Part 1 of this blog series expanded on some of TEC’s earlier articles about companies’ need for better pricing management and optimization practices. It also introduced the FUD (fear, uncertainty & doubt) notion about how appropriate these solutions might be in a down market. It appeared that at least the service sector (including spare parts pricing) remains largely impervious to the economic climate (if not even bolstered by a downturn).
So, What’s in Store for Pricing Management Solutions?
Given that the way the manufacturing suppliers position their products and pricing changes with the economy, natural question is whether pricing solutions providers will suffer or blossom these days. Namely, during good times positioning is about increasing revenue, and that case has been proven by pricing optimization solutions. However, in bad times it is rather about lowering costs where pricing doesn’t seemingly help, but rather procurement-oriented applications.
In addition, people become more conservative when times are hard and pricing management & optimization is a category of software that is still not “proven” in the eyes of the conservative market. Still, many pricing vendors mentioned in Part 1 claim that business remains great for them (some continue to grow at over 60 percent year-over-year). One vendor recently (incognito) said that the economy hasn’t hurt its business yet, but it would be a stretch to say it’s helping.
A recent Business Week article entitled “Five Don’ts for Marketing in Tough Times” might also provide a ray of hope for pricing management solutions. The jury is still out on whether the recently announced Oracle Deal Management offering is perhaps a sign of the market’s validation, a threat to the pricing specialist vendors, or both.
Some of the pricing specialist vendors see no real consequence to Oracle’s forays, since price optimization is about science, software and expertise. The relatively simple scoring and analytics that Oracle offers will not qualify according to them. The likes of Zilliant and Vendavo have nearly 200 employees who “live and breathe” pricing for profits (many have been in pricing for 15 years or more). If one compares that with the dozen or so pricing people Oracle currently has, the difference in expertise might actually make the software giant the small upstart in this market.
Most of the pricing solutions are designed to solve very specific problems that come up in specific industries (mostly retail). Zilliant, for instance, is really a package for figuring out price elasticity within defined segments. Obviously, in a recession, price elasticity changes, so the solution might go berserk (or “kablooey” in nerdy terms) until it acquires enough data, then it goes on as before. DemandTec would go along similar lines, but since a lot of what it really does is to support retail merchandising, its system won’t necessarily “blow up” initially; in fact, it will probably be helpful.
What about Fast Moving Consumer Goods (FMCG) Retailers?
Revionics, Inc. is an upbeat provider of Software-as-a-Service (SaaS) subscription offering over the Internet for lifecycle price optimization, including base price, promotion, temporary price reductions (TPR), and markdown optimization technology for FMCG Retailers and distributors. The Revionics Advanced Pricing System (RAPS) generates increased sales and profits through sophisticated consumer demand intelligence and proprietary retail pricing science, which includes weekly price remodeling as well as scenario planning, forecasting, and category analytics.
In July 2008, Revionics announced the addition of key modules to its SaaS solution, so RAPS now includes the following:
Revionics also announced another major release of the existing RAPS Promotion Planning and Optimization module. The vendor states that the accelerated pace of new functional modules is nowadays possible by leveraging its advanced retail pricing science for different applications/purposes. Revionics believes its approach to development and the SaaS model is helping it to leapfrog many of its competitors and win some great new customers.
Todd P. Michaud, Revionics’ President & Chief Executive Officer (CEO), with whom I’ve also dealt while he was an executive at Retalix, recently shared with me his views on the economy. To his mind, the economic environment is having an impact on a number of things:
Therefore, dear readers, what are your views, comments, opinions, etc. about Revionics’ moves and about the pricing optimization software market in general? We would also be interested in your experiences with this nascent software category (if you are an existing user) or with your current (possibly ineffective) practices, and your general interest to evaluate these solutions as prospective customers.
[…] on how some supply chain management (SCM) applications could fare in a down economy. One was about pricing optimization solutions while the other one was about how sourcing and procurement can help enterprises in a down economy. […]
[…] that SignalDemand is the only on-demand price optimization software for manufacturers (since DemandTec and Revionics focus on retailers).? The software as a service (SaaS) model allows the vendor to deliver science-based results to its […]
I would say, its always necessary to manage cost and time, either separate or with respect to each other. There are many project management software’s that help in managing the complete project cost and time and there are employee time clocks and time billing softwares for managing and tracking employees performance with respect to time. So, companies can use these kinda software’s and make their process simpler and perfect.