Introduction
To describe the pricing of a segment, you cannot use the actual prices directly because different products have different prices. You need to use a “target metric” that is comparable among all the products. To create the segments, you must define all the attributes (parameters) and observe the target metric distributed for each segment. The goal of this price optimization / Segmentation model is to reshape this distribution and increase the profit specific for each segment by targeting a higher aggregate margin %.
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This exercise will provide you guidelines to create a Segmentation model using an existing Datamart and model logic (algorithm).
The Optimization capability provides a framework that helps you analyze and segment your business, optimize your product portfolio, and improve your pricing. At the end of this exercise, you will have price recommendation values to be used in your sales quotes, products pricelist among other business areas.
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