HBR On Strategy
How to Build a Dynamic-Pricing Strategy That Works
Aug 14, 2024
Marco Bertini, a marketing professor at Esade Business School, dives into the intriguing world of dynamic pricing strategies. He cautions that while algorithms can enhance profits, they may hurt brand perception if not aligned with human psychology. Bertini emphasizes the importance of maintaining customer trust amidst fluctuating prices. He shares actionable strategies, including communication tactics and real-world examples, to strike a balance between profit maximization and customer loyalty, making it a must-listen for modern businesses.
28:05
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Quick takeaways
- Dynamic pricing can maximize profits but may damage brand perception, leading to distrust among consumers if not managed carefully.
- Incorporating customer psychology into pricing strategies is crucial, as emotional reactions to price changes can significantly impact customer relationships.
Deep dives
The Impact of Dynamic Pricing on Brand Perception
Dynamic pricing, while beneficial for maximizing profits, can significantly damage a brand's perception. Frequent price fluctuations can lead customers to feel distrustful, as they may suspect the company is taking advantage of them. Marco Bertini emphasizes that businesses should be aware of the psychological effects of their pricing strategies, as constant price changes can create confusion and skepticism among consumers. To mitigate these issues, companies should implement guardrails and communication tactics to ensure transparency and maintain trust with their customers.
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