In this use case, product and pricing teams recognize over and under inventoried products and upcoming changes in demand and determine price changes that optimize profitability in the business.
Use Case Situation Description
User Role:
Pricing or Product Manager
Business Objective:
Our business receives updated forecasts of market demand for products from various sources. In the case demand is constrained for some of these products by limitations on raw materials or production capacity, we need to determine the pricing levels for each impacted product to optimize our profitability. Pricing level could be dependent on current inventory levels and should fluctuate based on inventory usage, particularly in times of supply and demand imbalance.
Complication:
· Accessing a valid demand forecast for related products
· Translating future demand scenarios into pricing plans that optimize margins
· Understanding of inventory levels
Capability Needed:
A quick, integrated way to evaluate updated demand scenarios and inventory levels across multiple products to determine pricing that will optimize margins.
Benefit:
Company margins will improve.
KPIs:
Gross margin or contribution margin