How To Reap Higher Profits with Dynamic Pricing Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Dynamic pricing, in which prices respond to supply and demand pressures in real time or near real-time, has long been used by airlines and hotels. Now the dynamic pricing penetrate in various sectors, including apparel, automobiles, consumer electronics, consumer services, telecommunications, and used goods. These companies are using new data on dynamic pricing and increased processing power to increase their average sales price, thereby increasing revenues and profits. There are two mechanisms for dynamic pricing: prices replied that customers can see and price discovery mechanisms, in which customers determine prices through their own actions. These two mechanisms work in seven different forms: the control output (typically used by airlines), demand-based pricing of three types of auctions, group buying and negotiating. Describes eight situations for different forms of dynamic pricing. An important limitation in the use of dynamic pricing Latitude consumers Price Acceptance, which varies for different products and situations that can be detected by observation, study or analysis of elasticity of demand. Customer involvement in the process of pricing reduces the chances of the consumer backlash. In addition, customers typically cover dynamic pricing in the following situations: when the price reflects the intensity of the demand for products, there is a connection between the seller and the consumer, and the price difference is explained by the difference in the perceived value through the channels through which the transaction took place. The more the seller understands buying cycles and habits of the client, the more he is able to control the price of the field in the rhythm of trade customers, segment customers, and the development of price discrimination. "Hide
by Arvind Sahay Source: MIT Sloan Management Review 10 pages. Publication Date: July 1, 2007. Prod. #: SMR254-PDF-ENG