2Profiles, Segments, and Strategies

This chapter contains the following:

Profiles and Segments

Use a pricing profile to describe the buying characteristics of each of your customers.

For example, profile a customer as high customer size, high customer value, medium customer rating, and high revenue potential.

This topic includes example values. You might use different values, depending on your business requirements.

Manage pricing profiles.

  1. Determine the characteristics that describe each of your customers.

    In this example, assume you work for Vision Corporation, a fictitious company that sells desktop and laptop computers. You must administer pricing for these customers.

    • Computer Service and Rentals, and Professional Computing Solutions. Each of these businesses are large, long-established customers who have been selling to commercial, domestic corporations for a long time.

    • Computer Associates International. A medium size, up-and-coming, new customer who sells to governments and commercial enterprises in domestic and international markets.

    • Computers Direct to U. A brand new, just-launched company who sells direct to consumers.

    Vision Corporation determined that customers exhibit these characteristics.

    Customer Revenue Potential Cost to Serve Value Rating Size

    Computer Service and Rentals

    Very High

    Medium

    Very High

    Very High

    Large

    Professional Computing Solutions

    Very High

    Medium

    Very High

    Very High

    Large

    Computer Associates International

    High

    High

    Medium

    High

    Medium

    Computers Direct to U

    Low

    Low

    Low

    Medium

    Small

  2. Sign into Oracle Fusion Pricing with the Pricing Manager job role, then, in the Navigator, click Pricing Administration.

  3. On the Overview page, click Tasks > Manage Customer Pricing Profiles.

  4. On the Manage Customer Pricing Profiles page, click Actions > Create.

  5. In the Create Customer Pricing Profiles dialog, add values from the table in step 1 for Computer Service and Rentals, then click Save and Close.

    For the Start Date and End Date attributes, note that you can create only one pricing profile for each customer for each time period. You can't add a customer with more than one pricing profile in the same time period or in time periods that overlap one another.

  6. Repeat steps 4 and 5 for Professional Computing Solutions.

  7. Repeat steps 4 and 5 for Computer Associates International.

  8. Repeat steps 4 and 5 for Computers Direct to U.

  9. Add a pricing segment that Pricing can use to match each customer to a segment.

    For details, see the Manage Pricing Segments topic.

Use a pricing segment to categorize sets of customers, understand their business motivations, and offer a pricing solution. Use it to track pricing performance and analyze similar customer situations to help you improve revenue and margin.

Assume you must add a corporate segment, international segment, and a domestic segment.

This topic includes example values. You might use different values, depending on your business requirements.

Manage pricing segments.

  1. On the Overview page, click Tasks > Manage Pricing Segments.

  2. On the Manage Pricing Segments page, click Create Pricing Segment Matrix.

    If the Manage Pricing Segments page already displays a pricing matrix, then you must click Delete Pricing Segment Matrix, click Yes in the Warning dialog, close and reopen the Manage Pricing Segments page, then click Create Pricing Segment Matrix. Oracle Fusion Pricing can maintain only one pricing matrix for each deployment.

  3. In the Create Pricing Segment Matrix dialog, add a check mark for each condition you must include in the matrix, then click OK.

    Add a check mark to each condition that you require. If a row in your matrix doesn't require a condition, then you can leave it empty, and Pricing ignores the condition only for this row. Adding each condition simplifies future maintenance if you must expand your matrix at some time in the future.

  4. On the Manage Pricing Segments page, click Actions > Add Row.

  5. Add values for the first row of this matrix.

    Revenue Potential Size Cost to Serve Value Rating Segment Precedence

    Very High

    Large

    Medium

    Very High

    Very High

    Corporate Segment

    1

    High

    Medium

    High

    Medium

    High

    International Segment

    2

    Low

    Small

    Low

    Low

    Medium

    Domestic Segment

    Not applicable

  6. Click Actions > Add Row, then add values from the second row of the matrix in step 5.

  7. Click Actions > Add Row, then add values from the third row of the matrix in step 5.

  8. Create a pricing strategy to make sure your pricing logic meets the pricing objective.

    For details, see the Manage Pricing Strategies topic.

Note.

  • Pricing compares the pricing profile to each row of the pricing matrix until it finds a match. If more than one row matches, then Pricing uses the row that contains the lowest value in the Precedence.

    For example, if the first and second row match, and if the first row contains a precedence of 1, and the second row contains a precedence of 2, then Pricing uses the first row. For details, see the How Profiles, Segments, and Strategies Work Together topic.

