Cheil Turkey looks at various examples of dynamic pricing and explores its evolution into sympathetic pricing as a tactic brands use to develop a competitive edge and provide better value for their customers.

1. © 2015 Cheil Turkey
Dynamic
Pricing
August
2015

2. © 2015 Cheil Turkey
WHAT
IS
DYNAMIC
PRICING?

3. © 2015 Cheil Turkey
Some
Keywords
Dynamic
Pricing
Sympathe8c
Pricing
Price
Elas8city
Personal
pricing
Real-­‐8me
pricing
Flexible
pricing

4.
Dynamic
pricing
is
a
pricing
strategy
in
which
businesses
set
flexible
prices
for
products
or
services
based
on
current
market
demands.
Businesses
are
able
to
change
prices
based
on
algorithms
that
take
into
account
compeDtor
pricing,
supply
and
demand,
and
other
external
factors
in
the
market.
*https://en.wikipedia.org/wiki/Dynamic_pricing
© 2015 Cheil Turkey

5. © 2015 Cheil Turkey
Dynamic
pricing
is
a
common
pracDce
in
several
industries
such
as
hospitality,
travel,
entertainment,
and
retail.
Each
industry
takes
a
slightly
different
approach
to
repricing
based
on
its
needs
and
the
demand
for
the
product.
*https://en.wikipedia.org/wiki/Dynamic_pricing

6. Airlines
are
the
most
familiar
users
of
dynamic
pricing.
But
the
whole
concept
of
raising
prices
when
demand
grows
is
taking
root
in
other
sectors
too:
car
rental
companies,
hotels,
uDliDes,
online
retailers
–
and
now
theatres.
Many
theaters
discount
Dckets
for
performances
that
aren‘t
selling
well,
adjusDng
prices
to
meet
demand
(or,
in
this
case,
a
lack
thereof).
That‘s
dynamic
pricing
too.
*www.thinkaboutpricing.com/
© 2015 Cheil Turkey

7. © 2015 Cheil Turkey
TYPES
OF
DYNAMIC
PRICING:

8. © 2015 Cheil Turkey
Hospitality*
Hotels
and
other
players
in
the
hospitality
industry
use
dynamic
pricing
to
adjust
the
cost
of
rooms
and
packages
based
on
the
supply
and
demand
needs
at
a
parDcular
moment.
The
goal
of
dynamic
pricing
in
this
industry
is
to
find
the
highest
price
that
consumers
are
willing
to
pay.
Another
name
for
dynamic
pricing
in
the
industry
is
demand
pricing.
*https://en.wikipedia.org/wiki/Dynamic_pricing

9. © 2015 Cheil Turkey
Travel*
Airlines
change
prices
oUen
depending
on
the
day
of
the
week,
Dme
of
day,
and
number
of
days
before
the
flight.
For
airlines,
dynamic
pricing
factors
in
different
components
such
as:
how
many
seats
a
flight
has,
departure
Dme,
and
average
cancellaDons
on
similar
flights.
*https://en.wikipedia.org/wiki/Dynamic_pricing

10. © 2015 Cheil Turkey
Entertainment*
Sports
DckeDng
is
a
segment
of
the
entertainment
industry
that
uses
real-­‐Dme
pricing
to
boost
revenue.
Dynamic
pricing
is
parDcularly
important
in
baseball
because
MLB
teams
play
around
twice
as
many
games
as
some
other
sports
and
in
much
larger
venues.
Sports
that
are
outdoors
have
to
factor
weather
into
pricing
strategy,
in
addiDon
to
date
of
the
game,
date
of
purchase,
and
opponent.
Tickets
for
a
game
during
inclement
weather
will
sell
beYer
at
a
lower
price;
conversely,
when
a
team
is
on
a
winning
streak,
fans
will
be
willing
to
pay
more.
*https://en.wikipedia.org/wiki/Dynamic_pricing

