The evolution of market segmentation in revenue management and dynamic pricing

Abstract

Market segmentation techniques have played an extraordinarily important role in successful revenue management programs. For example, purchase fences allowed companies to sell a single product at multiple prices, simultaneously, to customers that self-selected into different customer segments, based on willingness-to-pay. As revenue management expanded to more industries, new approaches to market segmentation became possible. The financial benefits associated with successful implementations have been extraordinary. This article discusses how market segmentation techniques have evolved in support of revenue management and dynamic pricing practices and what companies and customers may be able to look forward to in the future.