SELECTED EXPERIENCE
Transportation Provider
Business Issue
+ A provider of intercity bus transportation was seeking to understand if routes were over-priced or under-priced
+ Measure the effect of previous price changes on passenger volume
+ Estimate the optimal price to charge on specific routes
+ Measure the effect of previous price changes on passenger volume
+ Estimate the optimal price to charge on specific routes
Solution
+ Utilized airline transactional data along with external data and Origin/Destination (O/D) pairings to estimate the elasticities for O/D bus route pairing
+ Evaluated pricing in light of estimated elasticities to determine routes that were candidates for price changes
+ Recommended price changes for a subset of city O/D pairs
+ Incorporated statistical models into a streamlined user interface that allowed client to perform “what-if” pricing scenarios
+ Evaluated pricing in light of estimated elasticities to determine routes that were candidates for price changes
+ Recommended price changes for a subset of city O/D pairs
+ Incorporated statistical models into a streamlined user interface that allowed client to perform “what-if” pricing scenarios
Impact
+ Suggested price increases on designated routes resulted in an increase in revenues of over 10%
+ Client continues to use optimization software to identify additional opportunities for price changes
+ Client continues to use optimization software to identify additional opportunities for price changes
Telecommunications Firm
Business Issue
+ One of the nation’s leading telecommunications companies sought to understand the business impact associated with various pricing strategies and bundled offerings
Solution
+ Estimated own-price and cross-price elasticities using internal and external data for select products across several geographies
+ Used elasticities by product and geography to test critical hypotheses related to model structure, cannibalization, and competitive pricing non-linearities
+ Used elasticities by product and geography to test critical hypotheses related to model structure, cannibalization, and competitive pricing non-linearities
Impact
+ Influenced the development and introduction of several products and service bundles
+ Improved the effectiveness of product and service introductions as measured by take-up rate and profitability
+ Improved the effectiveness of product and service introductions as measured by take-up rate and profitability
Supermarket Chain
Business Issue
+ Top 10 US-based Supermarket Chain wanted to group stores into pricing clusters based on price responsiveness of customers instead of geography
Solution
+ Estimated store-specific price elasticities for major products in each supermarket department
+ Established a pricing process to optimize profits across the store’s entire inventory
+ Focused on the use of private label and interaction with national brands
+ Used elasticities to forecast profits under various pricing scenarios
+ Established a pricing process to optimize profits across the store’s entire inventory
+ Focused on the use of private label and interaction with national brands
+ Used elasticities to forecast profits under various pricing scenarios
Impact
+ Identified actionable pricing clusters within the store network
+ Pricing process enhanced by incorporating facts about customer behavior
+ Pricing process enhanced by incorporating facts about customer behavior
HVAC Manufacturer
Business Issue
+ High-end manufacturer of HVAC equipment, building management systems and controls decided to increase its analytical and execution capabilities in the area of pricing in order to further secure its superior market positioning and to proactively address anticipated market and regulatory changes
Solution
+ Determined the different elements of the pricing waterfall, data sources, and allocation strategies for each of the waterfall elements, encompassing over 25 different revenue and leakage elements
+ Studied and recommended changes to the RFQ response process, price floors and manual overrides
+ Studied and recommended changes to the RFQ response process, price floors and manual overrides
Impact
+ Identified five core opportunities totaling 8M-14M
+ Determined optimal pricing for new products at the customer, brand and model level
+ The client was able to identify and take action to improve profitability for products sold through the low-margin, independent distributor channel
+ Determined optimal pricing for new products at the customer, brand and model level
+ The client was able to identify and take action to improve profitability for products sold through the low-margin, independent distributor channel
Diversified Chemicals
Business Issue
+ Global leader in chemical products was seeking to halt and potentially reverse a multi-year trend in declining margins at a business unit with $1.1B in annual revenue
Solution
+ Identified and implemented industry-specific strategies that focused on:
- Uncovering hidden costs
- Reducing raw material cost volatility
