Industry leaders continue to push the envelope about pricing capabilities and strategies—yet, the science remains inexact. Even in the face of innovations in automation and analytics, pricing experts often struggle to identify and implement the appropriate procedures on a circumstantial level.
A few select industries spearheaded the development of value-based pricing as a regional strategy, most notably in the medical device industry. Over time, this strategy proved effective in reflecting local consumers’ willingness to pay.
This article provides an analysis of the benefits and trends in regional pricing, and the factors that need to be considered in order for this strategy to be executed effectively.
Regional pricing can be an organic, spontaneous process of discovery - and the underlying signal mechanism is regional data. It is an extremely effective (and cost-effective) use of the divisions of dispersed knowledge among the company workforce. It is the quality of the resultant data which determines the future efficacy of otherwise abstract or loosely related information.
Experienced regional merchants and managers should review strategic decisions with regards to price, product selection, promotion and competitive intensity. It is important not to rely too heavily on any one manager in a region, given the potential for cognitive biases or personal agendas.