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    Dynamic Pricing Explanation

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    Select a company that uses (or has used) dynamic pricing. Briefly explain how the company uses dynamic pricing. What are the benefits and drawbacks of dynamic pricing for a particular company?

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    Dynamic pricing:
    Dynamic pricing works well when the features and quality of the product are well known to the customer and the main variables are availability and price. Take, for instance, the stock market. Each share of IBM common stock is just like all other shares of IBM common stock. The auction-style bidding that takes place at the stock exchange matches bidders and sellers who know what the "product" is.
    The term 'dynamic pricing' covers a multitude of practices -- some might say a multitude of sins -- that ultimately result in customers paying different prices at different times for similar services. The practice is based on the notion that a single fixed price undercharges customers who would be willing to pay more, while at the same time pricing some potential customers out of the game. Dynamic pricing lets a company capture higher profits from those who are willing to pay more while expanding its customer base to include new customers who would never consider paying the prevailing price.
    The airline industry is the most often-cited example of dynamic pricing, with their complex structure of fare classes and ...

    Solution Summary

    The solution answers the question(s) below. The dynamic pricing of explanations are determined.