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PRICING
FOCUS 24
Nike customers, for instance, can pay more to design their own trainers. I expect however that prices and promotions will also become tailored to individuals, based on criteria such as location and online behaviour. This is relatively common practice in e-tailing today where online search behaviour is used to target promotions, but more can be done.
Dynamic pricing
Back in 1999, it was reported that Coca-Cola had started trialling a vending machine that automatically raised prices for its drinks in hot weather. The backlash was intense on the grounds of it being price gouging and unfair.
A lot has changed since 1999. In a newspaper interview last year,the chief executive of B&Q parent Kingfi sher outlined how the DIY chain was running trials to deploy an Amazon-style variable pricing model, with price changes based on day of week, time of day, or popularity of the product line.
Dynamic pricing is common already. In most cities, we pay more for a taxi at night than during the day; we pay more for grocery deliveries on a Saturday than a Tuesday and most retailers tailor prices by store format and by region. By the 2013 season, 15 US Major League Baseball teams had implemented dynamic ticket pricing. In a way, dynamic pricing is simply an extension of these examples with a higher frequency of price changes. In the near future, product popularity, inventory levels, time and location and many other criteria will drive prices and companies will use electronic price tags to facilitate implementation.
SMALL AND MID SIZED “
RETAILERS STILL RELY ON A MIX OF COMPETITIVE BENCHMARKING AND INTUITION
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