Identifying the right pricing strategy
At Home, a big box retailer of furniture and home goods, first worked with Maven three years ago on a broad review of major competitors. In 2020, At Home engaged Maven a second time to examine the pricing strategies of major competitors.
Through diligent research, Maven was able to identify a spectrum of pricing strategies used by At Home’s competition. The low price model anchors one end of that spectrum. This strategy is simple: convey to customers to buy now because the price will not waiver. There will be no sales, no coupons, no promotions—in other words, no better deals worth waiting for. On the opposite end of the spectrum is the discount-driven model. In this strategy, prices are often deeply discounted, and customers are accustomed to waiting for either weekly sales or coupons before purchasing.
At Home’s CEO decided to work with Maven a second time because of Maven’s ability to gather detailed data and provide analysis that is unbiased and fact-based. With this data, At Home could make decisions and implement strategies with confidence.
To answer the questions At Home tasked Maven with, Maven’s consultants worked for four weeks to gather and analyze data. Maven’s approach of online and in-person research allowed them to understand how At Home’s competitors marketed to potential customers. The data Maven collected showed historical patterns of how often communications were made and how the messages At Home’s competitors changed (or remained the same) across various channels. Maven cataloged and categorized the information to drill down even further. By doing this, Maven noticed shifts in the marketplace.
An important element of Maven’s research was to understand how the home goods market had changed in the past several years. Research showed that those changes were significant: not only were some of the competitors new, but others had appreciably changed. With those changes came not only changes in pricing from competitors, but also changes in perception from customers. Maven was able to document and analyze all of these elements.
It can be tempting to use a few anecdotes about a competitor’s pricing actions as proof of their overall approach to pricing. Having a deep fact base to show how competitors are acting at a detailed level over time provides greater clarity and confidence when it is time to make decisions.
Working with Maven provided At Home access to unbiased data and Maven’s analysis of that data, which is important. All the data collected was used to develop a better understanding of At Home’s competitors’ pricing strategies.
This deep dive project with At Home exemplifies why strategy cannot be static. Had At Home relied on the data Maven collected three years ago, it would have been using outdated information to create strategies for growth and forward movement, a strategy that wouldn’t serve the company well. Businesses must assume that circumstances change over time and that it’s vital to rely on facts, not anecdotes, when making decisions on how to keep up with shifting environments.