KARE11-TV reporter Chris Hrapsky yesterday broke a significant story regarding retailer Target’s app, which changes its prices on certain items depending on whether one is inside or outside of a Target store. Consumers can end up paying hundreds more without realizing this.
[Verbatim] “For instance, Target’s app price for a particular Samsung 55-inch Smart TV was $499.99, but when we pulled into the parking lot of the Minnetonka store that price suddenly increased to $599.99 on the app. To test this further, we selected 10 products on the Target app at random, ranging from toys to bottled water to vacuum cleaners. We found that when we entered the store, four of the 10 products jumped up in price on the app.
‘Somebody at Target programmed in an algorithm which says someone who is 50 feet within the store is willing to pay more. The most reasonable explanation is that you just revealed your commitment to buying the product, you’re in the store, or in the parking lot. If you are further away, you haven’t quite committed, so I’m going to give you a juicier deal. That’s why the price went up when you got closer to the store,’ said University of Minnesota Carlson School of Management Marketing Professor George John.”
This also brings up an interesting question regarding business ethics.