Myopic Pricing Strategies Lose Seasonal Sales

Dynamic pricing involves setting different prices at different times of the buying season. One of the complexities of dynamic pricing strategy is managing ‘strategic’ consumers who usually wait for endof-season clearance sales. New research shows that many retailers are setting prices in a way that entice strategic consumers to early season purchasing; this strategy, however, is myopic because it limits potential revenues from end-of-season clearance sales. The researchers show that setting pricing levels in the early season that encourage late season-buying by strategic consumers results in the best overall retail sales and revenues for the season.