Explore the Segmentation Results in Negotiation Guidance

Business Scenario

In this scenario you are a Pricing Analyst, and you must determine the ideal target price for products at your company, analyzing competitor pricing and market expectations.   

For this purpose, you will navigate through an existing Pricelist and Quote, identify the optimized prices and review the Segmentation model results (no calculations execution is required). 

Open

Review the Price List/ Live Price Grid

Go to Price Setting > Live Price Grid: 

Open

From the Live Price Grids listing, click on any of them: 

Using the bottom bar, scroll to the right to find the Stretch, Target and Floor (price and margin) columns. These are the values that come from the Segmentation/Optimization model. 

Select one of the listed product by clicking on the check box. 

Scroll all the way to the right and click on the Calculation Results icon for the selected item. 

Notice the Stretch, Target and Floor values for the selected product by the calculation stage: Results of the last calculations, current approved calculated results, and previous approved calculated results. 

 Close the Calculation Results window. Click on the Pricefx icon (top left corner) to return to the home-page. 

Review the Quote

• Go to Quoting > Quotes: 

From the quote listing, click on any of them: 

Under the Calculations area, within the Pricing Details section on the right side, locate the quote prices (List Price, Suggested Price, Invoice Price, Net Price, etc.). These are the values that will be calculated and pulled from the Price Lists and Optimization models.  

Locate the margin values of the quote: 

• Click on the Items tab on the top-left menu.  

Review the values displayed for Stretch, Target and Floor Prices for each product listed. These prices are calculated in the Optimization model. 

Select one of the listed products by clicking on the check-box: 

On the right-side, select the Calculations tab to review the segment number and optimized prices for the selected product. The segment number comes from the Optimization/Segmentation model. 

• Scroll down to review the prices within the Pricing Details section. 

• Scroll down to locate the Analytics section and click on the Science-Based Guidance “Show” link. 

The system displays a bar chart with the Stretch, Target and Floor guidance for the customer’s margin/segment and transactions. 

• Close the chart (top-right corner), or click OK to return to the previous screen.  

• Click on the “Pricefx” icon on the top-left corner to go back to the Home page.

Overview of the Optimization-Segmentation Model Functionality

Model types include different models that perform scientific-based optimization. Pricefx offers a default Negotiation Guidance model that helps identify the performance drivers and offers the ceiling, target, and floor for the optimization driver. Below is a brief overview of the steps you need to take.

• Go to Configuration > Optimization > Model Classes

The Models are defined by the logic that is being copied to the partition that will be used for optimizing the values by Pricefx pricing science expert. Other standard logics are offered by Pricefx, besides the Negotiation Guidance, like Product Recommendation. It is another scientific-based method that helps to find the links between the products and bundle them for the optimization purposes. Your company may have different model classes depending on the pricing optimization strategies. 

• Go to Optimization > Models. 

Models include actual optimization models that are currently in use. This is also a working area for defining and running optimization. The models listed are related to your company’s optimization strategy.

• You can see that the model incorporates all the transactions from the “Standard Sales Transactions” Datamart. The model offers several tabs to determine the dimensions, rules, and constraints to calculate and find the Target prices between the Ceiling and Floor values. Click on the Results step. 

Floor, Target, Ceiling–represents your goals with optimized measure. 

• The Results step displays the calculation results from the segmentation model. The Tree View tab displays a segmentation tree that includes all transactions. Open the segment by clicking on the “>” symbol. 

The system opens all the boxes that represent the nodes of the segmentation tree. Each level of nodes corresponds to one dimension (segment) mentioned (the displayed picture may vary). Open as many dimensions as you need. Pick one segment and click on the top-right corner hierarchical icon. 

A detailed overview is displayed on the right side of the screen. Review the segment number created under the Tree Node section.  

• Scroll down and review the Floor, Target, and Ceiling values under the Price Recommendation section. These are the result values pushed to the quotes and pricelists. 

If you keep scrolling down, you will see the Transaction Histogram with values:  

Floor margin = 50%; Target margin = 66%; Ceiling margin = 90%  

Apply results in analytics and price management 

In standard scenarios, the values from the calculated model will be written in the price parameter table and later used to enrich the Datamart that was initially used for the model. You can also have a product-segmentation mapping table in Product Extensions to verify those suggestions. 

In the Segment Statistics section, you can see the margin, revenue, and pricing information for this specific segment, including the number of transactions included in the calculation for the segment.   

Click on the “Pricefx” icon in the top-left corner to go back to the Home page.  

Review Pricing Parameters Tables (DEPRECATED)