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.
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.
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 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.
If you keep scrolling down, you will see the Transaction Histogram with values:
Floor margin = 50%; Target margin = 66%; Ceiling margin = 90%
Floor and Ceiling are set by default on respectively 10th percentile and 70th percentile, whereas the target value can fluctuate.
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.
These results can be also displayed for different purposes in the Analytics and Dashboards.
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