Pricing in the Digital Age
|20 april 2021
A Roadmap to Becoming a Dynamic Pricing Retailer
Arnd Vomberg (RUG)
Dynamic pricing and personalized pricing emerged as novel pricing approaches in the digital age; shifting to these novel pricing approaches can increase company profits by 3% to 25%. Dynamic pricing allows firms to smoothen demand and supply and to remain competitive facing price pressure. Personalized pricing enables companies to tap into consumers' different willingness to pay.
However, such profit-increases only set in if managers make good choices when implementing their company's pricing approach. Managers need to overcome potential adverse consumer reactions and need to comply with privacy regulations. Managers need to create an appropriate IT infrastructure, synchronize prices in their on- and offline channels, harmonize prices in their product portfolio, and nurture a mindset that is open to automating prices.
In this book chapter, I discuss these aspects and provide practical guidance for decision-makers. This discussion enables managers to decide whether and how to implement a dynamic pricing approach. Download the book chapter here.
Arnd Vomberg is an Assistant Professor at the Marketing Department of the University of Groningen. In his research, he investigates how digital transformation impacts companies. He studies omnichannel strategies, marketing automation, and agile transformation. His research has appeared in prestigious journals such as Journal of Marketing, Journal of Marketing Research, and Strategic Management Journal.