High Stakes eComm Pricing Games

Extreme Marketing Makeover: The Price is Right, Right?

Price, you were the bedrock of brick and mortar, but the Internet changed you. Free Shipping. Annual Membership Fees. The more you buy, the more you save. (The games you play!) Your clever use of psychology and timing in the digital age are impressive. Just asking, Price, can you be trusted?

For the manufacturer and retailer, how pricing is presented online is often a key factor in converting sales. From bundles and SKU breadth to complementary product adjacencies, premium placement in search results, auto-fill subscriptions, and free shipping – there is shopper confusion online and true price is often obscured.

eCommerce Price Bundles: And the Winner is…

Certainly, with the complex pricing variables of today's eCommerce channel, it's not entirely clear who wins. Consider just two factors – unique to eCommerce – that may wildly affect shopping behavior:Free

  • Free Shipping: Many retailers have minimum purchase thresholds to activate free shipping. To reach the free shipping threshold, the shopper often adds unplanned items to their basket. To activate free shipping with some mega-retailers, there is an annual fee that must be weighed against savings before the actual discount is realized.

  • The more you spend, the more you save: With this pricing model, deeper discounts are applied as more items are added to the cart. Consumers may also agree to delayed shipping or other complex combinations to gain a discount. The criteria required to get the best deal is not always clear and the online retailer's "low price" claim may also be in question.

Price Optimization: Testing Alternatives with Digital.IQ™

Best PriceWithout physical limitations, complementary bundles and product adjacencies that are difficult in brick and mortar (consider occasion-based destinations such as Breakfast, Super Bowl, Back to School) are reasonably simple in eCommerce. But what bundles at what prices are optimal? The options are almost unlimited.

Decision Insight helps clients make better eCommerce decisions with Digital.IQ – our proprietary eCommerce test & learn platform. With Digital.IQ, multiple variables may be tested simultaneously to predict the best mix of product bundles, featured items, adjacencies, and discounts. This allows the retailer and manufacturer to optimize sales and improve the shopper experience.

Price Testing Example: Premium SKUs as Defaults

One online pricing model that has shown effectiveness in some categories is testing premium items as the default in search results or sort attribute. The test presents higher-priced premium items as the standard – effectively hiding premium pricing in plain sight.

SaleFor example, a deluxe detergent SKU formulated for whiteness, freshness and scent is slotted in the test as the default item – or first on a list in a drop-down design when shopping the Laundry Care category. In one recent price and arrangement testing scenario, this default change increased purchase of the premium item vs. the base liquid detergent SKU that historically had greater purchase frequency.

What Price Hesitation?

At Decision Insight we've been testing and optimizing the Four Ps for over 30 years – keeping up with the pace of retail and the changing shopper. Our virtual research solutions deliver confidence in product development, packaging, POS and merchandising, while determining how products should be priced within context to SKUs, package size, bundles, and adjacencies – for brick & mortar and online channels.

DI Virtual Shopping studies are mobile-compatible, enabling us to reach your shoppers wherever they are – on PC, smartphone, or tablet. Whether developing brick & mortar or digital strategies, the Shopper experts at DI have you covered.

Contact Leslie Downie at Decision Insight to discuss the impact of eCommerce and how we can help develop and test marketing strategies to optimize your PRICE at retail.

Price Four-Part SeriesPrice – Second in a Four-Part Series

In this series of articles, we examine the "Four Ps" (Price, Product, Promotion and last month's topic, Place), the building blocks of marketing – and their relevancy in today's Digital world.

As researchers and strategic advisors to a variety of brands and businesses, Decision Insight is highly vested in understanding the changing shopper, the impact on retail – and providing guidance to optimize for future opportunities, especially in relation to eCommerce, mobile and technology.

Contact Dicision