Chapter 3

Dynamic Pricing and Markdown Optimization

The last few years have witnessed a significant change in how organizations have approached the pricing of their products and services. Slowly but surely more and more companies have embraced and promoted dynamic pricing as a means of meeting the needs of individual customers and dealing with particular business situations. News reports in the popular media and articles in the scientific press have highlighted the potential benefits associated with dynamic pricing. A quick scan of these sources reveals that the concept has already crossed industry boundaries and has become the new thing in industries as diverse as utilities (e.g., Pacific Gas and Electric Company, a subsidiary of PG&E Corporation), ...

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