Monday, January 19, 2015

Add "Freshness Factor" to "Pricing Strategy"

In my visit yesterday to "Dina Farms" market to buy milk as they produce fresh milk with no preservatives added, I found that there are a lot of products that will expire on the same day being shown

For me, I doesn't matter as I am not losing anything as a costumer but as a person, I am not happy that all this good food will be thrown once the day ends

Also whenever someone go buy anything, they pick the most fresh one and leave the old behind and people knew that fresh ones are added at the back or at the bottom to sell the ones about to expire first

So the Q was how can I solve this problem in a good way ?

One solution that came into my mind which might have came also into other people minds who are dealing with "Pricing Strategies" is that Freshness should be added as a factor into the price of short life products

For example if Product X cost 20 LE and will expire in 7 days
At day one, it will cost X
At day 8, it will cost 0 as it is expired and should be thrown away
At day 2 to 7, The price should decrease gradually

We can have a uniform decrease of 2.85 LE per day
so at day 2, it will cost (20 - 2.85) LE and so on

Maybe it shouldn't be a uniform degradation of price and become linear or any other distribution

But regardless of how this will be applied, I think the idea is to insert Freshness as a factor in our pricing

This way, as a consumer, I might buy a product that is 1 day away from being thrown because I know i will consume today and I am making use of the price difference and another consumer who need the whole expiry period (as me) will pay more because he knows that he will need this whole period to consume the product

So this way, both sides are feeling good. No one is playing games with the other side. It is all clear and reasonable

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