In a time of galloping inflation, Key Value Items have become remarkably important as a powerful means of price perception management in retail. At the same time, many retailers fail to leverage the full potential of KVIs as they don’t know how to identify and price them properly. This presentation will share proven tips to manage and price KVIs sustainably that will help your business stay competitive and keep customers loyal regardless of retail industry or market region.

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Confidential. Not For Public Distribution
How Can KVIs Become Your Superpower
to Manage Price Perception

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Webinar
Agenda
Price perception — is it an intangible concept or can
retailers drive it?
Introducing KVIs as a means of price perception
management — cases from different industries
2.1 How retailers can identify & influence
their true KVIs
2.2 How to price KVIs articles
2.3 How often should retailers reconsider
their KVIs
Traditional vs Innovative approaches to manage KVIs pricing
#1
#2
#3

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1. Price perception —
is it an intangible concept or can retailers drive it?
High Quality
Low Price
High Quality
High Price
Low Quality
High Price
Low Quality
Low Price
Perceived
quality
of
a
product
/
service
Price of a product / service
Fair /
Bargain
Premium /
Luxury
Low Quality
High Price
Basic
Price of a product / service

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2. Introducing KVIs as a means of price perception
management
KVI Pricing Strategy as the most relevant influence driver
Fair /
Bargain
Premium /
Luxury
Inflated
Basic
Price of a product / service
Brand Awareness / Trust
Influence purchase behavior
Market Share
Margin
Opportunity
Key value item – top of mind
articles that customers look
for due to a wish or need
- Can be associated purchasing
frequency;
- desired purchase with research
and price monitoring;
- trends;
- featured articles across
channels (marketing)
KVI

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2.1 How retailers can identify & influence their true KVIs
Attractiveness
products / brand
Customer
Trend
Featured articles
Price Positioning
Purchase
frequency

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2.1 How retailers can
identify & influence
their true KVIs?
Importance of considering internal & external variables
relates to the ability to understand not only your customer’s
purchase behavior but also to have the capabilities
to understand people that do not buy from you
To look outside your door with accuracy and not gut
feeling, its critical to have measurable variables that
can support decision making.
Know how market – you, competitors & influencers -
can determine purchase behavior

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2.1 How retailers can identify & influence their true KVIs
- Performance: transactions, sales, revenue,
sell through, Online vs Offline share; purchase frequency
- Assortment: Category & Product Roles
- Website: # visits, conversion rate, default product order,
traffic source
- Store: planograms; location
- Marketing: promotional plan; investments (channels)
- Customer perception: price elasticity
- Competitors website data
- Competitors prices
- Price perception studies
- Comparison websites
- Top Market Products
Internal Variables External Variables

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How retailers can identify & influence their true KVIs
Super KVI
KVI
Transition
Non KVI
KVI clusters

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2.1 How retailers can identify & influence their true KVIs
Focus
Combine variables - ability
to give them importance rate
(can be different across
industries)
Limit number of KVI products to
avoid over investments, brand
position disrupts and minimize
risk of price wars
KVI revenue share:
15 – 25%

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2.2 How to price KVIs articles
Competitors current prices
Available Stock
Target: Revenue / MS / NPS
Ability to define a subset for KVIs that is
dynamic to incorporate new trends and
price it according market position
Know Product Elasticities
Priority:
Real Time Data
Analytics
capabilities
Investment: Current Costs & potential
support from suppliers
KVI articles

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2.3 How often should retailers reconsider their KVIs
Historical data on Competitors prices
and promotions - Dynamics
Sell through rate
Identify new trends
Costs dynamics
Know Product Elasticities
Priority:
Historical Data &
Performance
Analytics
capabilities
From KVI to Non KVI: avoid quick huge
price changes
KVI articles

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3. Traditional vs Innovative approaches
to manage KVIs pricing
Consider Top Seller articles as KVIs
- Category Role to determine importance of KVIs
- Learn Customers Behaviour with internal and market data
- Anticipate Competitors actions
- Know impact of competitors actions on your sales
- Real time automation - Support to decision making
(price; place; communication)
- Add value on top of price
Traditional Innovation

13. Thank you
Marina Dias
Pricing Solution Consultant