What is it about?
In response to the highly dynamic business conditions and intense competition, the price set of tools is also developing based on the latest technologies. Dynamic pricing can be classified as a market method of pricing based on demand, with the respective mechanism being an algorithm. The access to the large data arrays and the reduction in the expenditures for processing them has led to the progress of the data-based marketing. That`s allow the companies to create customized products and services and personalize the consumer experience.
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Why is it important?
In the case of dynamic prices, companies respond to changing demand by offering variable prices, as there is even a term, "real-time prices" , which is very close to the definition of a third-degree price discrimination. Price discrimination of third-degree occurs when the vendor company divides the demand into two or more groups of buyers and sets different prices for different groups, but within the same group, prices are equal. This is the most common form of price discrimination. In addition to reflecting changes in demand, dynamic prices are also based on market segmentation and individualisation, which enables the formation of a consumer profile for each client.
Perspectives
Consumer knowledge is used to achieve management objectives. Ideally, they are used to establish and maintain a relationship of trust between the enterprise and the consumer. However, while artificial intelligence and machine learning register supply and demand and generate prices accordingly, they often fail to take into account one important aspect of the transaction: the psychology behind the customer's decision and the impact on the buyer-seller relationship. It is crucial not to ignore what customers learn from prices.
PhD Mariyana Veselinova Kovacheva
Technical University – Sofia
Read the Original
This page is a summary of: Dynamic pricing in data-based marketing, January 2024, American Institute of Physics,
DOI: 10.1063/5.0208310.
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