Paper Type
Complete
Paper Number
1348
Description
Pricing is certainly one of the most important and difficult business decisions. With the increasing spread of online shopping platforms, there is the option of setting group-specific prices instead of general prices. This makes it possible to align the product price with the respective customer group. However, the concrete decision concerning group prices is very difficult due to the large number of stochastic influencing factors like customer behavior and attitude faced with different price data. Since analytical methods cannot be used AI methods are an option. We implemented an evolutionary strategy which, with the aid of a simulation model, is able to find a optimal solutions for different scenarios and answer the question if group pricing makes sense. Furthermore the adaptation of group prices in the course of time is optimized. Finally, the study examines how the data quality problems affect the stability of the group pricing decision.
Recommended Citation
Lackes, Richard, "Evolutionary Algorithms to Optimize Pricing Decisions for new Products in B2C Shops – Should one really use Dynamically Adjusted Group Pricing?" (2024). PACIS 2024 Proceedings. 9.
https://aisel.aisnet.org/pacis2024/track01_aibussoc/track01_aibussoc/9
Evolutionary Algorithms to Optimize Pricing Decisions for new Products in B2C Shops – Should one really use Dynamically Adjusted Group Pricing?
Pricing is certainly one of the most important and difficult business decisions. With the increasing spread of online shopping platforms, there is the option of setting group-specific prices instead of general prices. This makes it possible to align the product price with the respective customer group. However, the concrete decision concerning group prices is very difficult due to the large number of stochastic influencing factors like customer behavior and attitude faced with different price data. Since analytical methods cannot be used AI methods are an option. We implemented an evolutionary strategy which, with the aid of a simulation model, is able to find a optimal solutions for different scenarios and answer the question if group pricing makes sense. Furthermore the adaptation of group prices in the course of time is optimized. Finally, the study examines how the data quality problems affect the stability of the group pricing decision.
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