Optimum pricing strategy for maximization of profits and chance discovery

  • Authors:

  • Kohei Yamamoto;Katsutoshi Yada

  • Affiliations:

  • Faculty of Commerce, Kansai University, Suita, Osaka, Japan;Faculty of Commerce, Kansai University, Suita, Osaka, Japan

  • Venue:
  • KES'05 Proceedings of the 9th international conference on Knowledge-Based Intelligent Information and Engineering Systems - Volume Part I
  • Year:
  • 2005

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Abstract

The objective of this paper is to present and discuss methods for formulating optimum pricing strategies for maximizing store profit levels using consumer purchase data. In order to maximize outlet profit levels, it is necessary to seek such pricing strategies after achieving an in-depth understanding of the various features of consumer purchase behavior concerning a wide range of products and their related prices. We authors have used a very large amount of consumer purchase behavior data in order to clarify the effects on store-level profits of a wide range of specific products to develop a support system for pricing specialists. At the end of this paper, we analyze the framework that has been presented for the system from the standpoint of its utility for discovery of new business chances and discuss the need to clarify the problems connected with the use of data mining-based pricing strategies.