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The use of dynamic pricing strategies can have a tremendous impact on the hospitality industry. Understanding the variety in the type of customers and the perceptions of customers concerning the fairness of dynamic pricing is essential. This study aimed to investigate how a dynamic pricing strategy could positively affect the demand for a hotel located on the West Frisian island of Vlieland. This research was divided into four topics: determining segments and corresponding booking processes, the importance of price when booking, perceived fairness of price change and how to influence booking behaviour. This research used a survey that was presented to customers of the hotel in this case study for six weeks. Three hundred and sixty-eight customers completed the survey. The evidence suggests that implementing a more elaborate pricing strategy would positively affect the demand for this hotel. While price is still an essential factor when booking, it is concluded that this is not the most important consideration for consumers. If a pricing strategy is implemented, the hotel can improve the occupancy rate and generate more hotel revenue while simultaneously keeping the consumers satisfied. Relevant managerial implications include implementing peak load pricing to influence demand.

Background: In the consumer-centric global economy of the 21st century, customer retention is a vital concept in the hospitality industry for building and sustaining long-term relationships. Recognizing the challenges of acquiring new customers, the industry acknowledges the significance of retaining existing ones. To achieve their goals, hospitality businesses need a comprehensive strategy that extends beyond price targets, emphasizing the development of effective pricing strategies from the outset. Methods: Data collection took place between June 2022 and January 2023, involving a random sample of seven international hotels located in Tirana, Durres, and Vlora. Quantitative data was collected through surveys utilizing Likert-scale questions. Statistical analysis, including crosstab tests, was employed to explore the relationship between economy pricing strategies and customer retention. Results: The study encompassed 572 participants representing diverse demographic characteristics. Analysis revealed a statistically significant positive relationship between economy pricing strategies and customer retention in international hotels in Albania. These findings underscore the importance of implementing effective pricing strategies to enhance customer loyalty and guide the development of improved strategies within the hotel industry. Conclusions: This study provides empirical evidence of a significant positive relationship between economy pricing strategies and customer retention in international hotels in Albania. Effective pricing strategies play a crucial role in fostering customer loyalty. However, the study's limitations, primarily its focus on specific hotels in Albania, call for further research to validate the generalizability of these findings. The insights gained from this study inform policymakers and industry stakeholders in formulating strategies to enhance customer retention within the hospitality sector.

PurposeThis paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.Design/methodology/approachThis briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.FindingsThis research paper concentrates on determining the optimal pricing strategy for a reward-based crowdfunding project. In most market scenarios an early-bird pricing strategy using only high quality rewards was found to be the optimal strategy for maximizing revenue and minimizing product development costs, in comparison with a versioning pricing strategy. A reasonable project funding goal figure should also be selected to avoid the project failing to reach its all-or-nothing target.Originality/valueThe briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Consumers often consider delaying a purchase strategically, anticipating that prices might decrease. Combining two unique data sources from the air-travel industry (posted fare data and booking data), we use a structural model to estimate the fraction of strategic consumers in the population, assuming different levels of sophistication in consumers' perception of future prices: perfect foresight and weak- and strong-form rational expectations. We find that 5.2% to 19.2% of the population is strategic across markets, measured by the first and third quartiles. Our intermarket analysis indicates that shorter trips with more attractive outside options are populated with more strategic consumers. Using a nonparametric approach, we further find that most strategic consumers arrive either at the beginning of the booking horizon or close to departure. Finally, our counterfactual analysis shows that, contrary to conventional wisdom, the presence of strategic consumers does not necessarily hurt revenues. Rather, the impact varies by market. Commitment to a nondecreasing pricing strategy is more likely to benefit business markets than leisure markets, or it could even hurt leisure markets. Intermarket analysis shows that city pairs with lower Internet penetration, higher average price, and shorter distances tend to benefit more from such commitment as well. This paper was accepted by Yossi Aviv, operations management .

