A recent research report out of Northeastern University has looked at a few travel brands to determine how pricing is impacted by various characteristics of a particular user's session.
The statistically-supported real-world research revealed the following about travel companies Travelocity, CheapTickets.com, Orbitz, Hotels.com and Expedia.
Personalization extends to pricing
Personalization is an oft-discussed term related to targeting the right deal to the right customer at the right time - a merchandising strategy endlessly honed by all online travel e-commerce providers.
The report observed the following about personalization in the surveyed travel brands:
- Those users with accounts enjoyed lower prices on Cheaptickets and Orbitz, with the sister sites sometimes charging upwards of $12 to users without accounts or cookies.
- A/B testing was rigorously deployed by Expedia and Hotels.com to personalize the experience for certain users towards more expensive hotels - known as price steering.
- Travelocity personalizes search results on mobile devices.
- Priceline personalizes specific searches by looking at previous browsing history alongside clicks and purchases.
- Travelocity served hotels at an average of $15 less to users browsing on iOS devices.
As far as methodology, the report authors explain that the measurements occurred over 2-3 week periods and involved various means of ensuring a fair shake:
In addition to positively identifying price discrimination and steering on several well-known e-commerce sites, we also make the following four specic contributions.
First, we introduce control accounts into all of our experiments, which allows us to dierentiate between inherent noise and actual personalization. Second, we develop a novel methodology using information retrieval metrics to identify price steering. Third, we examine the impact of purchase history on personalization by reserving hotel rooms and rental cars, then comparing the search results received by these users to users with no history. Fourth, we identify a never-before-seen form of e-commerce personalization based on A/B testing, and show that it leads to price steering. Finally, we make all of our crawling scripts, parsers, and raw data available to the research community.
While these tactics are absolutely not new, it's always interesting to see how updated research relating to how specific brands are targeting their offerings.
In a blog post sharing the study, an explanation reserves judgement on the merits of price discrimination and price steering:
Wilson noted that he and his co-authors didn’t seek to judge whether these practices are good or bad, stressing that price discrimination isn’t an inherently sinister ploy to take advantage of people. In fact, it happens every day when someone gets a senior discount at the movies or a college student gets a price break on books.
Indeed, coupons are technically forms of price discrimination, he said. The key factor is whether these practices are transparent. In most cases, discounts for select groups of people are clearly posted and widely understood, but the Northeastern researchers said such behavior is much harder to detect on e-commerce sites.
The report will be presented at this conference next month, and can be read in full here.
NB: Discount pricing image courtesy Shutterstock.