Transfer Pricing Associates

Loyalty vs Bargain Shopping

post Tuesday January 29, 2013


Big data is a rapidly growing resource for a variety of organizations across industries, primarily within the retail sector. The tremendous amount of information, which is now more available than ever, is a growing tool for companies to better understand the behaviors of consumers. Large scale retailers are working on innovative ways to leverage the growing glut of information that they poses. Two examples of this are Kroger, a US supermarket giant, and Each of these companies is actively working to maximize their revenue by utilizing big data. Kroger is working to competitively price their products in a way that is tailored to specific customers, while works to provide consumers with forecasts for various products that individuals are shopping for.

The goals of implementing big data in Kroger’s pricing are to create a loyalty among shoppers by sending personalized discounts and coupons. The implementation of big data started in 2003 with the creation of a loyalty card. Pricing strategies shifted from originally discounting top-selling brands to attract new customers, to now seeking to grow loyalty within its current customer base by providing responsive pricing to prior shopping habits. The discounts are derived from algorithms based on shopper history and the frequent purchases made by individuals. Personal mark downs of certain items are then sent to customers by either mail, or via the Kroger smartphone app. The goal is to increase the share of consumer dollars spent of the current Kroger customer base. functions in a very different way. The main goal of is to tear down the information asymmetry that consumers typically have when shopping for certain products. claims to be actively working on behalf of consumers by forecasting potential price markdowns based on product life cycles, the relationships between certain goods and products and price wars between other companies. The CEO of Decide, Mike Fridgen, says: “We’re the people working on behalf of consumers. We’re arming consumers with the tools to fight back. The data scientists are on their side.” Access to Decide’s app costs $30 annually.

It is clear that intellectual property of data and certain computer programs is growing in importance and value to different companies. The battle between how it is best used will continue as these technologies continue to develop.

Source:Financial Times

Image source: Free Digital Photos

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