11. © 2015 Cheil Turkey
Entertainment*
For
example,
the
St.
Louis
Cardinals
set
their
Dcket
price
algorithms
based
on
factors
like
team
performance,
pitching
match
ups,
weather,
and
Dcket
demand.
In
their
2012
season,
Dckets
were
priced
for
$10
or
less
for
three-­‐quarters
of
games
played
at
the
team's
home
stadium.
*http://www.csmonitor.com/Business/Saving-Money/2013/1104/Everything-you-need-to-know-about-dynamic-pricing

12. © 2015 Cheil Turkey
Retail*
Retailers,
and
online
retailers
in
parDcular,
adjust
the
price
of
their
products
according
to
compeDtors,
Dme,
traffic,
conversion
rates,
and
sales
goals.
The
aim
of
dynamic
pricing
is
to
increase
revenue
and
profit.
*https://en.wikipedia.org/wiki/Dynamic_pricing

13. © 2015 Cheil Turkey
Dynamic
Pricing
at
Amazon
Marketplace*
The
Amazon
marketplace
is
very
crowded
with
sellers.
There,
dynamic
pricing
means
retailers
can
change
the
price
of
products
immediately,
intensifying
compeDDon.
*https://en.wikipedia.org/wiki/Dynamic_pricing

14. © 2015 Cheil Turkey
Pricing
Based
on
CompeDtors*
Businesses
that
want
to
price
compeDDvely
will
monitor
their
compeDtors’
prices
and
adjust
accordingly.
Amazon
is
a
market
leader
in
retail
that
reprices
oUen,
which
encourages
other
retailers
to
alter
their
prices
to
stay
compeDDve.
CompeDtor-­‐
based
dynamic
pricing
can
increase
sales,
especially
if
they
take
advantage
when
other
retailers
run
out
of
stock.
*https://en.wikipedia.org/wiki/Dynamic_pricing

15. © 2015 Cheil Turkey
Time-­‐based
Pricing*
Many
industries
change
prices
depending
on
the
Dme
of
day,
especially
online
retailers,
whose
customers
usually
shop
the
most
in
during
weekly
office
hours
between
9AM-­‐5PM.
Raising
prices
during
the
morning
and
aUernoon
and
lowering
prices
during
the
evening
is
a
common
pracDce
with
dynamic
pricing.
TransportaDon
is
another
area
where
prices
vary
based
on
the
Dme
of
day.
The
San
Francisco
Bay
Bridge
charges
a
higher
toll
during
rush
hour
and
on
the
weekend,
when
drivers
are
more
likely
to
be
travelling.
*https://en.wikipedia.org/wiki/Dynamic_pricing

16. © 2015 Cheil Turkey
SIMILAR
APPROACH:
SYMPATHETIC
PRICING

17. © 2015 Cheil Turkey
SympatheDc
Pricing
is,
“flexible
and
imaginaDve
discounts
that
help
ease
lifestyle
pain
points,
lend
a
helping
hand
in
difficult
Dmes,
or
support
a
shared
value.”
It
means
offering
your
customers
discounts
based
on
shared
moments
or
values—think
of
your
local
coffee
shop’s
early
bird
special
for
those
of
us
unlucky
enough
to
be
out
and
in
need
of
a
beverage
between
5-­‐6am.
Or
remember
McDonalds
sharing
water
and
food
with
rescue
workers
aUer
the
September
11th
aYack.
*http://www.melspeak.com/lets-talk-shop/sympathetic-pricing-a-new-trend-perfect-for-retailers/
A
new
trend
resona8ng
with
consumers
is
SympatheDc
Pricing.*

18. © 2015 Cheil Turkey
SympatheDc
Pricing
focuses
on
the
needs
and/or
values
of
the
person
paying,
rather
than
the
innate
social
or
environmental
aYributes
of
what
is
being
sold.*
*http://www.theguardian.com/sustainable-business/2015/apr/09/is-sympathetic-pricing-anything-more-than-a-novelty

