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Trends in pricing strategies: limitations and opportunities of dynamic surge pricing in the offline market with the example of food retailing – a feasibility study

  • Surge pricing is a dynamic pricing strategy which has been developed by the American ride-sharing platform Uber. Based on demand and supply, the surge pricing algorithm calculates a trip fare for both, riders and drivers. In times when demand outstrips supply in a certain geographic area, the algorithm applies a so-called “surge factor” which is multiplied by the basic trip fare. This way, the provider can calibrate demand and supply until they reach the market equilibrium again. This paper examines whether dynamic surge pricing can also be applied to the offline food retail market. Consequently, it starts by giving some theoretical background on dynamic and surge pricing, and with the aid of a PESTEL analysis, highlights all the factors presenting opportunities and limitations for the implementation of surge pricing in supermarkets. In addition to that, by conducting a SWOT analysis of dynamic surge pricing, this thesis investigates what the prerequisites are to a successful implementation strategy. In the end, it outlines possible consequences for consumers if surge pricing is used in grocery stores. It will be found that, from a theoretic point of view, a dynamic surge pricing strategy is feasible in the offline food retail market. However, it does not present the optimal pricing method for neither of the market participants.

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Author:Lena Mündel
Advisor:Paul Taylor
Document Type:Bachelor Thesis
Year of Completion:2018
Granting Institution:Hochschule Furtwangen
Date of final exam:2018/02/28
Release Date:2018/03/08
Tag:Dynamic pricing; Food retail market; Surge pricing
Page Number:56
Degree Program:IBM - International Business Management
Functional area:Marketing
Licence (German):License LogoUrheberrechtlich geschützt