GLOSSARY

Product chaining involves linking together successive SKUs for the same product over time, even when there are changes in packaging, EAN codes, brand names, or internal SKUs. The goal is to reconstruct a product’s complete history in order to analyze trends in its prices, sales, and performance, even if its technical SKU has changed.

Price elasticity measures how sensitive demand for a product is to changes in its price. Technically, it is calculated as the percentage change in the quantity sold divided by the percentage change in price. A product is said to be "elastic" if a small change in price leads to a large change in sales volume.

A price index is a composite indicator that measures a retailer’s pricing position relative to its competitors for a given basket of products. It helps answer the question: “Am I 5% more expensive or 3% cheaper than the competition?” The index is generally expressed on a base of 100, where 100 represents the average market price or the price of the benchmark competitor.

Pricing KPIs (Key Performance Indicators) are the key metrics used to measure, track, and manage the performance of a retailer’s pricing strategy. They help answer essential questions such as: “Am I competitive?”, “Is my margin growing?”, “Are my promotions profitable?”, and “Are my prices optimal?”. Without KPIs, it is impossible to effectively manage pricing.

KVI (Key Value Items) are the products that have the greatest impact on customers’ overall perception of a retailer’s pricing. These are the items that consumers easily compare across retailers and that directly influence price perception: milk, baguettes, eggs, smartphones, etc. Being competitive on KVI is essential for building a reputation for attractive prices.

Gross margin is the difference between a product’s pre-tax selling price and its pre-tax purchase cost. It represents the gross profit generated on each sale before deducting overhead costs (logistics, personnel, rent, marketing, etc.). Gross margin is expressed as an absolute value (in euros) or as a percentage of the selling price (gross margin rate).

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Net margin is the actual profit generated by a business after deducting all costs: cost of goods sold, operating expenses (personnel, rent, marketing, logistics, IT), depreciation, financial expenses, and taxes. It represents the final profitability and is measured as a percentage of revenue. It is the ultimate indicator of a company’s financial health.

Markdown refers to price reductions applied at the end of a season, collection, or product lifecycle to clear out remaining inventory before it loses all value. Unlike traditional promotions (which aim to generate traffic or volume), markdowns serve an inventory management purpose: to sell what’s left rather than throw it away, sell it at a deep discount, or store it at high cost.

Product matching is the process of identifying and linking equivalent products between your catalog and those of your competitors. The goal is to ensure that when you compare prices, you are comparing the exact same product (same brand, same model, same packaging, same variant). Effective product matching is essential for reliable price monitoring.

Price monitoring refers to the process of collecting, analyzing, and tracking competitors' prices. In retail and e-commerce, it relies on automated tools that scrape competitors' websites, track in-store prices, or aggregate panel data to provide a real-time view of pricing positioning.

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The price waterfall is a graphical representation that breaks down, step by step, the progression from the list price (or advertised price) to the actual net price received after all discounts, rebates, promotions, and hidden costs. Each step in the waterfall represents a "leak" in margin. The goal is to identify where value is being lost and to optimize each lever.

A loss leader is a price that is intentionally set very low—sometimes even below cost—for a visible and desirable product, with the aim of driving traffic to the store or website. The goal is not to make a profit on that product, but to attract customers who will then purchase other, more profitable items. The loss leader is a classic promotional marketing tactic.

Dynamic pricing is a strategy that involves automatically adjusting prices in real time based on contextual variables such as demand, available inventory, competitors’ prices, time of day, weather, customer profile, and more. Algorithms analyze this data and adjust prices to maximize revenue or profit margins. This practice is common in the airline industry, the hotel sector, and increasingly in e-commerce.

Psychological pricing refers to the set of techniques that exploit consumers’ cognitive biases to influence their perception of value and their purchasing decisions. The best-known example is pricing a product at €9.99 instead of €10: even though the difference is minimal, the brain focuses on “€9” and perceives the product as significantly cheaper.

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The depth of a promotion refers to the extent of the discount applied to a product during a promotion, typically expressed as a percentage discount relative to the regular price. For example, a 20% discount corresponds to a promotion depth of 20%. The greater the depth, the stronger the impact on sales volume, but the lower the unit margin.

Sales forecasting (or demand forecasting) involves predicting future sales volumes for a product or category over a given period (week, month, season). It is based on an analysis of sales history, market trends, seasonality, planned promotions, and external events (weather, holidays, social trends). Forecasts inform purchasing, pricing, and logistics decisions.

Price monitoring is the process of collecting competitors’ prices for a sample of products, either in physical stores or online. It can be done manually (through field surveys conducted by researchers) or automatically (via web scraping, APIs, or data panels). Price monitoring is the first step in any price monitoring strategy.

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A promotional strategy consists of the decisions that define a retailer’s promotional policy: which products to promote, how often, by how much, through which channels, and for what purposes (traffic, inventory turnover, customer acquisition, etc.). A coherent promotional strategy balances price image, profitability, and sales momentum.

The promotional rate measures the proportion of revenue or sales volume generated by promotional items relative to total sales. It is expressed as a percentage and provides insight into the retailer’s promotional intensity. A promotional rate of 30% means that 30% of sales are generated by products on promotion. It is a key indicator for managing the balance between price image and profitability.