PittaRosso: Artificial Intelligence-Driven Pricing and Promotion
Evo is proud of our academic collaborations. This is a way we can conduct research with some of the most brilliant scientists and researchers around the world, as well as help prepare future business leaders for today’s increasingly competitive and customer-centric markets. That’s why Evo CEO Fabrizio Fantini jumped at the chance to work with Harvard Business School Professor Ayelet Israeli to write up a case on PittaRosso’s holistic approach to AI-driven pricing and promotional decisions. This academic case study shows students the challenges executives face when making markdown decisions, as well as how they can overcome those difficulties by making data-informed decisions optimized to best achieve their particular business goals.
PittaRosso, a traditional Italian shoe retailer, is implementing an AI system to provide pricing and promotion recommendations. The system allows them to implement changes that would affect both the top of funnel and bottom of funnel activities for the company: once the objective function was defined, they could plan the season and choose which products to markdown and by how much, which additional promotions to apply and when, and how much to spend on online marketing. But what was the right objective function? Should they focus on revenues, margins, or the sell-through of older inventory? Each department had different views. The case supplement spreadsheet contains a simplified version of the AI system to allow students to examine the effect of different strategic and tactical decisions and make data informed choices and arguments, in addition to the information provided in the case.