A Dynamic Pricing Model Based on Market Segmentation

摘要

To maximize the revenue, the supplier should sell the limited products to those customers who are willing to pay the highest price. Unfortunately, the price-insensitive customers usually arrive later, which increases the risk and difficulity of the pricing decision making. This paper provides a dynamic yield management pricing model based on market segmentation, we assume each fare prices are given, the decision maker controls the pricing strategy by opening or closing each fare classes (or segments), and lower classes (those with lower prices) are closed before the higher ones. We proved the existence of such an optimal pricing strategy, and further discussed the model's applications in group selling, seasonal price adjustment and corporation's long-term capacity planning.