Whether it’s the price of a tank of petrol or a loaf of bread, most consumers are aware that the same goods or services have different price tags in different locations. When your business is trying to outline its pricing strategies, it needs to take into account a range of important factors. Below are the ones that can be immediately analysed through the use of location analytics.
Income levels are of course one of the most important geographic variations that affect pricing: it is not just about what people can afford, but also about their previous experience of the local market. Depending on the consumer’s location and current market prices, buying experiences may vary on a personal level but in a wider economic context a higher price of one item can be converted into a sum of other prices of multiple products. Therefore by using location analytics to observe the general income levels of an area, a company can understand how the product’s pricing will be perceived. Think this argument is missing a step? Disposable income?
Age, Gender, Demand and Supply
Demographics affects demand and supply, which in turn impacts a company’s pricing strategy. For example, in an area that is dominated by young age segments a fast food outlet may be able to charge higher prices than in a seaside resort filled with pensioners who prefer more formal dining. With increasing demand comes more competitors and more competitive pricing. On the other hand burger outlets in seaside resorts, will also have to adjust the pricing in order to compete with other players.
Location intelligence enables companies to have a global perspective of the demographic profiles that dominate within their business territories. By visualising different demographic segments companies can adapt their pricing strategies and offering in order to become highly competitive.
Logistics play a key role as the supply side of a business is just as important to developing accurate pricing strategies. In a business location where transport links are poor it’s costly to bring in supplies, therefore a business may need to charge higher rates even if the demographics of customers aren’t as favourable. This works both ways: petrol is often cheaper in a relatively affluent city near an oil refinery than in more rural areas. This is because there are higher logistics costs attached to the final pricing of the product.
With the help of a location analytics system, companies are able to better understand the distances and the complexity of city infrastructures in order to minimise the costs associated with logistics.
Keeping track of all these factors in order to outline a pricing strategy for each business territory can be highly complicated. The above elements are just a few of the important areas where businesses need to look in order to streamline their pricing strategy. One option is to crunch the numbers from different datasets (CENSUS etc.), but getting it right can be tricky and time-consuming.
A better alternative is using a location analytics platform which displays huge quantities of variables on a customisable map dashboard that allows different types of intuitive data visualisations. This takes advantage of the way the human eye and brain is unparalleled at spotting and assessing visual patterns.
By seeing the demographic variations shown geographically, people can almost instantly spot the best match of factors and figure out where they might need to make a compromise in pricing and organisational practicality.