Is fuel price optimization right for you?
Selecting the right markets for fuel price optimization
There’s no such thing as a perfect market for optimization. But there are conditions that make some markets better suited to optimization than others.
- Good quality (and timely) data
The biggest part of the puzzle is your data. Having good quality data that enables you to understand what’s been done historically and how the market responds is key. You’ll need realistic plans and budgets, which can only be derived from quality data.
- Clearly defined brand proposition
It’s important to understand your brand proposition. Are you aware of your customer perception? What do your customers expect from you? What constraints do you need to put on your price position to ensure you uphold your brand integrity and deliver the customer promise?
- Competitive environment
Do you understand who you compete with? What are you trying to achieve and how does this relate to the competitive market?
- Price position variability
Do you understand your competitors’ price sensitivity? If your market has always stuck tightly to their price position you may not have a true understanding of price sensitivity — and you’ll be the one to introduce variability and volatility. In this case, you’ll need to exercise caution as there’s always a risk that if you move, and competitors quickly move with you, you could potentially increase the volatility in the market. Ideally, you do need some flexibility in the market in relation to your price position.
Having interconnected systems will allow you to implement price changes ― then gather and analyze the resulting data ― seamlessly. Many people successfully implement price optimization without integrated systems, so it can be done, but it certainly makes life easier if at least some of your site systems are integrated.
- Stakeholders “buy-in”
Finally, and most importantly, you need buy-in from stakeholders, particularly territory and area management. They need to understand what you’re trying to achieve, and commit to providing reliable data feeds in a timely manner so you can analyze effectively.
If you can positively answer each of these questions about your network, it’s a great candidate for price optimization.
To find out more about how to apply fuel price optimization and create the business case, download Fuel price optimization 101
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