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Geography 3422A/B Study Guide - Orbitz, Price Discrimination, Cheaptickets


Department
Geography
Course Code
GEOG 3422A/B
Professor
Milford Green

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Websites Vary Prices, Deals Based on Users
Information 3/11/2013 10:46:00 AM
Websites Vary Prices, Deals Based on Users Information
A Wall Street Journal investigation found that the Staples Inc.
website displays different prices to people after estimating their
locations
o Staples appeared to consider the person's distance from a
rival brick-and-mortar store, either OfficeMax Inc. or Office
Depot Inc.
o If rival stores were within 20 miles or so, Staples.com usually
showed a discounted price
o The Journal's testing also showed that areas that saw the
discounted prices had a higher average income than areas
that saw higher prices
o When assessing Staples’ potential pricing formula, by far the
strongest correlation involved the distance to a rival's store
from the center of a ZIP Code
That single factor appeared to explain upward of 90%
of the pricing pattern
Testing suggested that Staples tries to deduce people's
ZIP Codes by looking at their computer's IP address
Websites are adopting techniques to gain information about visitors
to their sites and then deliver different versions of the Web to
different people
o Prices change, products get swapped out, wording is
modified, and there is little way for the typical website user to
spot it when it happens
Companies such as Staples, Discover Financial Services, Rosetta
Stone Inc. and Home Depot Inc. were consistently adjusting prices
and displaying different product offers based on a range of
characteristics that could be discovered about the user
o Offering different prices to different people is legal, with a few
exceptions
o Several companies pointed out that their online price
tweaking simply mirrors the real world
Regular shops routinely adjust their prices to account
for local demand, competition, store location, etc.
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