Balance Demand and Experience Through Smart Algorithms

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Effective management of seasonal demand in businesses, such as theme parks, can significantly enhance customer experiences. By utilizing algorithms, operators can optimize visitor distribution, encouraging families to visit during off-peak times. This strategic shifting of attendance can reduce wait times and improve overall satisfaction. The integration of basic economic principles with insights from psychology and sociology is crucial, as consumer behavior often drives the success of these strategies. Understanding and tapping into this mix allows for better resource allocation and enhanced guest experiences.

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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