This chapter delves into the complexities of dynamic pricing in modern business, emphasizing the need for a careful balance between profit maximization and customer trust. It offers strategies to manage the impacts of price fluctuations on brand reputation while addressing the psychological aspects of consumer behavior.
More and more companies are turning to pricing algorithms to maximize profits. But many are unaware of a big downside.
Marco Bertini, a marketing professor at Esade Business School in Barcelona, says constant price shifts can actually hurt the perception of your brand and its products. He warns that employing AI and machine learning without considering human psychology can damage your relationship with customers.
In this episode, he outlines steps you can take to avoid these pitfalls, including some basic guardrails, overrides, and communication tactics. He also shares real-world examples of companies that are using dynamic pricing to smooth demand and provide better customer experiences.
Key episode topics include: strategy, pricing strategy, algorithms, psychology, customer experience, communication, dynamic pricing, brand, AI, machine learning, profits.
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· Listen to the full HBR IdeaCast episode: Algorithms Won’t Solve All Your Pricing Problems (2021)
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