- Eliminating specific services provided to customers that went unreimbursed
- Eliminating free freight and generous payment terms for select customers
- Uncovering hidden costs
- Reducing raw material cost volatility
- Eliminating specific services provided to customers that went unreimbursed
- Eliminating free freight and generous payment terms for select customers
Impact
+ Identified opportunities in excess of $28M-38M
+ These opportunities reduced costs-to-serve, freight, payment terms, late fees in addition to other business performance improvements
+ These opportunities reduced costs-to-serve, freight, payment terms, late fees in addition to other business performance improvements
Beer Producer
Business Issue
+ Major international beverage manufacturer’s low margin, high volume business profits were threatened by changing competition, consolidation and consumer behavior
Solution
+ Used advanced analytics and demand modeling to create a price-setting and optimization process to provide fact-based pricing capabilities
+ Developed a sustainable technology solution, which received and used sales, cost and market activity data on a periodic basis
+ Developed a sustainable technology solution, which received and used sales, cost and market activity data on a periodic basis
Impact
+ Client’s benefits were $75 million in profits per year
+ Deployed leading-edge price-setting capabilities that can quickly react to consumer and competitive changes
+ Deployed leading-edge price-setting capabilities that can quickly react to consumer and competitive changes
Beverage Manufacturer
Business Issue
+ Global producer and distributor of can and bottle beverages was experiencing a reduction in consumer demand thus creating the need to expand consumption and product demand by better understanding and satisfying consumer preferences
+ Understand the volume, price and profitability effects associated with changes in input costs, product price elasticities, and retail market conditions
+ Understand the volume, price and profitability effects associated with changes in input costs, product price elasticities, and retail market conditions
Solution
+ Developed an integrated model for retail products that considered the firm’s input costs and operations, as well as consumer, retailer, and competitor behaviors
+ Used historical data from finance, marketing, and operations to calibrate the model
+ Developed several scenarios that forecasted retail prices, sales volumes, and profitability using different input costs and market conditions
+ Forecasted at specific product, package, and retail channel levels
+ Used historical data from finance, marketing, and operations to calibrate the model
+ Developed several scenarios that forecasted retail prices, sales volumes, and profitability using different input costs and market conditions
+ Forecasted at specific product, package, and retail channel levels
Impact
+ Identified over $50 million in improved bottom-line performance
+ Established pricing optimization models
+ Restructured supplier contracts to improve alignment of incentives
+ Established pricing optimization models
+ Restructured supplier contracts to improve alignment of incentives
Distributor
Business Issue
+ High transaction volumes masked true profitability and hindered ability to raise prices selectively at this $3.0B life sciences and laboratory equipment distributor
Solution
+ AACG personnel designed a customized waterfall that provided visibility at the transaction level, useful to both sales and management
+ Discounts to low volume, low profit customers were withdrawn resulting in immediate margin improvement
+ Identified changes to business practices surrounding vendor price support requests and private label go-to-market strategy
+ Discounts to low volume, low profit customers were withdrawn resulting in immediate margin improvement
+ Identified changes to business practices surrounding vendor price support requests and private label go-to-market strategy
Impact
+ Client’s benefits were $75 million in profits per year
+ Deployed leading-edge price-setting capabilities that can quickly react to consumer and competitive changes
+ Deployed leading-edge price-setting capabilities that can quickly react to consumer and competitive changes
Consumer Products
Business Issue
+ One of the best-known brands in the US, suffering from yearly revenue declines, wanted to implement targeted price increases that minimized additional volume decline
Solution
+ Historical POS data was analyzed to determine price elasticity by channel, product and customer segment
+ Using advanced optimization models, optimized price increases were determined at the store level
+ Using advanced optimization models, optimized price increases were determined at the store level
Impact
+ Managers gained valuable insight into customer buying behavior and sensitivity
+ By using the targeted price increase recommendations, volume loss was expected to be reduced by as much as 75%
+ By using the targeted price increase recommendations, volume loss was expected to be reduced by as much as 75%