Strategic Initiatives: Dynamic Pricing

Dynamic pricing means a flexible pricing strategy in which companies set prices for goods or services based on algorithms where a variety of factors is taken into account. An effective dynamic pricing strategy depends on the strength of the algorithm used to generate prices. The more variables an algorithm considers, and the more consistently it works with market dynamics, the more efficient dynamic pricing will be. We at Borusan Cat, to adapt to the rapidly changing nature of today's market conditions and assess the current level of prices, sales opportunities, and productivity, have implemented the Dynamic Pricing initiative.

Today, various industries and businesses, such as airlines and e-commerce platforms, use dynamic pricing which is based on adjusting prices for products/services according to market trends, customer behavior, and the competitive environment to dominate the market. For example, Amazon changes product prices every 10 minutes on average. That means that, on average, commodity prices change 144 times a day, 1,008 times a week, and 52,560 times a year. This method is believed to increase profits by about 25%. The Smart Pricing at AirBnB automatically adjusts prices when certain factors change, such as season, demand, property features, or location. AirBnB says owners who use the Smart Pricing app are booked 4 times more often than those who don't. AirBnB claims that this feature alone increases incomes of homeowners by 12%.

Today's market conditions are evolving toward a more dynamic, flexible, and data-driven environment. The Dynamic Pricing initiative also emerged in response to increased competition and potential growth. Dynamic pricing enables accurate pricing, adapts to competitive environments and market-appropriate prices in the changing market, and provides intelligent operation in the spare parts business. As part of this initiative, although the scope of the project covers 6 countries, using available to us OLGA* Data and Parts Price Data to identify areas for improvement and changes that need to be made based on the group of parts to increase the number of customers, market share and profitability in Turkey and Borusan Cat's other countries of operation, as well as to increase momentum, we are committed to developing AI-powered pricing infrastructure.

OLGA: Cat Opportunity Lead Generation Analyzer (OLGA) is a web-based application hosted by Caterpillar that calculates future and past capabilities and the percentage of parts sold (POPS) and labor force (POLS) based on equipment life cycle stage. OLGA provides the ability to proactively manage spare parts and services sales, improve demand forecasting and workforce planning, and through Customer Relationship Management (CRM) procedures and systems, present specific, actionable sales opportunities/opportunities to the management process as in Caterpillar, as well as dealers. That provides the broadest view of the product support market and opportunities in the dealer's operation region.

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