'Dynamic Pricing to Become Commonplace' says Mindshare as shoppers benefit from cold snap
Companies will increasingly use dynamic pricing to adjust the cost of goods during periods of extreme weather, according to leading global media agency Mindshare.
As the cold snap hits the UK, the most sophisticated companies will adjust the price of the most in-demand products to reflect seasonal demands – even for short periods such as during the extreme icy conditions.
Companies use data to identify how best to reach their target audiences and sophisticated deals that take advantage of trends such as very hot or cold weather will become commonplace, providing consumers with more ways to benefit as demand grows or dwindles.
For instance, in June 2012, temperature-sensitive vending machines for Coca-Cola’s Limon & Nada lemonade drinks brand were installed across Spain at vending machines with integrated thermometers. The temperature was shown on a large display and cans were priced at €2 when the temperature was below 25°C; at €1.40 for temperatures of 26-29°C and €1 when it was over 30°C.
Qcue has taken the same adaptive marketing idea and applied it to sports tickets for the Oakland A’s and St. Louis Cardinals in the United States. They monitor social buzz around games as well as real-time data such as the weather and injuries to star players to adjust ticket prices to reflect anticipated demand.
Norm Johnston, Global Digital Leader Mindshare Worldwide, an expert in marketing both in the United States and the United Kingdom, believes that this trend will also have an impact on business marketing strategies. He said: “We are living in an increasingly digital world and companies will have to adapt as real-time sales data and market conditions change."
“Being flexible on price and identifying where demand is greatest can be the difference between selling units of fast moving consumer goods and seeing them gather dust on store shelves. Mindshare works with companies across the world at the highest level to help analyse data and adjust prices according to market conditions. Things can change very quickly as we’ve seen with the cold weather in the UK and companies who are slow to adapt will miss out.”
Johnston also believes that in this cold snap, shops will be looking to change their prices to take advantage of the wintery conditions and get more people coming through their doors.
He added: “Coffee shops promoting hot drinks to warm you up in the cold snap or iced drinks in a heatwave may seem like basic marketing. But using sophisticated data to adjust prices based on the weather, for instance, can have a significant impact on profit and loss, something of increasing importance in this highly competitive world. Mindshare expects more and more companies to use dynamic pricing to shift their products and not be out-done by their competitors as the use of consumer data becomes an essential element of marketing planning.”