Key Value Item Series I: (Re)Defining the KVI

This post is part I of our series on Key Value Items, or KVIs.  Read Part II here.  If you’re looking to get a better handle on your KVIs, drop us a line.

The standard definition of a Key Value Item (KVI) is “an item which drives the price/value perception for customers.”  But we’ve found a wide variation in the actual interpretation and usage across our retailer clients.  In this post (the first of three on KVIs) we’ll lay out four common definitions and grades each of them on how well they can actually be put to use.

Why is this important?  Every single time a customer sees a price on your shelf, they update their opinions on your price and value equation.  Understanding which products have large impacts and which have small is crucial to optimizing your pricing strategies (both promotion and everyday).

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“Fairness” in Pricing

A recent HBR article titled “Understanding Fairness is the Key to Keeping Customers” caught our eyes this week. From the headline we expected another rant on what a “fair” price is, conflating ethics with price setting. We were relieved to discover it’s actually a more tactical guide to the perception of fairness in pricing. Customer perception of a price, whether it can be described as “fair” or not, is obviously one of the key drivers of elasticity, and is ignored at retailers’ peril.Read More »“Fairness” in Pricing

The Six Analytic Capabilities of Retail Pricing Excellence

The current state of retailer pricing sophistication is all over the map. Some, with little investment and low organizational adoption, stay in the low-value early stages perennially. Others develop advanced analytic capabilities which, when paired with the broader strategic context, drive huge financial impacts. Setting aside why these disparities exist, there’s value in exploring how they progress from naive to best-in-class.
In the evolution of pricing analytics there are six core capabilities that retailers must master to not only broaden the scope and applicability of the analytics, but also increase the value delivered. The rewards, however, are large: pricing is one of the single most important levers for immediate bottom-line impact.Read More »The Six Analytic Capabilities of Retail Pricing Excellence