Price Optimization, Forecasting, CuBe Mapping

Price Sensitive Demand Forecasting and Price Optimization

Veritec's Patent Pending Customer Behavior (CuBe) Mapping Software offers a revolutionary way to forecast the demand that will materialize at different prices.

By mapping, rather than modeling consumer behavior, CuBe Mapping enables companies to gain insights into customer behavior that go far beyond the insights gained from techniques commonly used.

The Theory. At the heart of the approach is the notion that there are a variety of paths customers follow when making decisions. Commonly used statistical methods such as regression or Structural Equation Modeling rely on aggregations, averages and a specific predetermined model structure that collapse that variety and lose information. CuBe Mapping on the other hand, retains information defining each path and focuses on creating flexible metrics and maps that enable users to easily highlight the most influential paths.

The Practice. What this means, in practice, is that the types of unrealistic demand estimates that typically result when using traditional techniques to estimate customer price elasticity (requiring special "rules" to override the mathematical models) are avoided. More accurate depictions of how customer demand actually changes when prices vary are made possible.

CuBe Mapping also facilitates a wide variety of alerts and notifications that are not typically feasible when employing traditional statistical methods, due to the way the data is maintained. Demand forecasts and price recommendations that are based on these forecasts are more transparent so that all staff, not just pricing analysts, are better able to understand when recommendations are likely to be most accurate and when conditions are such that analyst overrides are most likely to provide value.

Noteworthy Items

Price Sensitive Demand Forecasting and Price Optimization