Price elasticity matrix: base price against promo price
One matrix that shows where to invest in price, where in promotion, and where in neither.
Account Brand Elasticity Matrix places every promoted product group in your competitive set on one base-price and promo-price matrix, with a play for each quadrant.
Covers every product group in your competitive set, yours and competitors', in every market you configure.
See your product groups on the elasticity matrix.
- Brands
- Every product group you configure
- Competitors
- Every competitor product group in the set
- Markets
- Every market you configure
- Cadence
- Trailing 52 weeks
The question it answers
For each product group, should we invest in everyday price, in promotion, in both, or in neither?
Account Brand Elasticity Matrix places every promoted product group in the competitive set on one matrix of base-price and promo-price sensitivity, each indexed to the set average. The four quadrants give four plays: invest to compete, invest in base, invest in promo, and manage for cash.
Why it matters
Elasticity studies usually end as long tables of coefficients that few people use. The decision they should inform is simple: which lever to pull for which product. Putting both sensitivities on one indexed matrix turns the table into that decision, and shows where the same product needs a different play in a different market.
How it works
- Inputs
Supplied base and promo price coefficients at product-group level, and the latest 52 weeks of dollar sales for your and competitors' product groups, by market.
- Analysis
Each coefficient is indexed to the competitive set average, where 100 is the category norm, and plotted.
- Outputs
A matrix by market, with a play for each quadrant.
What you get
One matrix per market
Every product group in the set, yours and competitors'.
Four plays
Invest to compete, invest in base, invest in promo, manage for cash.
Indexed to the category
100 is the set average on each axis.
Single-lever views
Each lever on its own screen.
Market differences
Where a product group changes play between markets.
Example in action
Illustrative scenario
Your brand's largest product group sits in "invest in promo" nationally but in "manage for cash" at one retailer, where shoppers respond little to either lever. The team trims promotional depth at that retailer and moves the funds to a group in "invest to compete".
Questions
- Do we need existing elasticity coefficients?
- Today, yes. The matrix runs on supplied coefficients. Estimating new ones is a separately scoped add-on.
- What is needed to estimate new elasticities?
- Two years of historical sales, price, distribution, and feature and display attributes, for all customers and aggregate channels.
- What does an index of 100 mean?
- It is the average of the competitive set. Above or below 100 shows more or less sensitivity than the category norm.
- Is there a limit on product groups, competitors or markets?
- No. Include as many as you need. Pricing scales with the coverage you configure.