CFOs Turn to AI Pricing Strategies in Response to Rising Consumer Price Sensitivity
According to research released Wednesday by Grant Thornton, 57% of CFOs say customer price sensitivity in their industries has increased. To address this trend, AI and advanced pricing models such as segment-based pricing and dynamic pricing are being increasingly adopted, with 16% of organizations having fully implemented them and another 35% in the process of scaling up. Meanwhile, 73% of CFOs say affordability concerns have impacted pricing strategies.
Key Takeaways:
- According to research released Wednesday by Grant Thornton,customer price sensitivity is rising, with 57% of CFOs reporting this trend in their industries.
- Artificial intelligence and advanced pricing models are increasingly being used to balance customer sensitivity with profitability, including segmented pricing for different customer groups, and dynamic pricing based on demand or inventory. The consulting firm reports that 16% of organizations have fully implemented these methods, while another 35% are rolling them out more broadly.
- "AI and productivity enhancements are helping businesses protect margins while remaining responsive to customer price sensitivity," said Paul Melville, chief growth officer at Grant Thornton, in apress release. "The most effective pricing strategies are rooted in value, not merely cost recovery."
Deeper Insights:
According to the latest consumer sentiment index from the University of Michigan,consumer sentiment fell 2.6% in March, reaching its lowest level so far this year.
"Gasoline prices have had the most direct impact on consumers, but the extent of pass-through to other prices remains highly uncertain," Joanne Hsu, director of the university's Surveys of Consumers, said in a statement. "Broad groups of consumers across income, age, and political affiliation reported declines in their personal financial expectations, down 7.5% nationwide."
According to Labor Department data,consumer prices rose 2.4% year over year last month, unchanged from January and in line with expectations. Core prices, excluding volatile energy and food costs, rose 2.5% year over year.Inflation has exceeded the Federal Reserve's 2% long-term target for five consecutive years.
Grant Thornton said nearly three-quarters (73%) of CFOs report that affordability concerns have impacted their pricing strategies. The firm's research also found that inflation has prompted nearly six in ten finance chiefs to restructure their cost and operational efficiency practices over the past 12 months. More than 84% of respondents reported passing some cost increases on to customers over the past year.
"CFOs are working to keep prices affordable, but they themselves are facing inflationary pressures," the consulting firm said in the report.