Indian Journal of Marketing

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Improving Profitability Using Predictive Analytics


Affiliations
1 Research Scholar, Department of Statistics, Banaras Hindu University, Varanasi - 221 005, Uttar Pradesh & Vice President - Genpact, India
2 MPhil, International Institute for Population Science, Mumbai - 400 088, Maharashtra & Senior Manager - Genpact, India
3 Assistant Professor, Department of Mathematics and Statistics, Banasthali Vidyapith, Banasthali - 304 022, Rajasthan, India
4 Professor, Department of Statistics, Banaras Hindu University, Varanasi - 221 005, Uttar Pradesh, India
     

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The objective of this paper was to explore a better pricing strategy by predicting contribution margin (CM) to drive wins at higher prices. This paper focused on the services industry, where macroeconomic factors play a key decisive role in arriving at contribution margin to win more deals in this competitive market. The paper incorporated prior research findings to develop a multidimensional and multifaceted framework depicting the methodology of formulating customer value for value-based pricing. The empirical portion of this paper contained a case study based on masked industry data from an industrial manufacturing company dealing with products and services. We discussed and highlighted the criticality of identifying and capturing the right features while creating the right pricing strategy using multiple linear regression and decision tree techniques. Applying the predictive analytics approach helped us estimate the contribution margin with a higher winning probability during contract negotiation. This paper would aid organizations to develop and implement an enterprise-wide strategic pricing discipline designed to bolster the value and impact of their products and service pricing.

Keywords

Regression, Predictive Modeling, Contribution Margin, Multicollinearity, Value-Based Pricing, Customer Value, Pricing Strategy, Business-to-Business, Decision Tree, Strategic Pricing.

Paper Submission Date : January 10, 2021 ; Paper Sent Back for Revision : March 10, 2021 ; Paper Acceptance Date : May 7, 2021 ; Paper Published Online : August 30, 2021.

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  • Improving Profitability Using Predictive Analytics

Abstract Views: 147  |  PDF Views: 2

Authors

Bhaskar Roy
Research Scholar, Department of Statistics, Banaras Hindu University, Varanasi - 221 005, Uttar Pradesh & Vice President - Genpact, India
Debabrata Bera
MPhil, International Institute for Population Science, Mumbai - 400 088, Maharashtra & Senior Manager - Genpact, India
Praveen Kumar Tripathi
Assistant Professor, Department of Mathematics and Statistics, Banasthali Vidyapith, Banasthali - 304 022, Rajasthan, India
S. K. Upadhyay
Professor, Department of Statistics, Banaras Hindu University, Varanasi - 221 005, Uttar Pradesh, India

Abstract


The objective of this paper was to explore a better pricing strategy by predicting contribution margin (CM) to drive wins at higher prices. This paper focused on the services industry, where macroeconomic factors play a key decisive role in arriving at contribution margin to win more deals in this competitive market. The paper incorporated prior research findings to develop a multidimensional and multifaceted framework depicting the methodology of formulating customer value for value-based pricing. The empirical portion of this paper contained a case study based on masked industry data from an industrial manufacturing company dealing with products and services. We discussed and highlighted the criticality of identifying and capturing the right features while creating the right pricing strategy using multiple linear regression and decision tree techniques. Applying the predictive analytics approach helped us estimate the contribution margin with a higher winning probability during contract negotiation. This paper would aid organizations to develop and implement an enterprise-wide strategic pricing discipline designed to bolster the value and impact of their products and service pricing.

Keywords


Regression, Predictive Modeling, Contribution Margin, Multicollinearity, Value-Based Pricing, Customer Value, Pricing Strategy, Business-to-Business, Decision Tree, Strategic Pricing.

Paper Submission Date : January 10, 2021 ; Paper Sent Back for Revision : March 10, 2021 ; Paper Acceptance Date : May 7, 2021 ; Paper Published Online : August 30, 2021.


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DOI: https://doi.org/10.17010/ijom%2F2021%2Fv51%2Fi8%2F165759