Empirical studies reveal a surprisingly wide variety of pricing strategies among retailers, even among Internet sellers of undifferentiated homogeneous goods, such as books and music CDs. Several empirical findings remain puzzling; for example, within the same market, some small retailers decide to discount deeply, whereas others forgo the price-sensitive switchers and price high. The authors present theoretical and empirical analyses that address these varied pricing strategies. A model of three asymmetric firms shows that under multiple switcher segments, in which different switchers compare prices at different retailers, firm-specific loyalty is not sufficient to explain the variety of pricing strategies. The authors demonstrate that a retailer's strategy to discount deeply or frequently is driven by the ratio of the size of switcher segments for which the retailer competes to its loyal segment size. The relative switcher-to-loyal ratios among retailers explain situations in which a small retailer finds it optimal to price high, despite having few loyals, or to discount and go for the switchers. The results of two empirical studies confirm the model's predictions for varied pricing strategies in the context of Internet booksellers. The analyses also present several implications. A small retailer can sometimes benefit from strategically limiting its access to switchers to soften price competition. A midsized retailer can benefit from targeting its switcher acquisition activities toward its larger rival, given the shallower discounts involved. When most switchers widely compare prices, a large retailer should offer few shallow discounts because other firms will more aggressively discount. The importance of switcher segmentation suggests that managers should carefully measure switching behavior in devising pricing strategies.

We consider dynamic pricing competition between two firms offering vertically differentiated products to strategic customers who are intertemporal utility maximizers. We show that price skimming arises as the unique pure-strategy Markov perfect equilibrium in the game under a simple condition. Our results highlight the asymmetric effect of strategic customer behavior on quality-differentiated firms. Even though the profit of either firm decreases as customers become more strategic, the low-quality firm suffers substantially more than the high-quality firm. Furthermore, we show that unilateral commitment to static pricing by either firm generally improves profits of both firms. Interestingly, both firms enjoy higher profit lifts when the high-quality firm commits rather than when the low-quality firm commits. This paper was accepted by Yossi Aviv, operations management.

While the Internet has provided a new means for retailers to reach consumers, it has fundamentally changed the dynamic of competition in the retail service supply chain. The mix of offline and online channels adds a new dimension of competition, and one central issue of this competition is the pricing strategy between the two channels. How to set prices for both online and offline channels? What is the impact of the supply chain power structure on pricing decisions and the performance? This research aims to address these questions by focusing on a retail service supply chain with an online-to-offline (O2O) mixed dual-channel. From the Supplier-Stackelberg, Retailer-Stackelberg, and Nash game theoretical perspectives, we obtain the optimal prices and maximum profits for both the retailer and supplier under different power structures. The analysis result provides important managerial implications, which will be beneficial to retailers to develop proper pricing strategies.

Many products undergo cost reductions over their product life cycles. However, strategic customers may have more incentive to wait if they expect a cost reduction to lead to a price drop. A firm that does not face any uncertainty can use pricing strategies such as price commitment and price matching to alleviate the strategic waiting of customers. However, these pricing strategies provide less flexibility than dynamic pricing for a firm facing uncertainty. In this paper, we examine the impact of cost reduction under dynamic pricing, price commitment, and price matching when cost reduction can come from production learning or from technology advancement. The firm makes pricing decisions when facing uncertainty in future cost, and strategic customers decide whether to wait when facing uncertainty in future price. We show that in general the firm’s profit is higher when future cost is more uncertain, but not necessarily when cost reduction is more significant. In addition, production learning and technology advancement can have opposite effects on the optimal pricing decisions and the choice of pricing strategy. This paper was accepted by Yossi Aviv, operations management .

We study the dynamic pricing implications of a new, behaviorally motivated reference price mechanism based on the peak-end memory mode. This model suggests that consumers anchor on a reference price that is a weighted average of the lowest and most recent prices. Loss-averse consumers are more sensitive to perceived losses than gains relative to this reference price. We find that a range of constant pricing policies is optimal for the corresponding dynamic pricing problem. This range is wider the more consumers anchor on lowest prices, and it persists when buyers are loss neutral, in contrast with previous literature. In a transient regime, the optimal pricing policy is monotone and converges to a steady-state price, which is lower the more extreme and salient the low-price anchor is. Our results suggest that behavioral regularities, such as peak-end anchoring and loss aversion, limit the benefits of varying prices, and caution that the adverse effects of deep discounts on the firm's optimal prices and profits might be more enduring than previous models predict.

We develop a game-theoretic model to examine the entry of copycats and its implications by incorporating two salient features; these features are two product attributes, i.e., physical resemblance and product quality, and two consumer utilities, i.e., consumption utility and status utility. Our equilibrium analysis suggests that copycats with a high physical resemblance but low product quality are more likely to successfully enter the market by defying the deterrence of the incumbent. Furthermore, we show that higher quality can prevent the copycat from successfully entering the market. Finally, we show that the entry of copycats does not always improve consumer surplus and social welfare. In particular, when the quality of the copycat is sufficiently low, the loss in status utility from consumers of the incumbent product overshadows the small gain in consumption utility from buyers of the copycat, leading to an overall decrease in consumer surplus and social welfare.