Improving Decision Making Essay Example | Topics and Well Written Essays - 1250 words

Improving Decision Making - Essay ExampleThe companys defence that the price was part of a random price test and could be refunded solidified the suspicion further it was into moral force pricing activity, as similar instances were far too many. Just like the company offered $51 less by Amazon than its own usual price on a dedicated bargain website (ramasastry, cnn.com).An analysis can be done from figures provided as quarter wise sales data, of a particular book sold by dint of this portal, (Niles, R., ojr.org). It shows that the company had skimmed high earnings through a dynamic pricing policy in the first quarter sales. Eleven and twelve copies of the same book were sold at the prices of $11.02 and $11.50 each respectively while in the second quarter the same book sold sixteen and eleven copies each at the prices of $11.02 and $11.70 respectively meaning a exceedingly elastic nature of the books demand can be computed at a elasticity demand- coefficient of two, which is great er than unitary. It whitethorn be noticed here that there was an plus in sales of the books even when the prices charged were higher. If total earnings based on variable pricing quarter - on - quarter are considered , so they range from 15% to almost as high as 40%. This is where the marketers like Amazon.com have the opportunity to maximize their earnings from unsuspecting guests through their dynamic pricing strategy as even against a higher price Amazon sold more number of copies. The remaining quarters also showed a similar effect.Benefits & disadvantagesThe benefits of dynamic pricing comprise of stimulating demand which admirers to churn inventory quicker translating into more revenue and greater margins. The new focus is on target pricing, with technology profiling the price sensitivity of customers to determine the selection of groups which can be discriminated on pricing. . It is believed by the company to help in increase the total revenue for the company. The associa tes and partners of Amazon even share historical data of their dynamic pricing. (Liquid commerce, information-age.com). The disadvantages are also quite a few such as customer loyalty start disappearing once regular customers find out that they are being overcharged in contrast to a new customer offered a lower promotional price . This could drive customers to bargain counters where everyone is treated fairly and there is no discrimination through dynamic pricing. The other drawback of this order may be a legal threat incase it appears that the firm is violating antitrust laws or not having a fixed price policy. ConclusionHowever, it may be an end of an era of list prices where the product life cycle is short, (Strategic interactive marketing, managing change.com), the distance minimized and delivery lead times lessened with the help of technology and modernization. Industry experts have reportedly observed dynamic pricing to be a boon to high fixed and low marginal follow industr ies and also as a necessity for e commerce (Weiss, R., M. & Mehrotra, A., K.,