Dynamic pricing or flexible pricing isn’t new.
Before the 19th century, customers haggled for discounts, and loyal patrons were often given a “friendly price.” Mass marketing introduced a little more science by using demographic research, and more recently big data and analytics, but lost the shopkeeper’s ability to directly negotiate with a customer. Prices now are mostly set according to market segment and supply-demand, not based on firsthand buyer knowledge.
Dynamic pricing today is human-driven, assisted by big data and analytics. Airlines change their pricing based on peak times. Uber charges more for high-traffic hours, during driver shortages or for traveling in certain neighborhoods.
Dynamic pricing can also be applied based on customer segments. People in segment A get pricing X. People in segment C get pricing Y. Pricing managers can control this kind of supply and demand / yield management pricing with rules in an ecommerce solution.
However, marketing has gone through a revolutionary shift to personalization. Customers are interacting with brands in new ways, on more platforms. They want the company to know who they are, no matter what method they are using, and expect consistently personalized service. The new commerce challenge is that companies must now attempt to sell to (and …read more