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Improving Decision Making - Essay Example
Amazon.com is a Fortune 500 worldwide company and a leader in online shopping. The portal carrying a diverse range of products, has been in the news not only for a successful e - commerce business model but also for a controversial revenue generation method called dynamic pricing (ramasastry, cnn.com.) This form of pricing like discriminatory pricing or variable pricing is where the organization in question utilises internet technology tools like "cookies" and "click stream" tracking valuable data on a customer profile like purchasing patterns, financial resources etc to achieve a targeted revenue just like its feature for the customer to track their own browsing record (homepage, amazo…
The company's defence that the price was part of a "random price test" and could be refunded solidified the suspicion further it was into dynamic pricing activity, as similar instances were far too many. Just like the company offered $51 less by Amazon than its own usual price on a dedicated bargain website (ramasastry, cnn.com).
An analysis can be done from figures provided as quarter wise sales data, of a particular book sold through this portal, (Niles, R., ojr.org). It shows that the company had skimmed high earnings through a dynamic pricing policy in the first quarter sales. Eleven and twelve copies of the same book were sold at the prices of $11.02 and $11.50 each respectively while in the second quarter the same book sold sixteen and eleven copies each at the prices of $11.02 and $11.70 respectively meaning a highly elastic nature of the book's demand can be computed at a elasticity demand- coefficient of two, which is greater than unitary. ...