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Retailers Experiment with Varied, Personalized Pricing

Personalized pricing based on consumer habits gaining traction

October 26, 2012

Personalization is permeating ecommerce in areas such as product recommendations and customer service. Now personalized pricing is the latest fertile area of focus for multichannel retailers, according to a new eMarketer report, “Multichannel Pricing Strategy.” Retailers are looking to optimize what they charge based on shifting consumer demand and competitor moves. A recent RetailWire survey suggests that offering different prices across channels will become commonplace.

Ways US Retailers Recommend Retailers Address Online vs. Physical Store Price Consistency, June 2012 (% of total)

Although some consumers still want to see consistent multichannel pricing, the protracted economic slump has created legions of price-sensitive consumers whose purchase decisions are deeply influenced by price. The importance of price is evident from a March 2012 NPD Group survey. It showed that price and sales and special deals were by far the primary influences in deciding where online consumers shopped.

Most Important Influences in Deciding Where to Shop* According to US Internet Users, March 2012 (% of respondents)

Price-conscious consumers know that they are more likely to find those special deals online than in stores. Deal-hunting online and comparison smartphone shopping have opened consumers’ eyes. It has made them less naive about price fluctuations and pricing differences across a retailer’s channels. Digital consumers are also smart enough to know that shopping channels offer different levels of service, and this will be reflected in price variations. And consumers have a growing arsenal of powerful digital tools to help them find where to get the best price for a particular product and determine when the best time is to buy it, whether online or in-store.

Seeing that many consumers want the best price, retailers that decide to optimize pricing across channels are moving toward a personalized pricing approach based on consumer shopping habits. This trend was reflected in the RetailWire survey. Personalized pricing or promotions ranked as the most important pricing practice for combatting price transparency.

Most Effective Pricing Practices in Combating Problems Caused by Pricing Transparency According to US Retailers, June 2012 (ranked on a scale of 1-7*)

Jason Goldberg, vice president of strategy and customer experience at CrossView advises retailers that want to offer different prices under any circumstance to use personalized prices specific to a particular customer instead of specific to a particular geographic location or retail touchpoint. Single-zone pricing—i.e., adopting a national pricing policy—ranked third on the RetailWire list of pricing practices.

The full report, “Multichannel Pricing Strategy,” also answers these key questions:

  • What are the implications of price transparency for retailers?
  • When are prices generally lower in-store than online?
  • What digital tools help consumers decide where and when to buy?
  • How can retailers appease consumer concerns about price differences?

This report is available to eMarketer corporate subscription clients only. Total Access clients, log in and view the report now.

Check out today’s other articles, “What Brands Can Learn from Obama's Live Q&A on Reddit” and “Half of UK Shoppers Will Buy Most Holiday Gifts Online.”


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