventory management & order fulfilment.
Symson
Source: Symson
+95% Accurate competitor data
AI-powered dynamic pricing, competitor monitoring, insights and predictive scenario planning.
Claim to fame: Identify margin bleeders and increase margins with price elasticity.
Accelerate the software selection project
Use Info-Tech’s resources and tools to get started with vendor selection
Download The Rapid Application Selection Framework
Research Contributors & Experts
Craig Broussard
Executive Counselor
Info-Tech Research Group
John Leidl
Executive Counselor
Info-Tech Research Group
Vince Mirabelli
Principal Research Director
Info-Tech Research Group
Sidori Nissan
Member Services Director
Info-Tech Research Group
Shreyas Shukla
Principal Research Director
Info-Tech Research Group
Heather Munoz
Executive Counselor
Info-Tech Research Group
External Contributors
3 external contributors have asked to remain anonymous
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