Align Algorithms with Organizational Insights

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Effective integration of algorithms in business requires more than just technical implementation; it demands alignment with the organization's marketing and value positioning. While data teams focus on the economic potential of algorithms, understanding the psychological and sociological implications is often overlooked. This gap can hinder overall effectiveness. To maximize the benefits of algorithms, businesses should ensure that their strategies incorporate insights about company perception and product value.

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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