While companies often provide discounts at opportune moments to increase their sales, or to clear inventory, such policies often work to the detriment of the brand. This is especially true with loyal customers who tend to generally buy at an earlier stage, so do not get the discount benefits. It can also lead to the market getting delayed as a significant portion of the customer base waits till the expected time of discounting. So, a study was conducted by a team from Wharton to study the effects of such pricing changes, and when is the best time to go for such. For this business intelligence was gathered from two different,though somewhat related fields- a symphony orchestra and a sports team. It was realized that customers’ perceptions depended on three factors- static pricing, dynamic pricing and product variety. Most viewers wanted the gallery or the stadium to be at least four-fifths full. This is an issue which even plagues the concept of surge-pricing at cab operators- Uber and Lyft. The mathematical model of the demand curve needs to be well balanced with the human element involved. Source: http://knowledge.wharton.upenn.edu/article/price-pliant-considering-risks-rewards-dynamic-pricing/

Uploaded Date:23 November 2017