Dynamic Pricing Case Study

Introduction It can be easily expected from a company to offer a static price for their goods and services, but how does static pricing maximize profits? Currently, companies who make sales online are able to collect data on their current and potential customers regarding their demographics and track their search and purchase history. With the collected data, companies can produce a price that may match the dollar value of certain customers – this is called Dynamic Pricing. Dynamic Pricing is a pricing strategy in which a seller collects data and use technologies to flexibly change prices for different people for the same goods or services depending on the person 's perceived willingness to pay for those goods or services. The strategy is very much legal, but the ethics of Dynamic Pricing is debatable.

This topic weighs the importance between the trust of customers and effectiveness of the pricing strategy. Allow Dynamic Pricing

Online merchants should be allowed to use dynamic pricing based on consumers’
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On another study on shopper’s perception of price discrimination shows that shoppers who were at a disadvantaged from a price discriminated shopping experience based on “discrimination based on attributes that go against social norms” such as residency, occupation (or income), etc. rated a high level of perceived unfairness and negative emotions towards the pricing inequality. Adversely, those who were at an advantage rated lower, but relatively high on the study’s scale (Wu, Liu, Chen, & Wang, 2012). The same study showed in the results of shoppers surveyed on store choice implies that disadvantaged shoppers would have preferred a store with uniform prices (Wu, Liu, Chen, & Wang,

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