Product Segmentation (Price Setting)

Owned by Ondřej Tesař
Sept 30, 2024
2 min read

Product Segmentation is used to diversify your pricing decisions, for example:

  • Pricing adjustments/factors (e.g. margin uplift in Cost+ method) can depend not only on the Pricing Levels, but also on a combination of several product attributes, e.g. Industry, Business Unit, Product Group.

     

  • Pricing Strategies can be defined differently for different product segments. You can define some high-level pricing strategy and specify special product segments on a more granular level where needed.

     

Product Segment is described by combination of values of several product attributes, e.g. Industry, Business Unit, Product Group. Those product attributes are not necessarily hierarchical, but when defining the product segments, we needed to have them in certain order, e.g. Industry > Business Unit > Product Group.

A product segment can be either very narrow (e.g. products with industry A, business unit B, product group C), but also more broad (e.g. products with industry A, business unit “any”, product group “any”).

The product segmentation must be decided very early in the project because you need to know it already during installation of the accelerator. It directly impacts fields of data tables, so any later change requires a special process.

Product segmentation is also known as: segmented product portfolio, product attribute hierarchy.