Monday, May 1, 2017


“Will you pay more for those shoes before 7 p.m.? Would the price tag be different if you lived in the suburbs? Standard practices and simple discounts are giving way to far more exotic strategies designed to extract every last dollar from the consumer”
By: Jerry Useem
Level of difficulty: ****
·         The text has an audio version the link to which is provided. Listen carefully reading at the same time. I have broken the text down into sections. While you are listening, see if you can determine how I did so and how many sections there are. You will have your answer when you have completed the questions.
You are advised to download the app so as to be able to listen to audio versions of the texts in The Atlantic. The link is in the text.
·         Pricing strategy: an introduction
·         Marketing mix: pricing strategies
1.       Read the first six paragraphs of the text and answer the questions.
·         The offering of certain products to consumers at radically different prices at the same time of the year is not as bizarre as it may seem because it is, in fact, ……
·         The purpose of the above is to determine…(Be specific)
·         The reason companies need to carry out such experiments is the advantages presented by…..
·         The example of a can of soda and that of the Google headphones prove that: Mark the one that doesn’t fit.
-          Economists are getting much better at enabling companies to make a profit
-          The ways consumers shop help to determine market trends
-          Nothing has a fixed price any longer because demand fluctuates
-          The increase in the number of shoppers is providing economists with more data
2.       What subtitle would you assign this section of the text: the price war / pricing: not as easy as it looks / consumers versus economists / modern technology and pricing.
3.       Continue reading as far as “But in the 1990’s…” and answer the questions
·         The aim of the fixed price policy championed by conservative religious groups was to bring peace to the marketplace / simplify buying and selling / make buying and selling more ethical / make buying and selling less exploitative.
·         We understand from the case of GM that companies didn’t give up without a fight / found a way round the fixed price policy/ tried to provide everyone with a car / classified society according to their earnings.
·         What powerful desire of shoppers lead economist to rethink their views on value?
4.       What subtitle would you give the section you have just read: peace in the marketplace / fixed prices whether you like them or not/ fixed prices for appearances’ sake/ there is a way round everything. Be very careful.
5.       Continue reading up to “By the early 2000’s…” and answer the questions:
·         The increased availability of huge amounts of data affected pricing in that…..started to play less of a part in the determining of the price of a good.
·          The Jewel data proved / disproved earlier experiments with left digit bias by indicating that the effect….
6.       What subtitle would you give this section: data versus consumers/ data versus intuition/ data versus the market / data versus Nagle.
7.       Continue reading as far as “As this new world began to take shape…” and answer the questions:
·         What does the phrase “gravitational pull” refer to? The pull of whom, in what direction?
·         What was the attraction of corporations to academic economists?
·         The end result of the experiments that produced data was ….
8.       What subtitle would you not give this section of the text: the ultimate price fixing/ academia and corporations join forces / the pull of big data / the sky is the limit.
9.       Continue reading as far as “This could be seen as…” and answer the questions:
·         Which sentence in this section best expresses the main idea?
·         The examples in this section prove that the customer is always right / big data works both ways / consumers are not idiots / there is still justice in the world.
10.   Read as far as “It didn’t have to be that way…” and answer the questions:
·         The current price system has a lot in common with the stock exchange as…
·         The reason for the above system was the fact that companies were trying to avoid…
·         The looming danger of bankruptcy sets of a chain reaction:…
11.   Read as far as “Where does all this end?” and answer the questions:
·         What marketing ploy employed by grocers is Amazon employing with great success?
·         Amazon made a profit on its sales of Samsung televisions despite the 100 dollar drop in price because…………………………………
·         The use of various premade algorithms to set prices can have a knock on effect: ……..
·         The above proves the necessity of ……………………………, which means algorithms cannot be left to their own resources.
·         How does the writer support his contention that pricing is a very complex operation in the modern business world? By pointing to the application of…..
12.   What subtitle would you give the section you have just read: retailers hit back/ the age of algorithms/ from grocery stores to big business/ Hariharan’s solution
13.   Read as far as “But a different theory…..” and answer the questions.
·         By providing customers with the complete picture, Everlane was trying to…
·         Why Did Everlane take the seemingly illogical step of providing customers with the three options?
14.   Read the text to the end and answer the questions.
·         What is the retailers’ “holy grail”?
·         The walk-away price of every single buyer can be determined in one of two ways:………………….or/and…………………..
·         The purpose of the research in Catalonia was to prove…..
·         The major disadvantage of the ways to combat price fixing is that though affective they are…………………
·         Patten’s attitude to shopping seems to support the contention that…………………………………….
To what extent do you agree with the idea that retailers are treating consumers like idiots? Write an argumentative essay in which you support your opinion and refute the counter arguments.
1.       A price experiment
The price that will extract the most profit from consumers’ wallets
Online comparison shopping
The last
2.       Pricing: not as easy as it looks
3.       Simplify buying and selling
Found a way round the fixed price policy
The desire (instinct) to best their neighbours
4.       Peace in the marketplace
5.       Intuition (The head merchant will fit too but this is not in fact the correct answer as he probably continued to determine prices but based his decisions on data)
Disproved, of ending prices in .99 was huge in grocery stores
6.       Data versus intuition
7.       The pull of academic economists towards corporations
Pricing, people, behavior, reputation – the things that have always set economists aglow – plus the chance to experiment at a scale that’s unparalleled
The optimal profit maximizing figure
8.       The sky is the limit
9.       The first
Big data works both ways
10.   Prices are never set to begin with and can fluctuate hour to hour and even minute to minute
Expenses like staff, training and customer support are slashed; profit margins keep falling nonetheless and a death spiral ensues
11.   Identifying goods that loom largest in consumers’ perception and keeping their prices carefully in line with competitors’ prices, if not lower while allowing the price of everything else to drift upwards.
They hiked the price of HDMI cables needed to connect the TV by about 60%
It could devastate a retailer’s bottom line
Human oversight (Guardrails is not the answer because it is stated in the question that algorithms cannot be left to their own resources)
Game theory to pricing
12.   Retailers hit back
13.   Capitalize on consumer backlash to retailers’ ever more vaguely underhand tactics
To give customers a glimpse of how stuff gets made, how workers get paid, and other things not typically visible on a shoebox or a sweater tag
14.   Perfect price discrimination
Demographics and people’s web browsing history
That personalized pricing was feasible
(There is a finite amount of uncertainty we can absorb, a limit to how much we can check the ticker to see whether the Swiffer’s price is up or down this morning;) somewhere in us is a shut-off point

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