19. © 2015 Cheil Turkey
When
it
comes
to
being
a
truly
human
brand,
brands
are
constantly
reassuring
consumers
that
they
care.
Care,
that
is,
about
everyday
lifestyle
challenges
that
individual
consumers
face,
as
well
as
the
big
problems
we
all
share
–
sustainability,
social
responsibility
and
more.*
Vicki
Loomes,
senior
trend
analyst
at
trendwatching.com,
says
such
pricing
strategies
allow
brands
to
show
their
human
side.
“They
are
saying,
we
care
and
understand
your
problem,
and
this
is
us
punng
our
money
where
our
mouth
is,”
she
says.
*http://www.theguardian.com/sustainable-business/2015/apr/09/is-sympathetic-pricing-anything-more-than-a-novelty

20. © 2015 Cheil Turkey
Discounts
that
offer
a
helping
hand
at
difficult
8mes
will
always
be
welcomed;*
In
April
2014,
online
plaporm
Pressfolios
announced
it
would
make
its
porpolio
service
free
to
journalists
affected
by
staff
redundancies
at
one
of
New
Jersey's
biggest
newspapers.
Discounts
that
highlight
shared
values
and
beliefs
and
tap
into
a
specific
group
of
consumers
are
more
effecDve
and
emoDve
than
a
bland,
all-­‐encompassing
CSR
campaign.
*WARC Trendwatch: Sympathetic pricing

21. © 2015 Cheil Turkey
In
March
2014,
Dutch
airline
Corendon
offered
a
50%
discount
on
flights
to
Russia
for
passengers
travelling
to
the
Winter
Olympics
to
demonstrate
for
gay
rights.
*WARC Trendwatch: Sympathetic pricing

22. © 2015 Cheil Turkey
In
March
2014,
Panasonic
announced
it
would
pay
workers
in
China
more
to
compensate
for
high
polluDon
levels.
Truly
forward-­‐thinking
brands
have
sympathy
for
everyone.
*WARC Trendwatch: Sympathetic pricing

23. © 2015 Cheil Turkey
LET’S
LOOK
AT
THE
EXAMPLES...

24. © 2015 Cheil Turkey
Best
Buy*
Best
Buy
is
one
of
the
companies
that
has
engaged
in
dynamic
pricing.
Amitabh
Biswal,
the
manager
of
merchandising
opera8ons
at
Best
Buy
Canada,
said
his
company
was
at
first
just
reac8ng
to
customers'
tendency
to
comparison
shop
for
electronics.
*http://www.zdnet.com/article/the-future-of-retail-is-dynamic-pricing-so-why-cant-we-get-it-right/
"It
has
become
very
easy
for
a
customer
to
research
prices.
At
Best
Buy
Canada,
we
have
implemented
capability
that
blends
in
compe==ve
prices.
In
the
past
year,
we
have
increased
our
online
assortment
by
about
20,000
products
in
Canada.
Many
of
them
are
not
carried
in
our
stores.
If
a
customer
is
able
to
get
a
price
online,
they
should
be
able
to
get
it
in
the
store
as
well.
So
we're
able
to
respond
and
react
to
compe==ve
[compe==on]
more
quickly."

25. © 2015 Cheil Turkey
McDonald’s*
When
the
temperature
at
the
Damrak
in
Amsterdam
hit
a
record
of
38.6
degrees
Celsius
(101.48
F,)
a
panel
opened
automa8cally
to
offer
out
100
McFlurry
cups
to
passing
pedestrians.
They
then
had
to
pop
into
the
nearby
McDonald's
restaurant
to
collect
their
free
ice
cream.
*http://www.businessinsider.com/mcdonalds-billboard-gives-out-free-ice-cream-when-weather-is-hot-2015-7

26. © 2015 Cheil Turkey
Emart*
*http://www.digitalbuzzblog.com/emart-sunny-sale-3d-shadow-qr-code/
To
boost
sales
at
lunch8me
Emart
introduced
“The
Sunny
Sale”
which
involved
a
three-­‐dimensional
QR
code
that
was
placed
across
the
city
and
could
only
be
scanned
during
the
hours
of
12
and
1
each
day,
due
to
the
sunlight
cas8ng
a
shadow
to
complete
the
QR
code.
Anybody
who
did
scan
the
code
was
given
a
special
discount
code
with
25%
off
that
could
be
redeemed
in
store
or
through
their
mobile
e
commerce
site.

