Case study
Follow along as EcoSmart crafts a dynamic pricing approach for global markets.
After completing this page, you should be able to:
- Correctly identify the final price chosen by Composable Commerce given a particular pricing strategy.
EcoSmart is a company committed to producing sustainable products. They are preparing to launch their latest product—an eco-friendly water bottle—in the United States and Australia. They're trying to establish a dynamic pricing strategy that will maximize revenue while aligning with their commitment to sustainability and customer satisfaction.
In this case study, let's take a look at their pricing strategy and understand how it can be implemented using Composable Commerce's pricing capabilities.
The pricing strategy
EcoSmart's initial research has shown that their new product variant, a 500ml blue bottle can cater to diverse consumer needs while emphasizing durability and eco-friendliness.
EcoSmart recognizes the importance of adapting prices based on market, sales channel, and customer groups. They wish to implement the following requirements into their pricing strategy:
- Establish a base Price for each international market. This is the starting point for the pricing strategy.
- Reduce prices by 5% for shoppers who purchase through the mobile app.
- Reduce prices by 10% for shoppers who purchase in the retail stores.
- Sell through a third-party marketplace at a premium price (add 10% to the United States base price).
- Reduce prices and promotions by 10% in retail stores for EcoSmart Club Members (a loyalty program).
- Reduce prices by 15% for first-time buyers on their first purchase through the mobile app.
By utilizing scoped pricing in Composable Commerce, EcoSmart can set specific prices as follows to reflect this strategy:
For the US market:
- Base Price: USD$15.00
- Mobile app: USD$14.25 (a 5% reduction in the base price)
- Retail store: USD$13.50 (a 10% reduction in the base price)
- Third-party marketplace: USD$16.50 (a 10% increase in the base price)
- EcoSmart Club Members: USD$12.15 (an additional 10% reduction in the retail store price)
- First-Time Buyers: USD$12.10 (an additional 15% reduction in the mobile app price)
For the AU market:
- Base Price: AUD$17.00 (slightly more expensive due to the weaker currency)
- Mobile app: AUD$16.15 (a 5% reduction in the base price)
- Retail store: AUD$15.30 (a 10% reduction in the base price)
- EcoSmart Club Members: AUD$13.75 (an additional 10% reduction in the retail store price)
- First-Time Buyers: AUD$13.70 (an additional 15% reduction in the mobile app price)
Summary
By leveraging the capabilities of Composable Commerce, EcoSmart can effectively manage its pricing strategy across multiple markets, channels, and customer groups. This approach allows for flexibility, enabling EcoSmart to remain competitive and cater to diverse customer needs.
The pricing strategy in Composable Commerce can be split into the following: Base Prices and scoped Pricing for markets, Channels, and Customer Groups. The following table summarizes the implementation:
| Currency | Price | Country | Customer Group | Channel |
|---|---|---|---|---|
| AUD | $17.00 | Australia | None | None |
| AUD | $16.15 | Australia | None | Mobile App |
| AUD | $15.30 | Australia | None | Retail Store |
| AUD | $13.75 | Australia | EcoSmart Club Members | Retail Store |
| AUD | $13.70 | Australia | First-Time Buyers | Mobile App |
| --- | --- | --- | --- | --- |
| USD | $15.00 | United States | None | None |
| USD | $14.25 | United States | None | Mobile App |
| USD | $13.50 | United States | None | Retail Store |
| USD | $16.50 | United States | None | Third Party Marketplace |
| USD | $12.15 | United States | EcoSmart Club Members | Retail Store |
| USD | $12.10 | United States | First-Time Buyers | Mobile App |
Applying the Price selection logic
Now let's look at how Composable Commerce's price selection logic plays out with EcoSmart's pricing strategy.
Let's consider Customer A, from the US, who is looking to buy EcoSmart's new product through their website. Within Composable Commerce, they would fall within the following scopes:
- Currency: US Dollar
- Country: United States
- Customer Group: First-Time Buyer
- Channel: None (shopping via a browser)
Let's go through the price selection logic step by step—you can do this yourself too, by scanning the table above:
| Step | Result |
|---|---|
| Check for matching currency, Customer Group, Supply Channel, Country | No price matches all of Customer A's Cart dimensions (USD, US, First-Time Buyer, No Channel). |
| Check for matching currency, Customer Group, Supply Channel | No price matches (USD, First-Time Buyer, No Channel). |
| Check for matching currency, Customer Group | No price matches. |
| Check for matching currency, Supply Channel, Country | No price matches. |
| Check for matching currency, Supply Channel | No price matches. |
| Check for matching currency, Country | Base Price for US is selected. |
As we move through the price selection logic, we end up with the base Price (USD$15.00) being selected due to their being no matches prior.
Introducing the customer personas
Now that we've looked at EcoSmart's pricing strategy, let's try to work out the price that three different customers would receive with Composable Commerce—if they bought a particular variant.
Persona 1: Liam, a loyalty member
- Location: Brisbane, Australia (AU Market)
- Customer Group: EcoSmart Club Member
- Scenario: Liam wants to buy the 500ml blue bottle (from a retail store). What is their final price?
Persona 2: Sophia, an app shopper
- Location: Los Angeles, USA (US Market)
- Customer Group: General Customer
- Scenario: Sophia wants to buy the 500ml blue bottle (from the mobile app). What is their final price?
Persona 3: Oliver, a new buyer
- Location: Melbourne, Australia (AU Market)
- Customer Group: First-Time Buyer
- Scenario: Oliver wants to buy the 500ml blue bottle (from a browser). What is their final price?