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If you do not like the terms dynamic or surge pricing, which can sound somewhat harsh, think of it as inventory or customer management, or maybe zone pricing
The last variable included in the models is meant to control for the possibility of zone pricing
, in which average prices in a part of a market area are higher or lower than market averages.
It could be a promotional item or traffic driver, but more and more, it's likely a result of zone pricing
That investment is beginning to pay off now in zone pricing
and assortment clustering capabilities.
A food manufacturer we assisted recently reviewed its zone pricing
Under "zone pricing
," gasoline distributors charge different wholesale prices--known in industry parlance as the Dealer Tank Wagon (DTW) price--to service stations in different areas.
Zimmer reports Monsanto now uses "zone pricing
" for some of its traits.
Wyden's probe showed that the industry engages in zone pricing
and discrimination against independently owned gas stations.
As for such pricing activity in America, it raises the question: Does zone pricing
offer all consumers a level playing field?
(2) The findings of Basu and Mazumdar (1994) who analyzed the zone pricing
plan where the retailer divides the market served into zones based on the cost of delivery, and offers a uniform delivered price to all customers in a given zone.