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Price Ceilings

By Amy Cortese  |  Posted 03-01-2002 Print

Price Ceilings

The Internet is just the beginning. Some stores are starting to experiment with wireless networks and location-tracking devices. Stop & Shop, the Quincy, Mass.-based grocery chain, is testing "smart carts" in its stores that make use of wireless and location-based technology. Customers can attach a wireless tablet to their shopping carts and scan in their Stop & Shop loyalty cards for access to personalized electronic coupons, shopping lists and details on previous purchases. Marketing vice president Curt Avallone says that eventually, tracking technology in store ceilings could pinpoint a customer's whereabouts and guide shoppers to promotions on items within eyeshot or in the next aisle. The smart carts also have the ability to cross-reference special offers with personal data.

But companies must proceed with caution when experimenting with pricing strategies, to avoid seeming too intrusive or to discriminate unfairly against certain customers. Amazon.com learned that the hard way last year, when its move to offer some customers a deeper discount on DVDs than others erupted into a public relations nightmare.

The ideal strategy? To capture the value of the product or service for a particular customer or customer segment. "There are opportunities to do this in a way that doesn't put the brand at risk and still get the insight," says McKinsey's Zawada. In these profit-pinched times, the bigger risk may be doing nothing at all.

AMY CORTESE writes for a variety of publications, including The New York Times and Business 2.0. She was previously software editor for BusinessWeek and a vice president at Wit Capital. Comments on this story can be sent to editors@cioinsight.com.


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