US 7,321,865 B2 | ||
Method for determining retail unit specific price sensitivities | ||
Thomas Kelly, Dade City, Fla. (US); Nicholas M. Kiefer, Ithaca, N.Y. (US); and Alex Wohlhueter, Riverview, Fla. (US) | ||
Assigned to Revenue Management Solutions, Inc., Tampa, Fla. (US) | ||
Filed on Oct. 26, 2004, as Appl. No. 10/972,447. | ||
Prior Publication US 2005/0060223 A1, Mar. 17, 2005 | ||
Int. Cl. G06F 17/30 (2006.01) |
U.S. Cl. 705—10 | 19 Claims |
1. A method of determining a price sensitivity for one or more retail units comprising:
disregarding products at promotional price points;
creating a fixed weight price index based on pricing information from each retail unit, wherein the index varies only when
prices vary and the weights are based on an average menu mix per retail unit over a select period of time;
regressing profits or sales and quantity sold for the retail unit on the fixed weight price index over a select period of
time, and producing a regression coefficient for the fixed weight price index, wherein time differences in the price index
are used as the independent variables in the regression analysis and the variable regressed is the time differences in quantity
sold and gross profit;
assigning a price sensitivity indicator based on the magnitude of the regression coefficient associated with the time differences
in the price index and its t-statistic, wherein the magnitude of the indicator reflects the level of price sensitivity of
the retail unit as it relates to the regressed variable and the t-statistic indicates a confidence level of this relationship;
and
providing the price sensitivity indicator to a user;
wherein the price sensitivity indicator for profits or sales shows how the retail unit compares to a predetermined pricing
index, and the price sensitivity indicator for quantity sold shows how sensitive the retail unit is to price changes.
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