Apparatus for merchandise price optimization

• US 7,092,918 B1
• Filed: 05/04/2001
• Issued: 08/15/2006
• Est. Priority Date: 12/20/2000
• Status: Active Grant

• Current Assignee: Acoustic, L.P.
• Original Assignee: DemandTec Inc. (International Business Machines Corporation)
• Inventors: Venkatraman, Krishna, Valentine, Suzanne, Neal, Michael, Lee, Hua, Delurgio, Phil
• Primary Examiner(s): MEINECKE DIAZ, SUSANNA M
• Application Number:
  US09/849,168
• Time in Patent Office: 1,929 Days
• Field of Search: 705/10, 705/400
• US Class Current: 705/400
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors
• CPC Class Codes: G06Q 30/0283 Price estimation or determination
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions

Abstract

A technique for determining optimum prices of products. The apparatus includes a scenario/results processor, a demand engine, an activity based cost engine, and a price optimization engine. The scenario/results processor enables a user to prescribe an optimization scenario, and presents the optimum prices to the user, where the optimum prices are determined by execution of the optimization scenario. The demand engine models relationships between potential prices of the products and market demand for the products. The activity based cost engine estimates costs for the products based upon market demand. The price optimization engine employs the market demand and the demand chain costs to determine the optimum prices, where the optimum prices are a subset of the potential prices, and where the optimum prices maximize a merchandising performance figure of merit according to the optimization scenario.

Claims

1. An apparatus for determining optimum prices of products for sale, comprising:

a scenario/results processor, configured to enable a user to prescribe an optimization scenario, and configured to present the optimum prices to said user, wherein the optimum prices are determined by execution of said optimization scenario, wherein said scenario/results processor comprises;

an input/output processor, configured to acquire data corresponding to said optimization scenario from said user, and configured to distribute optimization results to said user, said input/output processor comprising;

a template controller, configured to provide first price optimization templates and second price optimization templates, wherein said price optimization templates are presented to said user to allow for prescription of said optimization scenario, and for distribution of said optimization results, wherein said first price optimization templates comprise;

a plurality of new scenario templates, configured to enable said user to prescribe scenario parameters corresponding to said optimization scenario, said plurality of new scenario templates comprising;

a category template, for specifying a product category for price optimization, said product category comprising;

 

a plurality of demand groups, each of said plurality of demand groups configured to categorize a set of highly correlated products, wherein said highly correlated products are normally substitute products, but may also be complementary products; and

a command interpreter;

configured to extract commands from said first price optimization templates executed by said user, and configured to populate said second price optimization templates according to result data provided for presentation to said user; and

a scenario controller, coupled to said input/output processor, configured to control the acquisition of said data and the distribution of said optimization results in accordance with a price optimization procedure;

a demand engine, coupled to said scenario/results processor, configured to model relationships between potential prices of the products and market demand for the products;

an activity based cost engine, coupled to said demand engine, configured to estimate demand chain costs for the products based upon said market demand; and

a price optimization engine, coupled to said demand engine and said activity based cost engine, configured to employ said market demand and said demand chain costs to determine the optimum prices, wherein the optimum prices are a subset of said potential prices, and wherein the optimum prices maximize a merchandising performance figure of merit according to said optimization scenario.

2. The apparatus as recited in claim 1, wherein said data is acquired from said user over the Internet via a packet-switched protocol.

3. The apparatus as recited in claim 2, wherein said packet-switched protocol comprises TCP/IP protocol.

4. The apparatus as recited in claim 1, wherein said data is interactively provided by and said optimization results are interactively distributed to said user.

5. The apparatus as recited in claim 4, wherein said data is acquired from a source electronic file and said optimization results are distributed to a destination electronic file, said electronic files being designated by said user.

6. The apparatus as recited in claim 1, wherein said first and second price optimization templates are provided according to hypertext markup language (HTML).

7. The apparatus as recited in claim 1, wherein said first and second price optimization templates are provided according to extensible markup language (XML).

8. The apparatus as recited in claim 1, wherein said first and second price optimization templates are provided as applets.

9. The apparatus as recited in claim 1, wherein said plurality of new scenario templates further comprises:

a products template, for specifying the products for sale, wherein the products for sale may span more than one of said plurality of demand groups.

10. The apparatus as recited in claim 1, wherein said plurality of new scenario templates further comprises:

a locations template, for specifying a plurality of store groups for which the optimum prices are to be determined, wherein, when determining the optimum prices, the apparatus employs portions of said data that correspond to said plurality of store groups.

11. The apparatus as recited in claim 1, wherein said plurality of new scenario templates further comprises:

a time horizon template, for specifying a time period for which the optimum prices are to be determined.

12. The apparatus as recited in claim 1, wherein said plurality of new scenario templates further comprises:

an at-large rules template, for specifying rules to govern determination of the optimum prices, said rules comprising;

maximum allowable price swing for each of the products for sale; and

maximum allowable swing for average price of each demand group within said plurality of demand groups.

13. The apparatus as recited in claim 1, wherein said plurality of new scenario templates further comprises:

a strategy template, for specifying said merchandising performance figure of merit, and for specifying limits for changes in sales volume.

14. The apparatus as recited in claim 13, wherein options for specification of said merchandising performance figure of merit comprise net profit, said sales volume, and revenue.

15. The apparatus as recited in claim 1, wherein said second price optimization templates comprise:

a price optimization results template, for providing said user with said result data corresponding to said optimization scenario.

16. The apparatus as recited in claim 15, wherein said result data comprises optimized values and percent change values for merchandising factors, wherein said merchandising factors comprise one or more of the following:

volume, revenue, product cost, gross margin, and net profit.

17. The apparatus as recited in claim 16, wherein said result data is presented graphically.