Dynamic Pricing – Can consumers achieve the benefits they expect

Author

Howard J. Deane

Organization

Consumers Council of Canada (CCC)

Published

2017

Summary

The goal of this research was to determine, within a consumer protection framework, the sources of harm to consumers from lack of awareness, misleading practices, or misuse of dynamic pricing, what consumers can do to protect themselves, and what businesses and government can do to ensure consumers’ rights are protected. Big data offers companies a gold mine of opportunity, driving many marketing and pricing decisions, and with obscure and easily bypassed privacy consent rules and practices, difficult to enforce competition regulations, a lack of consumer awareness, and consumer confusion regarding benefits and privacy, it can be easily abused. Consumers often give up personal information, overestimating the benefits and underestimating the downstream costs. Their actions often are opposed to their intent, as most consumers indicate they have concerns over the use of their personal information.

Multiple mixed methods of gathering evidence were used, to cover different perspectives, and to reduce chances of missing relevant information. In general, as part of CCCs research for this project, surveys, focus groups, etc., were used to assist in better understanding the perspectives of different actors involved in dynamic pricing contexts, but no generalizations should be made about the representativeness of the respondents contacted for this research.

CCC’s research into dynamic pricing found that Consumers have a low awareness of pricing based on behaviour or personal information. When made aware of such practices their reaction was often decidedly negative. However, findings also indicated that benefits can arise from dynamic pricing for those consumers who have the time, diligence and acumen to determine the benefit and act on it. This research also found that the recent increase in price transparency has increased business interest in creating pricing opaqueness. Retailers are looking for ways to combat the impact of well-informed consumers willing to shop based on price.
Research recommends that The Office of Consumer Affairs should produce material for consumers suggesting steps they can take to protect themselves, and questions to ask. As well, it can provide guidance to organizations about involving consumers in pricing education. It is also recommended that ISO and/or Canadian standards organizations should consider developing a Dynamic Pricing standard, which would provide principles and guidance in designing, developing, implementing, maintaining and improving an open and honest relationship with consumers for retailers using dynamic pricing.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

Contact information

Source: Consumer Policy Research Database