Intelligent systems and software have seen their usage increase rapidly for some time now. This is known as artificial intelligence, or AI for short. One of the most common fields of application in this area is machine learning. Machine learning is based on a technology that uses algorithms to develop further and “learn more”. With the help of these systems, data can be collected, processed and evaluated faster and more efficiently. As the study “Machine Learning in Corporate Usage” shows, some 64 percent of German companies are currently involved in the field of machine learning. The technology has also already found its way into online commerce in the form of chat bots and personalised marketing. But that’s not all: Machine learning can also contribute significantly to a company’s success when it comes to defining a pricing strategy. Read more about how!
The challenge of big data analysis
“I think today very few companies are getting much out of their data” – Alex Shartsis, Co-Founder Perfect Prize
Expert Alex Shartsis complains in an interview with the Professional Pricing Society that too few companies are still failing to analyse their data and use its insights – both in day-to-day business terms and in price setting. Particularly in eCommerce, this represents a decisive omission! In this dynamic industry, after all, data streams must be evaluated all the faster and the results then transposed into corporate strategy. The biggest challenge for those tasked is to cope with the enormous amounts of data, since these are now far too large for manual evaluation. Ultimately, only those solutions based on machine learning will enable complex big data analyses to be performed quickly and cost-effectively. As regards pricing, the following advantage thus also emerges for the experts. An automatic analysis provides information about when and to what extent pricing should be higher or lower, and does so much faster than a human ever could by traditional evaluation methods.
Support from SaaS solutions
According to Shartsis, the need for intelligent big data analyses has been recognised, but the majority still lack the appropriate software service solutions (SaaS) or the relevant experts. The latter have only ever existed in isolated cases, and are anyway lured away by large corporations like Google, Amazon and Netflix.
It is very difficult to set up these technologies by yourself and even impossible without using data specialists. According to Shartsis, companies should thus be considering outsourcing their machine learning processes. Our Business Intelligence software blackbee in itself represents just such an outsourcing alternative. Its self-learning algorithm collects large volumes of data from the Internet and determines from this relevant pricing and product data from your competitors. The software thus allows you a comprehensive analysis of market evolution. From this, you can then actively and dynamically adapt your own prices.
Changes in pricing by AI and machine learning
What will be the consequences of machine learning? In future, the entire pricing sector will increasingly use scientific methods and mathematics to shape its decisions.
The following developments are emerging in pricing for the coming years, which will be of interest to you, either as a retailer or manufacturer:
- Intelligent algorithms are already largely determining prices in eCommerce. To remain competitive, it is becoming increasingly important to monitor your competitors and exploit your own pricing potential.
- Even if machine learning is greatly simplifying data evaluation already, artificial intelligence will not be replacing any specialists in the near future. On the contrary, man and machine will be mutually complementing one another in coping with the data jungle. Price managers, pricing specialists and data analysts will need to work more closely together to draw the right conclusions from intelligent analyses.
- There is a need for stronger focus on data in decision-making in price management. Tools like our Business Intelligence suite blackbee help here in gathering and evaluating large volumes of data.
Would you like more information on the topic of market analysis and price optimisation with blackbee? Contact us now! We can also offer you individual solutions.