Read how OK have taken advantage of advanced dynamic pricing

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PRICECAST FUEL©

RETAIL FUEL PRICING – MANAGEMENT AND OPTIMIZATION

OK BENZIN – THE LEADING RETAIL FUEL COMPANY IN DENMARK

OK Benzin is the largest Retail Fuel Company in Denmark with 1.300 employees and a yearly turnover of EUR 1,2 billion. Their retail network comprises approximately 700 stations accounting for a 25% share of the Danish retail fuel market. The network is spread across all of Denmark – in the city centers as well as in the countryside and on the islands – and it consists of a mix of unmanned stations, unmanned stations co-located with COOP supermarkets, and manned stations with full-service convenience stores. Some are dealer operated CODO and some are company operated COCO.

A VOLATILE AND COMPETITIVE MARKET SITUATION

The Danish Retail Fuel market has for years consisted of five brands accounting for 95% of the entire service station network. Between 2007 and 2012 the market was charac-terized by fierce competition and high volatility. At the peak there were 10 to 20 price changes a day, and the spread between the highest and the lowest price of the day could be up to 15 eurocent.

PRICECAST FUEL - reference storyOK Benzin running PriceCast Fuel on 700 stations across Denmark

During that time period OK Benzin spent a huge sum of money defending their market share, and consequently the management team started looking into the pricing process. The objective was to improve the pricing analysis and deci-sion process and optimize pricing according to their overall strategy in order to lower the cost of price wars or better yet, to avoid them.

TESTING AND EVALUATING THE ALTERNATIVES

After having evaluated various conventional pricing solutions, at the end of 2010 OK Benzin consulted a2i systems about developing an industry-specific version of their PriceCast system, tailor-made to the needs of an agile and leading player in a dynamic retail Oil&Gas down-stream market. During 2011 the industry specific ‘PriceCast Fuel’ was designed and developed. OK Benzin’s historical transactional data as well as all other data relevant to their sales were thoroughly analyzed by the PriceCast Fuel AI engine. The results of these data analysis were stunning and a Pilot live test should prove their promises right. During the Pilot live tests it became clear that by using PriceCast Fuel OK Benzin could improve margin with 4-5% without compromising their market share. The case was clear PriceCast Fuel where the right choice.

RUNNING PRICECAST FUEL ON 700 UNIQUE STATIONS

After the Pilot live test end of 2011, OK Benzin started a full deployment of PriceCast Fuel to manage the pricing on all of their 700 stations. As all their stations are working within each their unique market situation, some stations are managed with rule based pricing, others with AI optimized pricing and yet others with a combination of the two – call it restricted AI optimized pricing. With different strategies and locally adjusted parameters all stations are managed to perfection in each their local market and of course according to OK’s overall corporate strategies, restrictions and objectives.

MOBILE MANAGEMENT AT HAND ON SITE!

When visiting the local station dealers OK’s District Managers bring PriceCast Fuel with them on a tablet. This way they al-ways have all the latest sales data, history and reports at hand to show when they are on site discussing the local business with the local dealers. When the deliberations and conclusions lead to adjustments of parameters these changes can be implemented on the spot and right away. This means faster time to market and ease of business.