June 20, 2005

Different Customers - Different Prices

When the first retailers (500, 1000, 2000, 5000, etc years ago) started selling, they would haggle with their customers on price. As retailing got larger and more uniform retailers started to standardize their pricing and put price tags on items for all to see.

Joseph Turow, a professor at the University of Pennsylvania's Annenberg School for Communication says that this was because retailers did not trust their employees to haggle for price.

However, thanks to databases and other technologies, online retailers, can offer customer Joe one price and customer Sue, yet another price. For SMB's this can be a POWERFUL tool, but make sure it doesn't come back to sting you via customer complaints. I'm talking more than just a simple frequent flyer program which is simple and clear, but the ability to dynamically analyze customer buying behavior to determine the "value" of a customer as relates to their immediate purchase.

The professor writes, in the Washington Post The idea used to be that you, the consumer, could shop around, compare goods and prices, and make a smart choice. But now the reverse is also true: The vendor looks at its consumer base, gathers information, and decides whether you are worth pleasing, or whether it can profit from your loyalty and habits. You may try to jump from site to site to hunt for the best buy, but that's time-consuming. And there are comparative shopping sites such as Bizrate or Nextag, but these can be tough to navigate, and companies are learning quickly how to game the system.

This all might make sense for retailers. But for the rest of us, it can feel like our simple corner store is turning into a Marrakech bazaar -- except that the merchant has been reading our diary, while we're negotiating blindfolded, behind a curtain, through a translator.

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