  • You aren't required to define a segment. However, its recommended that you define at least one row that Pricing can use for the pricing strategy, by default.

  • Pricing might ignore each attribute in the pricing matrix that doesn't include a value, depending on whether the matrix class allows an empty value. For example, consider this row, where - indicates an empty value.

    Revenue Potential Size Cost to Serve Value Rating Segment

    -

    -

    -

    -

    Very High

    Corporate Segment

    If the matrix class allows an empty value, then this row assigns the Corporate pricing segment to every pricing profile that includes a Very High rating. It ignores the empty attributes, such as revenue, size, and value.

Set Up Pricing Without Customer Profile

Set up pricing without managing customer profiles under certain conditions.

If

  • Your set up includes only one price list, one discount list, and one shipping list, and . . .

  • All your customers use only one pricing strategy.

Then its not necessary to create a pricing profile for each of your customers.

Assume you use the Corporate Pricing Strategy for all your customers. Here's your set up.

  1. In the Pricing Administration work area, click Tasks > Manage Pricing Strategy Assignments.

  2. Make sure the Manage Pricing Strategy Assignments page includes only one row.

    Attribute Value

    Assignment Level

    Header

    Pricing Context

    Sales

    Transaction Type

    All

  3. Create an assignment matrix that includes only one row.

    Leave all the condition columns empty. Set only the pricing strategy.

    Attribute Value

    Pricing Strategy

    Corporate Pricing Strategy

Strategies

Create a pricing strategy to achieve a profitability goal.

A pricing strategy is a set of pricing rules that you set up to achieve a profitability goal for selling and pricing an item.

  • The pricing strategy specifies the price, cost, discount, currency conversion, shipping rules, and return price that Pricing uses to help meet the pricing objective of the pricing strategy.

  • The pricing objective is the goal of your pricing policies for a customer, such as to create interest about your items, increase sales volume, or maintain a market position that you already established.

  • The pricing strategy references the prices and pricing policies that Pricing applies to help you accomplish the objective.

  • You can group pricing rules in a pricing strategy to control pricing behavior.

  • Add a price list, cost list, discount list, or currency conversion list that you haven't approved to a strategy, then approve the strategy. However, Pricing only uses approved lists at run time.

  • Specify whether the user can override the default value for the price list.

  • Set up a default currency and specify whether the user can override it when the user creates a sales order. The user can override the default currency only with a currency that the pricing strategy references.

For example, create a pricing strategy according to competitor pricing, to sell at a loss so you can enter a market, to price an item differently for each pricing segment, or to price it high so that customers perceive it favorably.

Here are details about the pricing strategy you set up in this topic.

  • Optimize profit.

  • Reference the Operations business unit of customer Computer Service and Rentals.

  • Reference lists in Pricing to set the price, cost, discount, shipping charge, and currency conversion.

This topic includes example values. You might use different values, depending on your business requirements.

Summary of the Set Up

  1. Create the pricing strategy.

  2. Add lists to the pricing strategy.

Create the Pricing Strategy

  1. On the Overview page, click Tasks > Manage Pricing Strategy.

  2. On the Manage Pricing Strategy page, click Actions > Create.

  3. In the Create Pricing Strategy dialog, set values, then click Save and Edit.

    Attribute Value

    Name

    Enter Corporate Pricing Strategy.

    Business Unit

    Computer Service and Rentals Operations.

    Default Currency

    USD.

    Choose the currency that Pricing displays at run time for items that you associate with this pricing strategy.

    Default GL Conversion Type

    Leave empty.

    Choose the currency conversion type that Pricing must use if it can't find the conversion list when it converts currency in the general ledger.

    Objective

    Profit Maximization.

    Set the Objective to help clarify the purpose of the strategy. This attribute doesn't affect pricing calculations.

    Allow Price List Override

    Leave empty.

    Allow the user to choose some other price list at run time.

    Add a check mark to this option only if you modify a pricing algorithm so it supports a price override. For an example, see the Override Base List Price topic.

    Allow Currency Override

    If you set Default Currency to USD, and if you.

    • Set Allow Currency Override to Yes, then Pricing uses USD by default, but also allows the user to change USD to GBP (Pound Sterling) or EUR (Euro).

      If the user changes the currency, then Pricing uses the currency that the Order Entry Specialist chooses when it calculates the price.

