OnDemand WTP Pricing Research

Will Target’s dynamic pricing strategy erode customers’ trust? | RetailWire

In a two-month investigation conducted by Minneapolis TV station KARE, it was uncovered that Target changes its prices on certain items depending on whether you are inside or outside of the store.

In one example, Target’s app price for a Samsung 55-inch Smart TV was $499.99, but in the parking lot of one of their stores that price suddenly increased to $599.99 on the app. This test was done on 10 products and found that four of the 10 jumped in price from the parking lot to the store. The price jumps were not insignificant either — a Dyson vacuum went up $148 and a Graco car seat jumped $72. In fact, the in-store price was $262 higher for the four products vs. the parking.

University of Minnesota Marketing Professor George John, interviewed for the story, stated, “Somebody at Target programmed in an algorithm which says someone who is 50 feet within the store is willing to pay more. The most reasonable explanation is that you just revealed your commitment to buying the product, you’re in the store, or in the parking lot. If you are further away, you haven’t quite committed, so I’m going to give you a juicier deal. That’s why the price went up when you got closer to the store.”

Read complete article here:

Will Target’s dynamic pricing strategy erode customers’ trust? – RetailWire.