The Use of Artificial Intelligence in Dynamic Pricing Strategies
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School of Business |
Bachelor's thesis
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Authors
Date
2023
Department
Major/Subject
Mcode
Degree programme
Tieto- ja palvelujohtaminen
Language
en
Pages
31
Series
Abstract
Pricing strategies can have a large impact on the success of a company. This literature review focuses on the advantages and disadvantages of using artificial intelligence in dynamic pricing strategies. Having a good comprehension of the possible benefits and challenges will help companies to understand the effects of the chosen pricing strategies. AI-driven Dynamic pricing has great opportunities to increase the profits of a firm. Firms can benefit from things such as personalized pricing based on per-sonal behaviour and characteristics as well as cost reductions by improving efficiency and reducing the need for manual work and using automation. AI-assisted dynamic prizing can however have a negative effect on the customers perception of trust, feeling of fairness and transparency. The negative effects can have short- and long-term effects for companies. Also, ethical issues of privacy and equality can arise as price discrimination is used. It’s equally as important to understand the businesses and the customers perspective of the pricing strategy as one can’t exist without the other. This research will consider both sides of the equation. The literature review will provide a comprehensive overview of the main advantages and disadvantages of an AI-assisted dynamic pricing strategy. The focus of this research will be in the e-commerce, hotel, and transportation industries.Description
Thesis advisor
Movarrei, RezaKeywords
dynamic pricing, artificial intelligence, AI, algorithmic pricing