Dynamic pricing of Spare Parts – Louwman Group

Louwman Group believes that they are missing out on potential and current customers since they do not differentiate on the prices for different customers. According to Louwman Logistics, three groups of car users can be distinguished: consumers that drive a car that is 0 – 3 years old, consumers that drive a car that is 3 – 5 years old and finally consumers that drive a car that is 5+ year old. It is believed that consumers that fall within the first group almost always bring their car to an official dealer (i.e. Louwman Group) when a spare part needs to be replaced. The other two segments, however, are more likely to have their car repaired at an unofficial repair shop because the spare parts are universal and cheaper. Hence, Louwman Group believes that they lose a lot of the customers in the second and especially third category since they use fixed prices for their spare parts. In this project it is investigated if price differentiation would be profitable and efficient.