Companies worldwide struggle to adopt the right pricing strategies due to multiple sales channels, complex product portfolios with hundreds of products, and fragmented customer bases. A leading American multinational tobacco company with products sold in more than 100 countries, faced pricing challenges for its product portfolio, which comprises both international and local brands across premium, mid-price, and low-price segments. The company is also a market leader in most of these markets.
Given the nature of the product sold, the tax burden levied on the industry and on the players is very high, leading to higher product prices and frequent price increases. Price is a crucial business lever and drives consumption across all brands.
The company desired to understand the impact of changing prices on product volumes and use these insights to define the right pricing strategies for its product portfolio and understand the market dynamics in a better fashion.
Thoucentric collaborated with the stakeholder throughout the project and worked extensively in developing and deploying a predictor and a price simulation solution to help the stakeholder achieve their business goals. The predictor was built with the objective of helping the stakeholder to correctly predict base volumes. In contrast, the objective of the simulation solution was to empower the stakeholder to evaluate the impact of the changing prices on the predicted volumes. We played a key role in building both the offerings.
These solutions were pivotal in helping the stakeholder to formulate appropriate pricing strategies for its product portfolio and serve its customers better.
The simulation solution was initially deployed in one country to start with, but later was industrialized in more countries. The solution helped the stakeholder to achieve Price Strategy Scenario Planning, Price Elasticity Scenario Planning, and Price War Simulation.
Note: We take the confidentiality of our clients very seriously. While the name of the client has not been revealed, the results showcased are real.
