One example of a company that uses matrix pricing is Amazon.com, an online retailer that sells a variety of products. Amazon.com uses matrix pricing to estimate the prices of products that are not frequently sold or have limited availability. Amazon.com compares these products to similar products that have more active markets based on factors such as product category, brand, features, ratings, reviews, popularity, demand, supply, etc. Amazon.com then applies a multiplier to adjust the prices according to these factors. For instance, if a product is rare, high-quality, or highly rated, it will have a higher multiplier than a common, low-quality, or poorly rated product. This way, Amazon.com can set prices that reflect the value of each product to different customers.
Amazon.com also uses price discrimination to charge different prices to different customers for the same product based on their personal information, browsing history, purchase history, location, device type, etc. Amazon.com uses algorithms and dynamic pricing software to analyze customer data and segment them into groups with different price sensitivities. For example, suppose a customer is loyal, frequent, or has a high income. In that case, they may be charged a higher price than a customer who is new, occasional, or has a low income. Amazon.com also uses time-based price discrimination to change prices according to demand fluctuations throughout the day or week. For instance, if a product is in high demand during peak hours or seasons, it will have a higher price than during off-peak hours or seasons. (Example information gathered from various websites, 2023).
identify a company, such as an airline, a hotel, or a similar business that utilizes different prices for different customers. Then, identify a retail store with set pricing, such as Walmart or Target, and complete a comparative analysis between the pricing models. Is there a difference between the in-person pricing and an online retailer? To enhance your project, get real pricing examples from both in-store and online.
Introduction (1 page): Define the concepts of matrix pricing and price discrimination for the products and stores selected and explain why they are relevant for the businesses and the consumers in that market. Provide examples of companies or products that use these pricing strategies. Then, compare the different types of matrix pricing and price discrimination, such as first-degree, second-degree, and third-degree. Discuss the advantages and disadvantages of each type for both sellers and buyers.
Online, Mobile, or Virtual Shopping (1 page): Compare Brick and Mortar pricing to Online Pricing Models. Discuss the impact of the greater availability of prices when you make purchasing decisions. Evaluate the strengths and limitations of these pricing models. Compare and contrast the concepts to matrix pricing and identify gaps or inconsistencies.
References (1 page): List all the sources cited in the assignment using a consistent citation style, such as APA, MLA, or Harvard. Note that you must provide a citation for every product, store, and price listed.
Some questions to consider when completing your assignment:
What are the main factors that influence matrix pricing and price discrimination?
How do matrix pricing and price discrimination affect consumer behavior and welfare?
How do matrix pricing and price discrimination affect market competition and efficiency?
What are the ethical and legal issues related to matrix pricing and price discrimination?
How can matrix pricing and price discrimination be optimized or regulated to achieve optimal outcomes for both sellers and buyers