dimanche 31 mars 2013

Understand price discrimination and take advantage of it!

It has been ages since I've written in my blog! I haven't lacked inspiration nor ideas, but I haven't respected two rules for materializing them:
  • When inspired, you just go and start writing! don't postpone it until "you have the complete text ready in your mind"!
  • Shut off all sources of diversion while writing! (facebook for example ;p )

In this article I am sharing with you some techniques in order to save money in your online shopping.

First, I will start with some theory. Price Discrimination is a marketing concept of pricing same goods differently in order to maximize the value of sales and profits. The concept is explained in the following supply&demand graphs (Wikipedia) :

In the top diagram, a single price strategy is applied to all customers. The total revenue generated by this strategy is represented by area PAQO.
In the bottom diagram, a price discrimination strategy is applied to customers by dividing them into two segments:
  • D1 segment: it's the low elasticity segment, non sensitive to price.
  • D2 segment: it's the high elasticity segment, very sensitive to price.
According to the strategy of price discrimination, a higher price is charged to D1 segment, and a lower price is charges to D2 segment. By doing so, the total revenue generated is the sum of the two areas: P1BQ1O and ECQ2Q1. The sum of these areas will always be greater than the area without discrimination. In this way, we maximize the value of sales and profits!

To set up price discrimination, we must know how to recognize the category of a customer (which segment) in order to apply the appropriate pricing scheme.
Many e-commerce websites have implemented intelligence modules to classify customers by analyzing their behavior on the website. When you understand the logic of these modules, you can adapt your behavior in order to be classified in the D2 segment and have better prices!

The typical behavior of D2 segment is hesitation before undertaking a transaction. For example, you create a profile on the e-commerce website, then add a product to your basket, and continue with the buying process until the payment phase, and then cancel everything!! Normally, if some intelligence is implemented on the website, you will later have a personal promotion, coupon or even a call from the company!

Another typical characteristic of D2 segment, is its low fidelity to his current provider. This provider continuously verify the willingness of their customer to leave to another provider. When the provider identify this intent, he proposes some promotions to the customer in order to retain him. For example, many Mobile Operators (in highly competitive markets like France) implement on their websites an alert that is triggered whenever a customer goes to the line cancellation section to read the contractual conditions.

Now go and make the most of these techniques !

Aucun commentaire :

Enregistrer un commentaire