While hotels and airlines have used dynamic pricing for a long time, the last few years have
Question:
While hotels and airlines have used dynamic pricing for a long time, the last few years have seen an increase in marketers using dynamic pricing to offer their product/service to consumers at the right price based on time or other factors that allow the company to maximize profit. In the age of “big data” and multi-channel shoppers, retailers and manufacturers have a massive amount of information to use to create dynamic prices. Amazon.com and other e-commerce retailers have popularized this pricing method. But they are not the only ones taking advantage of frequent and real-time pricing strategies.
As an example, a number of professional and collegiate sporting events now price tickets based on demand and offer dynamic pricing instead of standard ticket prices for all games. Bloomberg Business reported certain ski resorts started testing dynamic pricing models in February 2015. Uber’s innovative disruption on taxi services also uses dynamic pricing based on demand, weather conditions, driver availability and other factors. However, posts from Forbes.com and MIT Technology Review suggest consumers may not always be happy with this type of pricing strategy, suggesting marketers must carefully consider the impact of dynamic pricing on consumer attitudes and behaviors.
Marketers continue to use dynamic pricing as a method to increase profit margins in today’s data-driven world.
Assignment: After reading Greg Petro’s article on dynamic pricing which appeared on Forbes.com. Blog on dynamic pricing and then watch the Uber Dynamic Pricing Video. When/where marketers might use it, what ethical concerns do you think consumers might have about marketers using dynamic pricing? Why?
