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Food brands, function! Dynamic pricing is the order of the hour - voila! Marketing and digital

2023-03-07T08:00:40.451Z


Get to know the dynamic pricing, the method thanks to which you could significantly cut the weekly spending at the supermarket, if only someone would implement it. Dr. Michal Bitterman, CEO of TNS Israel, in an interview


Supermarket, Walla La Perrayir (Photo: ShutterStock, Doron Sheiner)

Let's start at the beginning: what exactly is dynamic pricing?

This concept has existed for many years in the industry, and it refers to changes in the price of a product or service according to various pre-determined parameters.



For example, in the hotel industry, the price will increase on weekends and holidays and decrease on weekdays. In the case of aviation, the price will vary depending on the destination, the time of departure and arrival, and the demand. For these reasons, it is sometimes possible to find a cheap deal at the last minute before the flight, which would otherwise be significantly more expensive. The same As for end-of-season sales in fashion chains, periodic clearance sales in furniture and electrical warehouses, and many more buying opportunities that Israelis simply jump on.



When it comes to food, dynamic pricing means that instead of throwing away the products before or after they expire, price tiers are created with an ever-increasing discount as the expiration date approaches.

For example, a product whose shelf life is about a month will be offered at a 50% discount about a week before the expiration date, or at 75% in the days close to the expiration date.

This way, in fact, everyone benefits: the public buys at a reduced price, and enjoys fresh products that they might not have been able to afford before because it was expensive.



"Today, food manufacturers throw away about 35% of their produce, with a total value of billions of shekels per year. At the same time, the family expenditure on food is the second largest expenditure in Israel and is very heavy on households, especially now that prices are rising," says Dr. Michal Bitterman , CEO of TNS Israel, which has been promoting the issue of dynamic pricing in Israel since 2018.



"Unlike rescue projects that donate products to those in need, dynamic pricing not only increases food security, but also allows people to afford to buy better quality food, without feeling vulnerable or needy, and in a way that contributes to the economy. This method means that just as there are end-of-season prices for clothes,



so It will also be about yogurt and hummus. We tried to promote it mainly in front of the writers, but it is relevant to any business that sells food products with validity and has end-of-day prices, such as bakeries, greengrocers, etc. All this with the understanding that food waste is a significant component of the cost of living, Not to mention the huge consequences on natural resources resulting from poor waste treatment, landfill areas that are growing, and toxic gases that are released into the atmosphere in the process."

What are the accepted models of dynamic pricing?

"Although there are already accepted forms of doing it in the world, in Israel it is very local. It happens in certain branches but there is nothing systemic or a network that said it will do it in a holistic way," says Michal Bitterman.



"The existing models in the world vary between low tech - an area that is allocated in the supermarket at the level of the refrigerator where the products with a short shelf life are concentrated, and places with more advanced technology, which I personally prefer because the goal is to give a feeling that this is part of the normal shopping and not some area for the poor."



For example, the Israeli startup Wasteless has developed stickers with a barcode that tracks the validity of the product and discounts it according to predefined parameters that the customer can see at the checkout automatically.

They haven't been able to enter Israel yet, but they did pilots in the Netherlands and Spain that were very successful, and of course when things like this are successful then more startups always pop up to join the game.

Solutions of this type join a long line of innovative tools in the physical field - a combination of digital customer experiences within physical shopping complexes, which give the customer easy access to additional information about the products in front of them, fast payment options, member discounts, etc.

But if until today we looked at an innovative customer experience as a means to justify a higher price than the competitors, today this advantage can be used precisely to become more efficient and lower prices.

All this is very common in Europe - so why not in Israel?

"In Israel, there is an absurd situation where products are thrown away even a week before the expiration date, because they want to give the impression that the super is very high quality, or the manufacturers want to give the impression of a premium brand, so it can't even come close to the date."



These are branding issues that are respected, but from walking around the return warehouses, I've seen tons of perfectly good products thrown in the trash, and this is where it gets painful.

Brands that behave this way, and especially those that consider themselves "green", should ask themselves what will happen when the truth comes out, because all the campaigns in the world will not be able to cover the heavy damage that food waste causes to the environment, society and the economy every day.