    • Import a source order that isn't already priced, and if the source order uses GBP or EUR, then Pricing will use GBP or EUR to price the source order regardless of how you set Default Currency or Allow Currency Override.

    If you don't set up a pricing strategy, then Pricing allows the user to choose USD, GBP, or EUR, and Pricing will use the currency that the user chooses when it calculates the price.

Add Lists to the Pricing Strategy

Add the lists that this pricing strategy must reference, such as price lists, discount lists, and so on. You must create these lists before you can add them to this pricing strategy.

  1. Create the lists that the pricing strategy must reference.

    List Name For Details, See These Topics

    Price List for Computer Service and Rentals

    Manage Price Lists

    Cost List for Sentinel Standard Desktop

    Manage Cost Lists

    Discount List for Sentinel Standard Desktop

    Manage Discount Lists

    Shipping Charge List for Sentinel Standard Desktop

    Manage Shipping Charge Lists

    Currency Conversion List for Sentinel Standard Desktop

    Manage Currency Conversion Lists

  2. On the Edit Pricing Strategy page, in the Pricing Rules tab, in the Segment Price Lists area, click Actions > Select and Add.

    Use each area in the Pricing Rules tab, such as Segment Price Lists, to add a price list.

  3. In the Select and Add dialog, search for Price List for Computer Service and Rentals, then click OK.

  4. Navigate to the Edit Price List page, then click Close Tab.

  5. On the Edit Pricing Strategy page, click Approve.

    Pricing sets the pricing strategy status to In Progress when you create a pricing strategy, by default. You must approve the pricing strategy so you can use it in other parts of Pricing Administration.

  6. In the Segment Price Lists area, in the Name column, click Price List for Computer Service and Rentals.

  7. On the Edit Price List page, click References, then verify that the Name displays Price List for Computer Service and Rentals.

    Pricing displays each pricing strategy that references this price list.

  8. Repeat steps 2 through 7 for each of the other lists you added in step 1.

    For example, to add Cost List for Sentinel Standard Desktop, on the Edit Pricing Strategy page, click Costs Lists, add the cost list, navigate to the Edit Cost List page, click Close Tab, and so on.

    • You can add the same list to a pricing strategy more than one time, and you can assign a different time frame each time you add it, or you can add can add more than one list and set different time frames for them.

      For example, add a discount list that provides a 15% discount, and set the dates so its in effect from January through March the first time you add it, and in effect June through July the second time you add it.

    • If you add more than one list in an area of the Pricing Rules tab or Shipping Rules tab, then Pricing applies them according to the lowest number you set in the Precedence attribute.

      For example, assume you add two lists in the Segment Price Lists area. If you set the precedence for list x to 1, and precedence for list y to 2, then Pricing applies list x first, and then list y.

  9. Assign the pricing strategy.

Assign the pricing strategy that Pricing uses to price an item according to attributes, such as the pricing segment, channel, and type of transaction.

Assume you must assign all sales orders that are inside sales for all customers who reside in the Corporate segment. You must assign these sales orders to the Corporate strategy.

This topic includes example values. You might use different values, depending on your business requirements.

Assign a pricing strategy.

  1. On the Overview page, click Tasks > Manage Pricing Strategy Assignments.

  2. On the Manage Pricing Strategy Assignments page, examine the predefined assignments.

    If a predefined assignment meets your business requirement, then don't create a new one, and exit this procedure.

  3. Immediately below the page title, click Actions > Add Row, then set values.

    Attribute Value

    Assignment Level

    Header

    Pricing Context

    Sales

    Transaction Type

    Sales Orders

    Start Date

    Choose today's date.

    The combination of Assignment Level, Pricing Context, and Transaction Type must specify a unique value for each time period. You can't create identical pricing strategy assignments that include dates that overlap one another.

  4. Click Save.

  5. Click Create Assignment Matrix.

  6. In the Create Assignment Matrix dialog, add a check mark to each option, then click OK.

  7. In the Header-Sales area, click Actions > Add Row, then set values.

    Attribute Value

    Channel Method

    Inside Sales

    Pricing Segment

    Corporate Segment

    Transaction Type

    Sales Order

    Pricing Strategy

    Corporate Strategy

    If you create more than one row in the assignment matrix, then the combination of Assignment Level, Pricing Context, and Transaction Type must specify a unique value for each time period, and these dates must not overlap one another.

    Use the matrix class when you set up Pricing to determine the attributes that you can specify in the assignment matrix. For details, see the Manage Pricing Matrix Type topic.

  8. Click Save.