A pricing strategy used by the businesses to charge a different price to each customer for the same product or service is known as the price discrimination. Technology has raised the level of awareness for the consumers and also eased up their lives by giving them direct access to everything (Conitzer & Taylor et al., 2010). Computer and internet has earlier been perceived as the friends of a consumer as it eases the shopping and lowers the price. But recently it has been discovered that online shopping is actually triggering the price discrimination and hurting the customers in general.
The online retailers have access to software that help them in spotting the well-off customers and also keep record of the prior purchase behavior. The fact is that cookies reveal a lot of personal information about the online shopper including the gender, age, income bracket and the preferred sites in particular. The internet address of a person can be used to identify the physical address that can further be used to analyze the level of richness of the neighborhood. A person who clicks the checkout option too quickly from the product page must be wealthy enough to make a quick decision; there is no need to offer a discount (Valentino-Devries & Singer-Vine et al., 2012). Usually the products that are complex like the plans of mobile phones or the hotel rooms are vulnerable to be affected by price discrimination.
The retailers who are using niche selling know that the customer is already looking for a product with no substitute and thus, doesn’t require a lower price with bargain. The online retailer also has access to the source through which the customer opens the website like: those who come through Comparison Shopping Engine search are individuals seeking lower price products; those who come from Google Search, would be willing to pay a middle price as they have been searching for a particular products; but those customers who directly open the website, are suite of their choice and seeking a higher value and price (Online prices: Caveat emptor.com, 2012).
So, there are uncountable methods through which the online retailer can analyze the shopping patterns and the buying behavior of the customer to recreate a different price for each customer. It can also be termed as a competitive pricing strategy as the retailer identifies the need of each customer and charges the right price to the right customer. The online world is highly tailored and the retailers are targeting their customers varying prices based on their shopping patterns (Conitzer & Taylor et al., 2010). Concluding, online shopping has actually triggered the use of price discrimination.
References
Conitzer, V., Taylor, C. & Wagman, L. (2010). Online privacy and price discrimination.
Online prices: Caveat emptor.com. (2012). [online] 30th June. Retrieved from: http://www.economist.com/node/21557755 [Accessed: 25 Feb 2014].
Valentino-Devries, J., Singer-Vine, J. & Soltani, A. (2012). Websites vary prices, deals based on user's information. [online] 24th Dec. Retrieved from: http://online.wsj.com/news/articles/SB10001424127887323777204578189391813881534 [Accessed: 25 Feb 2014].
