Modern Franchise Magazine August 2013 - Page 30

marketing The price of the t-shirt you just decided to buy might change by the time you get to the checkout Online and brick-andmortar stores might have the ability to set prices based on real time information by using new technologies and individual tagging, increasing retail profits Sequential Pricing Increases Retail Profits, Study Finds New technologies, such as radio-frequency identification (RFID), allow brick-and-mortar retailers to monitor customer preferences in real time. Business researchers at the University of Arkansas have conducted an in-depth study of “sequential” pricing of retail products in both online and brick-and-mortar stores and found that the ability to set prices based on real-time knowledge of customer preferences and purchase intentions can increase profits in some specific circumstances. on customers’ intentions to purchase or not purchase other products,” said Cary Deck, professor of economics in the Sam M. Walton College of Business. “Think about how shopping carts offered at most online stores work. A customer clicks on an item to view information about it and decides to add it to a shopping cart or not. The mere act of selecting an item to consider, regardless of whether the customer purchases the item, provides information to the retailer. It tells the store something about the shopper’s taste and what other items may be of interest to the user. Stores can then set prices on those items accordingly, based on anticipated demand.” Sequential pricing - as opposed to simultaneous pricing - occurs when a seller, aided by technology, is able to set the price for a subsequent product based on a customer’s interest in or preference for an initial product. “We show that retailers can actually increase The goods are usually associated in some way. profits by altering prices on certain products based For example, a seller identifies a shirt the customer 30 | Modern Franchise Magazine maxiom