Optimizing Pricing Strategy for Retail Business

Last month, we had a chance to attend INFORMS Revenue Management and Pricing Conference in Amsterdam. Located in Centrum Wiskunde & Informatica, the conference invites academics, including PhD Student and practitioners who are active in research in the fields of pricing analytics and revenue management.

This conference was broken down into several sessions; Pricing, Assortment Optimization, Display Advertising, Transshipment, and practical session with professionals. We were delighted to be able to present our work on Estimation of Market Characteristics together with Aaron Dukes, Principal Scientist at IDeaS Revenue Solutions and Professor Nicola Winter from Berlin School of Economics and Law.

Our presentation titled “A Novel Approach to Measure Price Sensitivity from the Transactional Data of a Retail Company”; an approach rooted from a pricing project with our retail client. We believe that the core elements of a retail business itself is the product and the price of that product, not only in the realm of marketing. To optimize pricing strategy, we need to also measure price sensitivity. Unfortunately, price sensitivity measurement is easy in theory but it is not when dealing with real data. Aaron Dukes also cited his experiences on the difficulty of price sensitivity and how he found odd customer behaviors related to their perception of price.

A PhD student from MIT, presented a work on algorithm of slice recovery tensor for personalized recommendation engine, that provides significant performance improvement over state of the art incumbent approaches to tensor recovery. Another refreshing presentation we had during the conference was from a Professor at Harvard Business School on assortments rotation and what type of customer suitable for the strategy. We also learned on optimizing revenue by building dynamic pricing system for the unified online and offline stores from IBM.

It was such an honor for us, Stream Intelligence, being able to present our work with fellow academics and professionals. Aligned with our main goals, we aim to continuously innovate and help organizations create values that enable them to optimize their business.