Abstract
A modern effective business model involves the use of an appropriate pricing strategy. However, not only a short-term profitability matters but also long-term clients’ loyalty. The main purpose of this paper is to present a specific transactional pricing strategy for a second-hand goods resale exchange platform, which allows to avoid possible negative outcomes of being associated with consumer discrimination. Using simulation modeling approach, it was shown how customer segmentation combined with transactional pricing can help to gain higher profitability. The model is based on the work of intelligent agents that recreate the full product lifecycle. Changing the input parameters of the model, it is possible to simulate different scenarios of a company’s activity and market conditions. The model supports the inclusion of any number of products, while its intelligent agents’ methods are still flexible to replace with other techniques. The simulation model has shown that the use of transactional pricing can increase the profitability of a business, while keeping its clients loyal.
Highlights
Pricing strategies have become very sophisticated with the coming of the big data era
The main purpose of this paper is to present a practical tool for creating an optimal pricing strategy for a specific business model: a second-hand goods resale exchange
Even though pricing strategies are often associated with consumer discrimination, we showed one that does not affect clients’ loyalty
Summary
Pricing strategies have become very sophisticated with the coming of the big data era. What should have become the biggest advantage of contemporary pricing strategies, often plays a bad trick with companies and their goodwill. Even social medias, which operate, first of all, as advertising platforms, are instantly experiencing the change of policies, aiming to minimize the impact of discrimination while targeting their users. Considering the main economic Supply-Demand equilibrium principle, a company tries to sell a unit of production for the maximum price that a certain buyer is ready to pay. The company fully gets customer surplus and gains its short-term profitability goals. This manipulation is quite dangerous for the long-term company’s position: customers’ loyalty may tend to decrease dramatically
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