When 100 of Europe’s smartest and most experiences pricing specialists meet, there is no shortage of interesting discussions and learnings to be made. So if you wanted to understand the finer details of price management, Stockholm Meeting Space was the place to be on Thursday 18th May, as it was the venue for the annual Navetti User Conference.
This year’s theme was Practical Performance and Future Trends, and much of the presentations and discussions followed the theme’s implied delicate balance of evolution and revolution. On the one hand, price optimization is about constant learning, tweaking the details and sweating the small stuff to achieve gradual but constant improvement. And on the other hand, to be open to the possibilities that innovative technology, more data and smarter processing algorithms represent.
Two trends: AI and neuro marketing
Two of the sessions that looked at future opportunities covered the themes of Artificial Intelligence (AI) and neuro marketing. Both presented ways that technology, together with better knowledge about decision-making principles, can be applied in price management. The difference, of course, is that for AI the decisions are based on algorithms about product usage, expected lifetime usage, cost of breakdown and similar intelligence, as presented by Stefan Palm of Diff3ntia. Neuro marketing, on the other hand, is about understanding human decision making, and in a pricing context, what customers perceive to be fair value for a product vs. what they see as expensive or cheap. Dr Kai-Markus Müller of NeuroMarketing Labs showed how this can be investigated and defined without the need for complicated lab settings and testing facilities.
People and software together
Andreas Westling, the CEO of Navetti, uses a sporting metaphor to describe the parallel opportunities that pricing experts must pursue: “Usain Bolt is the world’s fastest man, but in running we have only been able to improve performance by 10% in the last 100 years, gaining a fraction of a second with each improvement. In high jumping, new technical solutions, such as the straddle and the Fosbury flop, have resulted in step-wise performance improvements of almost 50% in the same period. But when we combine new technologies with new ways of working, as we see around us here today, the improvement potential is exponential. Understanding and managing those opportunities of software and people working together is what mastering price optimization is all about.”