Unlocking Market Potential: Strategic Consumer Segmentation and Dynamic Pricing for Balancing Loyalty and Deal Seeking

Limor Dina Gonen (), Tchai Tavor and Uriel Spiegel
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Limor Dina Gonen: Department of Economics and Business Administration, Ariel University, Ariel 40700, Israel
Tchai Tavor: Department of Economics, The Max Stern Academic College of Emek Yezreel, Emek Yezreel 19300, Israel
Uriel Spiegel: Department of Management, Bar-Ilan University, Ramat Gan 5290002, Israel

Mathematics, 2024, vol. 12, issue 21, 1-31

Abstract: Background: This paper examines the economic implications of market segmentation on consumer purchasing behavior with a particular emphasis on intertemporal pricing strategies in dynamic markets. Methods: In order to analyze optimal discount rates and the timing for price reductions for consumer segments, including loyal and deal-prone customers, a detailed mathematical model was developed. The model incorporates theories of consumer behavior and pricing elasticity to simulate market responses to price changes throughout a product’s lifecycle. Results: This research indicates that market segmentation enhances sales by targeting the distinct preferences of loyal consumers, who are less price-sensitive and who stabilize revenue streams, and deal-prone consumers, who respond to price reductions. Customizing pricing strategies for loyal consumers and deal-prone consumers increases sales volumes and optimizes profitability. Conclusions: This research improves our comprehension of market segmentation and dynamic pricing, providing a practical framework for businesses to create effective pricing strategies that can be promptly implemented. It emphasizes the significance of understanding consumer behavior and price sensitivity in the interest of revenue promotion. This study also emphasizes the social implications of equitable pricing practices, promoting the implementation of transparent and value-based strategies to promote market inclusivity and consumer trust.

Keywords: market segmentation; intertemporal pricing; consumer behavior; pricing strategy; consumer loyalty; deal proneness; economic modeling (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2024
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