Not that long ago, the Eaton’s’ catalogue arrived at Canadian homes followed by the Sears catalogue and the Canadian Tire catalogue. They are all gone now thanks to technology and cost paring. Of course, to be a mail order catalogue, there had to be prices that could be scribbled on the order form to be mailed back to the company. But the prices had to appeal both to the wealthy residents of West Vancouver and the poorest parts of the country.
You can relate the single price, single catalogue to a brick with monolithic pricing supporting a monolithic profit structure. One price fitted all. One price had to fit all since there was only one technology that could get to every home in the land. I suspect that the companies left a ton of money on the table by this approach; some poor people would have purchased more at a lower price point and some wealthy would have been happy to pay a higher price. Instead they homogenised the price and averaged the profits. But it was the best they could do with the technology available.
The commercial version of this would have been the salesman’s paper price list that was updated twice a year and contained either 2 price levels or a formula to discount from retail. Nevertheless, even though power was handed to the sales staff to price to sell, the price was homogenised by the client and sales staff. The brick had some corners knocked off it, but the solid monolith of pricing was just as solid, nevertheless.
By the 1990’s, catalogues with prices had largely disappeared allowing price differentiation to appear in a small way in the same chain stores but in different parts of town. In the 1980’s there were price differences between stores in the poorer suburbs of Vancouver compared to the same store and same product in comparatively richer West Vancouver. The brick had now split into a couple of pieces.
The massive advancement of technology and the sheer size of the mountain of information that is collected on our daily lives and our spending habits make it simpler to break that brick into millions of pieces. This is called granularisation.
We already know that Google has an algorithm that high grades its responses according to your ISP which locates you geographically. It makes sense that your search for Chinese food while you are in Saskatoon does not bring up results in Moncton. The same algorithm tracks your surfing habits and steers you away from vulgar (OH NO!) chain stores to boutique stores because of your surfing history.
Consider now, how much information is gathered on you by the credit agencies and how much information is gathered on your personal net worth. Add to that mixture how much information is freely available on Facebook and on the social media sites and you can construct a virtual buyer for your product. We have the technology. It is being done.
Where will this end? Very soon, I think, on-line shopping which has threatened to flatten prices everywhere will evolve into a totally individualised sale. Prices will move around depending upon your location, whether you are a home owner or a renter, the time of day or year, your buying habits, your personal net worth, how long you have been employed and the amount of room left on your credit /loyalty card. Moreover, since you are alone at your desk, comparing prices with your peers is less likely to happen and personal interaction of female with female buyer on the one hand and male/male buyer on the other, to which Terry O’Reilly has alluded in CBC’s Under the Influence, cannot affect price.
Marketers have always said that if they knew everything about you, they could find a way to sell you popsicles in winter and saunas in the summertime. We are almost there. When my turn comes to have a barcode tattooed on my forehead, please turn out the lights and lock the door behind you!
About the author
Andrew Gregson has 20 years’ experience as a business consultant to small businesses in Canada, the United States and the Caribbean. Andrew started his business career in 1981. Andrew has analyzed and assisted over 120 businesses in the service, wholesale, distribution, manufacturing and logistics sectors in Canada, The Caribbean and the United States. In 2011 CBC National Radio interviewed him for his views on dynamic pricing and subsequently he has lectured to business groups, colleges and universities from coast to coast.
Andrew is available for lectures, workshops and consulting engagements.