Modern Franchise Magazine August 2013 | Page 31

selects, regardless of purchase, and then sets or alters the price for pants that go with the shirt. Because product selection reveals information about the buyer’s tastes and preferences, sellers are better able to estimate a buyer’s willingness to purchase other items and tailor prices accordingly. All of this can happen in real-time during the customer’s shopping experience. The findings indicated that a sequential pricing strategy worked better than bundling products and “pure” component pricing, in which a retailer simultaneously sets a price for goods that are close substitutes. Also, when customers’ values for goods were highly correlated - different books about baseball, for example - profits increased when a retailer was able to increase the price of a second product based on the customer’s decision to purchase the first product. Deck and Walton College colleagues Amy Farmer, professor of economics, and John Aloysius, associate professor of supply chain management, develo VB??FV???v??6?6V??W"6WG2&?6W2f?"Gv??FV?2?F?R??FV????vVBf?"F?R?76?&??G??b6WVV?F???&Wf?6??rF?R&?6Rf?"F?R6V6??B?FV?&6VBW??F?R'W?W.( ?2&WfV?VB&VfW&V?6Rf?"F?Rf?'7B?FV??F?R&W6V&6?W'2&?6??V?F???2v?F?&?vR?b'W?W"f?VW2F?6??&R6WVV?F??&?6??rv?F???VB'V?F??r?F?R??FV?&WfV?VBF?B6WVV?F??&?6??r6?V?B?WGW&f?&?'V?F??r?B6??V?F?V?W2&?6??r?b??F?f?GV??FV?2??6W'F??6?GVF???2?G&6???r?"????F?&??r7W7F??W"&VfW&V?6W2?B??FV?F???2F?W&6?6R?2??B??FVBF?????P??7F?&W2??WrFV6?????v?W2?7V6?2&F??g&WVV?7??FV?F?f?6F????$d?B?????r'&?6???F??'F"&WF??W'2F?????F?"7W7F??W"&VfW&V?6W2??&V?F??R??B7W7F??W'2F???B?fRF?7GV??W&6?6R??FV?F?FV???7G&FR??FW&W7B???F?f?GV?$d?BFw26???f?&?&WF??W'2F?B??FV??2&VV?F?V??fb6?V?b?"&V??fVBg&??f??GW&R?F?R&??G?F?G&6???F?f?GV??FV?2?2??&?fVB??fV?F?'??B6V7W&?G??'WB?B?2?6?V?&?VB7F?&W2F??FV?F?g?v??6??FV?2'W?W"??FV?G2F?W&6?6RBv?fV?&?6R??W7B2?6??r??FV????V?V7G&???26????r6'B?2F??Rf?"?V?V7G&???2&WF??W"?v?WF?W"????R?"???7GV?7F?&R?F?R?WrFV6?????w????w26V??W'2F???F?f?GV??R&?6W2v???RF?R7W7F??W"?26????r?F?R&W6V&6?W'27GVG?v2V&?6?VB??F?R??W&????f?&?F???7?7FV?2&W6V&6???&VG?6??gW6VB'??6VV??v??WfW"V?F??p?f???B?b?ffW'2?'&?G2?BW&6?6??r?F???2?vV??F???w2&V?( ?Bv???rF?vWBV6?W"??F??R6????v?F?6WVV?F??&?6??r?F?R&?6R?bF?R?FV???R?W7B?6?VBW?v?B6??vRFWV?F??r??v?B??^( ?fR?&VG?WB????W"6????rG&???W??????????FW&?g&?6??6R?v???R?3???