Discussion Forum 5
Respond to the following:
It is well known that on any given flight, one passenger may have paid $1,000 for their seat and the passenger sitting in the next seat might have paid $300. Some airlines have a base price and then charge more for value-added amenities, such as a window seat or carry-on baggage. Often, a passenger may visit the airline website and find a ticket for an attractive price and then visit the next day to make the purchase and find that the price has increased.
Consider that airline pricing is based on general algorithms that adjust prices as the time to departure gets closer. What would be your reaction if the airlines developed a more individual pricing model, one that would take into account your income, domicile, travel history, and even psychological profiling based on online shopping and social media? Would you welcome the possibility of saving money in this situation? To what extent would you allow an airline to individualize your price for travel? How would you adapt your buying strategy to get the best possible price?
Discussion Forum 5
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Discussion Forum 5
The fluctuations in airline pricing are not a secret. Airline seats may cost differently depending on the time of the day, day of the week, season, or other value-added amenities, such as carry-on baggage or a window seat (Krämer, Friesen, & Shelton, 2018). This is called a dynamic pricing strategy that alters prices based on these variables. Among these variables, there are no customer-related ones, which makes it relatively incomplete. As a result, there have been ongoing moves to introduce personalized dynamic pricing that will consider an extra dimension – customer buying behavior into the pricing criteria (McCormick, 2018). The personalized dynamic pricing will use algorithms that monitor customer behaviors and offer more suitable prices at an individual capacity (Philipps, 2021). For instance, giving a high-value and highly loyal customer a different offer from that of an unknown customer. The problem is how people feel about or perceive this strategy. As for this paper, I will only elaborate on my reaction, feelings, or perceptions about it.
Personally, I believe that considering personal preferences come as an advantage for both the customers and the company. People have varying preferences in all aspects of life, including boarding airplanes (Krämer, Friesen, & Shelton, 2018). For instance, a new customer would like a window experience to have an aerial view of the atmosphere and the earth’s surface as well. Others might not like such an experience at all due to maybe fear of heights or allergies. Considerable such individual preference may help ensure that airplane passengers have the maximum experience they need to keep them interested and fascinated about taking flights.
Besides, people who are used to taking flights tend to develop habits depending on what works for them (Krämer, Friesen, & Shelton, 2018). They will try to maintain such habits, but it will always be difficult and a constant scramble if an airline does not give much consideration. Instead of forcing people to adjust and be dynamic, they can be allowed to have their preferences but at a cost. This is why considering individual preferences is important because they enable people to have the experience they need. As airlines move to adopt this strategy, I would welcome it.
Personalized dynamic pricing may be a good move. However, it may also have some negative aspects that should also be addressed in the process. For instance, people might be predictable but also prefer flexibility. People adjust to situations, including spending, depending on their present conditions. Even after studying their behavioral trends, they can still change their preferences from time to time. If the airline companies profile these customers and make fixed prices for them, they might deny these customers flexibility. As such, airline companies should adopt some flexibility to give people freedom of choice even as they implement a personalized pricing strategy.
Personalized dynamic pricing will widen the scope of airplane pricing and give people the opportunity to choose their preferences. My reaction to this is positive, and I would embrace it if it means getting the experience I need for airplane travel. However, airlines must consider the negative aspects that are attributed to this. For instance, customers who have similar behaviors and experiences may be forced to step down if the opportunity is taken by others. Similarly, whenever a customer wishes to deviate from their customs, they should be allowed to do so easily. As such, the move to adopt personalized dynamic pricing is strategic if customers are given assurance of their freedom of choice.
References
Krämer, A., Friesen, M., & Shelton, T. (2018). Are airline passengers ready for personalized dynamic pricing? A study of German consumers. Journal of Revenue and Pricing Management, 17(2), 115-120. https://doi.org/10.1057/s41272-017-0122-0
McCormick, M. (2018). Personalized Airline Pricing is Here to Stay. BLACKCURVE. https://blog.blackcurve.com/personalised-airline-pricing-is-here-to-stay
Philipps, T. (2021). Airline Personalized Dynamic Pricing: What is it and why is it important? iunera GmbH & Co KG. https://www.iunera.com/kraken/big-data-examples/airline-personalized-dynamic-pricing-on-airline-e-commerce-what-is-it-and-why-is-it-important/