4. Q1:Demographics-Geographic
Presence highest in Northeast, Great
Lakes,Florida, and Northern &
Southern California metro regions
Modest in Piedmont-Atlantic
Low everywhere else
Low/Modest & high demand Texas
Triangle, Piedmont, Cascadia
GILT- WTP. & PURCH INT.
Non Gilt- WTP. & PURCH INT.
5. 1: Younger, Low Income
2: High PI, Low Income
3: Younger, High Income
4: Low PI, High Income
5: Older, High Income
Q1: Clustering of survey participants
6. How to determine maximum revenue
Step 1: Determine unique WTP
Step 2: Calculate total revenue for each WTP in the following function
Price * Number of people = Revenue
Step 3: Find maximum revenue and set optimal price
Step 4: Repeat for each look
7. Q2: Price Sensitivity and the Elasticity of Demand
The demand elasticity attained for
any look can be attained by the
function (%change in demand)
The range of elasticities we attained
was between -.87 and -1.47
These elasticities are determined
between the values of optimal price
and its associated number demanded,
and the number demanded at gilt’s
(%change in price)
9. Q3: Pricing Strategy
Continue gathering info on what maximum prices customers will purchase
a product
Survey customers before an item goes on sale
Implement optimization function
Guarantees minimum level of sales and would increase the amount of
money Gilt earns
All while decreasing the price of goods
Editor's Notes
Under the assumptions:
They put at what point they turn a profit as a constraint
They Automate the maximizing process
Make sure that their survey results are truthful.
