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Columbia Business School Research Finds that Customization of Pricing Is Not Always the Best Strategy for Retailers or Consumers | Columbia Business School

NEW YORK, March 21, 2019 /PRNewswire/ — As large retail chains compete with online retailers to maintain their hold on the market, a Columbia Business School study shows that it’s time to stop trying to meet consumers based on their geography. For decades, retailers have employed the strategy of adjusting their pricing store-by-store to match local consumers’ willingness to pay. But the new research finds that for some retailers, depending on the competitive landscape they face, following a national pricing strategy may now be more profitable than tailoring prices based on location.

By evaluating 11 million digital camera sales Columbia Business School Professor Oded Netzer along with co-authors Professor Yang Li of Cheung Kong Graduate School and Associate Professor Brett Gordon of Northwestern, both formerly of Columbia Business School, drew two major conclusions that could radically change retailers’ pricing strategy. Netzer and his co-authors found that retailers in competitive markets could see profits increase between 5.3 to 8.4 percent nationwide by employing a national pricing model. However, retailers that have the majority of their stores in less competitive markets will continue to benefit through a local pricing strategy.

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Columbia Business School Research Finds that Customization of Pricing Is Not Always the Best Strategy for Retailers or Consumers.