Articles & Discussion Questions
January 06, 2025
Dynamic pricing, where prices fluctuate based on factors like demand, location, and competitor pricing, has become increasingly common in various consumer industries, from ride-sharing to concert tickets. This method is attractive to retailers because it allows them to adjust prices in real-time, maximizing profits by using data-driven algorithms. The rise of dynamic pricing is partly due to the increased collection of consumer data and the growth of software tools that enable businesses, large and small, to implement such strategies. However, consumer backlash has been significant, as people dislike the unpredictability and potential for price manipulation, especially in cases where they feel they’re being unfairly charged.
Despite the pushback, dynamic pricing remains largely legal, with exceptions only for discriminatory practices based on personal characteristics like race or gender. The Federal Trade Commission has started investigating how pricing algorithms may exploit consumer data, but retailers are protected by the fact that these adjustments are often justified by the data-driven nature of the process. While dynamic pricing may result in higher prices for some, it can also offer discounts or more tailored pricing, benefiting both retailers and consumers in certain contexts. Nevertheless, the public’s negative perception, particularly regarding practices like surge pricing, presents a significant challenge for businesses looking to implement these strategies without alienating their customer base.
Discussion Questions:
1. What is a product or service that you think dynamic pricing would be especially effective for? Explain your answer.
2. Would dynamic pricing at your favorite restaurant or grocery store impact your shopping habits? Would you be willing to pay higher prices at the busiest times or would you shop somewhere else where prices remained the same?
“Inflation Is Coming Down, But Prices Won’t Stand Still in 2025” by Amanda Mull, December 16, 2024
Full Article Link: https://www.bloomberg.com/news/articles/2024-12-16/dynamic-pricing-is-coming-to-more-product-categories?embedded-checkout=true
December 16, 2024
Kraft Heinz’s iconic macaroni and cheese brand is facing increased competition in the market, with new products like Goodles gaining popularity. Goodles offers a protein-packed alternative with vibrant packaging, appealing to consumers willing to pay a premium for healthier options. The trend is not limited to mac and cheese; consumers are increasingly choosing either high-end products or low-cost store brands, leaving mid-priced options like Kraft and Velveeta struggling. Kraft’s sales have declined as it competes with both store brands and premium alternatives, which have been gaining market share, especially with inflation pushing consumers to be more value-conscious.
As mid-range brands lose ground, companies are adapting by targeting either the high-end or budget segments. For instance, Kraft is attempting to appeal to Gen Z with new, bold flavors, while other companies like Procter & Gamble and Kenvue are focusing on premium product innovation to compete with upscale alternatives. This bifurcation of the market has led to a shift in consumer behavior, where people are more willing to either splurge on luxury items or opt for cheaper store-branded products. As competition intensifies, the challenge for traditional brands is to either reinvent their products or sharpen their focus on a specific market segment to regain consumer loyalty.
Discussion Questions:
1. Think of a mid-range brand that you personally use in any industry and discuss whether it is losing ground in your opinion like Kraft and Velveeta have been?
2. If you were the Chief Marketing Officer for a mid-range brand would you pursue a strategy of reinventing the products or sharpening your focus on a particular market segment? Discuss your answer.
“Shoppers are Ditching Classic Brands They Once Loved” by Leslie Patton and Jaewon Kang, November 18, 2024
Full Article Link: https://www.bloomberg.com/news/features/2024-11-18/kraft-mac-cheese-sales-fall-as-shoppers-ditch-classic-us-brands
