Dynamic Pricing Meets Big Data
We all know that supply and demand intersect at price. Historically, supply and demand curves have represented the market place for a particular good or service. For example, how strong is the demand for skiing in April across the country? It is an aggregate of how everyone feels. Diehards are putting on their red wax and making reservations months in advance. Others are getting out their golf clubs or tuning up their bikes.
Why offer everyone the same price their level of demand varies so widely? Last year I presented to the ski industry how Ecommerce and Big Data make it possible to set prices based on supply and demand in real time. This year, Greg Petro wrote in Forbes that to find “proof of the effectiveness of dynamic pricing, look no further than the poster child of this movement: Amazon. Econsultancy pointed out that the e-retailer changes its prices every 10 minutes based on the data it collects in real time. It more accurately reflects supply and demand for every item it offers.”
Big Data allows marketers to talk to guests in a more individual and therefore more meaningful manner. Big Data further provides revenue managers the tools to price products and services based on an individual’s level of desire. One person’s price elasticity is another person’s inelasticity.
M-commerce is yet another tool for personalizing offers and prices, especially for ancillary services for travelers on vacation. Mountain resorts actively pursuing dynamic pricing will maximize revenues and experience more consistent business volumes through the season.