27. © 2015 Cheil Turkey
BGH*
The
Argen8nian
air-­‐condi8oner
manufacturer
offers
price
reduc8ons
during
summer
heat
waves.
But
while
consumers
will
welcome
being
cooler,
the
energy
costs
of
doing
so
will
leave
the
climate
warmer.
*http://adsoftheworld.com/media/online/bgh_my_home_is_an_oven

28. © 2015 Cheil Turkey
BGH*
*http://trendwatching.com/trends/sympathetic-pricing/

29. © 2015 Cheil Turkey
Puma*
To
showcase
their
super
fast
running
shoes,
Puma
in
Mexico
encouraged
customers
to
shop
as
quickly
as
possible
by
incen8vising
speedy
shoppers
with
a
discount
in
a
campaign
named
“The
World’s
Fastest
Purchase”.
*http://www.digitalbuzzblog.com/puma-the-worlds-fastest-purchase/

30. © 2015 Cheil Turkey
Noosa
InternaDonal
Resort*
In
March
2013,
the
Noosa
Interna8onal
Resort
on
Australia’s
Sunshine
Coast
offered
guests
a
20%
discount
on
hotel
accommoda8on
if
local
rainfall
registered
more
than
5
mm
during
their
stay.
*http://trendwatching.com/trends/sympathetic-pricing/

31. © 2015 Cheil Turkey
Uber*
*http://trendwatching.com/trends/sympathetic-pricing/
Uber
offered
travellers
in
London
and
Boston
discounts
when
they
were
hit
by
public
transport
disrup8on.

32. © 2015 Cheil Turkey
PruHealth*
UK
medical
insurance
company
PruHealth
gives
discounts
to
its
exercise-­‐taking
customers.
The
more
exercise
they
do,
the
lower
their
premiums.
As
a
result,
the
insurer’s
customers
are
fifer
and
the
insurer’s
payout
rates
are
smaller.
PruHealth
also
rewards
customers
with
discounts
for
adop8ng
healthy
habits
–
for
example
a
customer
can
save
75%
on
a
weekend
visit
to
a
health
spa.
*http://www.thisismoney.co.uk/money/bills/article-2384171/Insurance-How-discounts-changing-lifestyle-reduce-bills.html

33. © 2015 Cheil Turkey
La
PeDte
Syrah*
A
cafe
in
Nice
on
the
Côte
d'Azur
has
gained
interna8onal
notoriety
aker
reminding
customers
to
mind
their
manners.
It
drops
the
price
of
a
coffee
when
customers
say
“please.”
Sign
outside
Côte
d'Azur
establishment
lists
price
of
coffee
as
€7
but
'Bonjour,
un
café,
s'il
vous
plaît'
costs
only
€1.40.
*http://www.theguardian.com/world/2013/dec/11/french-cafe-discounts-police-customers

34. © 2015 Cheil Turkey
1)
To
boost
sales
à
For
brands
to
involve
in
promo8onal
/seasonal
ac8vi8es
without
devaluing
the
brand
through
‘offers’/‘discounts’
2)
To
be
close
to
consumers
à
For
brands
to
respond
to
customers’
needs
in
real
8me,
thus
genera8ng
unique
value
percep8on
that
builds
loyalty.
3)
To
create
buzz
à
For
brands
to
earn
reputa8on
of
an
innova8ve
and
consumer-­‐centric
market
player
3
MAIN
REASONS
FOR
BRANDS
TO
USE
DYNAMIC
PRICING

35. © 2015 Cheil Turkey
THANK
YOU.