Different prices have always occurred offline. For example, buying a beer in a five star hotel London is likely going to cost more than the same drink in a student union, but in-store personalisation is now starting to become more advanced.
The introduction of iBeacon and Beacon for Paypal are exciting developments and B&Q are already testing electronic price tags that change amount based upon the profile of the customer which is accessed via a chip in the customer’s mobile phone!
But I am just going to look at online price personalisation in this blog post.
Customers enjoy the superior user experiences that they receive as a result of personalised content. Whilst companies love it because they are creating user profiles which allow them to make their marketing far more targeted, which as we all know delivers greater results.
Over the last couple of years I have seen first-hand the growing popularity of personalisation as both existing and new clients want to implement it and the results have been very positive indeed.
However, as Spider-Man can testify, “with great power comes great responsibility”.
What if unscrupulous companies started to use personalisation for evil? What if people living in affluent areas and using high spec computers were charged more for products than someone using a crappy computer and living in {insert your choice of horrible town/city here}?
Well that is the fear of some, but are they right to be worried?
Why is the BBC talking about the Dog and Duck?
Just last week Marketing Week listed Personalised Pricing in its five hot topics for 2015, but it was being discussed much before 2014.
Back in November 2012, when most of the nation were still doing the “Mo-bot”, the BBC was writing about personalised pricing and using a nice little pub analogy.
Kevin Peachey explained how people like going into their local pub and the landlord is already pouring their favourite tipple before they have even ordered. However, he asked how readers would feel if they went into another pub up the road, one that they had never been in before, and the landlord was again pouring the drink of their choice.
It turns out the first landlord had sold your information to the second landlord. This is a little alarming, but what’s worse is that the second landlord has charged you 10p more than the usual drink price because he knew what you were going to order!
Kevin wrote that as well as reports of prices being different based on model of computer and living area, here has also been suggestions that if someone had viewed a hotel or flight booking on a website, then went back to view it again, the price had gone up!
The Office of Fair Trading (OFT), which is now the Competition and Markets Authority (CMA) as of April this year, said in 2012 that there was no evidence to suggest skulduggery but they remained concerned and would continue to monitor the situation.
Was it inevitable?
As websites started to track visitor behaviour and reward online consumers with discounts for repeat purchases and loyal custom, it was perhaps only a matter of time before companies started to use their new found power for evil and not good.
Earlier this year Amazon was forced to apologise after it charged certain people more than others for DVDs. The outrage amongst the general public, not just those affected, was perfectly understandable.
Amazon was accused of setting prices based upon customer demographics such as where they lived, or how much they had spent on similar products previously. Amazon denied the accusations.
Founder, Jeff Bezos, said
“We’ve never tested and we never will test prices based on customer demographics”.
Amazon say that it was simply performing random price tests to establish the suitable price point for the DVDs. Mmmm, Amazon not sure how much they should charge for DVDs? That doesn’t sound quite right.
Whether you believe Amazon was doing random price tests or you think there was something more underhand happening, Amazon had to refund a total of $21,377.60. As we all know, that amount is small change to Amazon but in terms of PR it was a bit of a disaster.
Should we really be worried?
It is accepted that the cost of goods will vary at certain times. The obvious example is cheaper holidays outside of the school holidays. This is not fair but as it affects so many people and is not really personalised, it is begrudgingly accepted.
It is when things become personal that concerns are raised. Why should people that are less price sensitive suffer a higher price for products? They shouldn’t of course, and I actually believe that this is not going to happen.
As yet, there are no actual examples of companies being found guilty of implementing price personalisation and with good reason.
Just look at the Amazon example. There was just a whiff of wrongdoing and the reaction was huge. Due to the size of the monster that is Amazon, they can brush this off and carry on as normal.
However, there are few companies that occupy a place in their respective markets in such a dominant manner. Should a company be caught personalising prices it could potentially be a PR disaster that may not be recoverable. Surely no business thinks this is worth the risk!
I cannot believe that people would not find out that they were paying different prices for the same product. In fact, it would probably take a matter of minutes before social media platforms were ablaze with consumers venting their anger.
The call for greater transparency is something that would calm a lot of fears. It might be that companies become far more open about what data they are collecting from online behaviour and how they are using it.
Or maybe I am being very naïve! Could be a very costly mistake at this time of year! Maybe, just to be safe, I will dust off my 1997 Toshiba Portege 3010CT, for present shopping online this Christmas.
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