"The main reason this happens is that the food manufacturers are indemnifying the supermarket for products they did not sell and refunding them the full price for them. Our starting point at TNS Israel was to promote dynamic pricing in supermarkets but also to involve manufacturers and technology. I do not at all go into complex issues such as corporate responsibility and ESG, because there is a situation of a very simple and very WIN-WIN solution. Despite this, we have not yet succeeded in promoting dynamic pricing in Israel."



And perhaps here is actually the mistake, because beyond the obvious operational and economic advantages of dynamic pricing, there is a question of branding here.

If the marketing chains and food manufacturers understood the magnitude of the news that dynamic pricing could bring to their customers, and the loyalty that would follow, they would jump on it with both hands.

But when the only consideration before their eyes is profit, and the choice is to leave things as they are, it is much easier for them to simply raise prices.

Why don't writers in Israel want dynamic pricing?

"We don't see return agreements abroad, it's a failure of the Israeli market and in the end everyone loses from it.

There are many situations in which the customer loses and the corporation gains, but in the current situation, the supermarket and the food manufacturers also lose.

This situation requires a solution.

"Because of the return agreements that exist between the food manufacturers and the retailers, the authors do not feel the pain in their pockets. They usually receive a full refund for up to 2% of the goods, and that is enough for them to reject the dynamic pricing outright.

This is a mistake because there are many more reasons to adopt dynamic pricing: increasing the customer base and their loyalty, better inventory management and monitoring, saving display space, and above all, priceless branding value, of a company that really cares about its customers." "We don't see return



agreements Abroad, this is a failure of the Israeli market and in the end everyone loses from it. There are many situations in which the customer loses and the corporation gains, but in the current situation, the supermarket and the food manufacturers also lose. This situation requires a solution," continues Bitterman.



"Manufacturers have their own reasons. Supposedly, they cannot determine the price of the products in the supermarket, but at the same time, they do take care of their premium products. When the public does not demand it, and in the absence of competition that would oblige them to fall in line, what reason do food manufacturers now have to change the world order Instead, they line up precisely with the price increases in the economy, and put the burden of waste on the end consumers."



"The third reason is that there is no regulation. Despite our recommendations to adopt regulation as in Italy and other places, where incentives are provided through grants, the regulator does not deal with this issue at all, so there is no pressure on them to do it. As long as this situation continues, dynamic pricing simply will not happen."

What advantages are expected for businesses that adopt dynamic pricing?

"At the marketing-branding level, any business that adopts dynamic pricing will attract an audience that is looking for exactly such a solution and even connects with it on a conceptual level. More and more consumers are already looking for and asking about dynamic pricing, and we know that as soon as a customer enters the store, he will also buy more things. When he arrives to the checkout and will feel the savings in his pocket, he will fall in love with the brand and become its ambassador."



In a survey conducted by TNS Israel that sought to find out how much of the public would be ready for the steps of dynamic pricing.

The absolute and overwhelming majority of respondents were interested.



"A food manufacturer that stands up and declares a dynamic pricing policy for its products will gain a strong competitive advantage with a strong social statement. A supermarket that adopts this model will save itself the operating and logistics costs of sorting the shelves, issuing short-lived products, transporting the products for shredding or transferring them to the food manufacturers that store it in the ground."



"Ahead of the tsamboz week (reducing food waste) that will begin on 12/3, we have created a list of businesses that offer dynamic pricing and end-of-day sales in the easy app. We are trying to connect as many suppliers as possible across the country that will offer dynamic pricing to give them a positive incentive, and to prove To the writers and the food corporations that it works."

List of end-of-day specials on the Easy website. (Photo: screenshot, Easy.co.il)

In this process, we also aim to create a deeper connection of the consumers to the local businesses around them - the supermarket, the grocer, the mafia.

These are the businesses we want to encourage.

Hundreds of businesses have already joined the initiative and now all that remains is to encourage the large food corporations to join as well.

  • Marketing and digital

  • in the headlines

Tags

  • Retail chains

  • food manufacturers

  • Cost of living

  • Pricing

  • trash

  • environmental quality

  • retailing

Source: walla

All news articles on 2023-03-07

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