Merging Discrete-Choice Models and AI into Retail Pricing Process

B2B & B2C Themed • Skill Level: Intermediate B2B & B2C Themed • Skill Level: Advanced

Increasing margin is often not a question of a better pricing strategy, but rather a question of price execution. The value pricers generate in the first mile of developing a pricing strategy is often lost in the last mile of sales, unnecessary discounts, and negotiations with the customer. In this interactive and instructive workshop, we will highlight the success factors of price execution and discount management and pragmatically show how pricers can recover the rebates that have been granted unnecessarily while avoiding the internal conflicts with sales.

ATTENDEES WILL LEARN:

• Why improving discount management is a huge lever to boost profits

• Why many discounts are granted unnecessarily

• How to systematically redesign incentive systems, pricing governance, and negotiation skills to influence customer decisions

PRESENTED BY:

Florian Bauer, Ph.D., studied psychology and economics at the Technical University in Darmstadt, MIT, and Harvard University. He has devoted himself to research into behavioral economics and the psychology of pricing. In 1999, he co-founded Vocatus AG in Munich, an internationally operating pricing consulting company. Since then, Vocatus has focused on systematically translating behavioral economics insights into a completely new pricing framework. Besides his consulting engagements, he is an honorary professor at the Technical University of Munich.

Businesses typically sell thousands of distinct products. Many products have substitutes or alternatives with the same ingredients. This situation poses a huge challenge for pricing and revenue management. In this workshop, we’ll demonstrate how to solve this problem by using a combination of elasticities (calculated with discrete-choice models) and machine learning and finalizing the solution with a profitoptimization algorithm.

ATTENDEES WILL LEARN:

• How to prepare a minimum database sufficient for the task

• How to calculate elasticities using an advanced econometric modeling

• How to adjust the results using machine learning

PRESENTED BY:

Vinícius Pantoja is the CTO of Proffer, where he is responsible for the company’s technology and dynamic pricing modeling. He is also the founder of Claudius Legal Intelligence, a startup that uses AI for legal prediction. He has a B.A., an M.S., and an MIT data science certification. He is the Principal Investigator for an SBIR Grant, was Vice President of the Center for Computational Law and Social Justice at Princeton University, and the Dean of Princeton’s School of AI.