Impact of surge pricing on user, is it creating a gap in the market?

My views by referring economists theory about surge pricing.

      Surge pricing is not impacting on the user and also not creating a gap in a market, this perception of dynamic pricing is derived from the common man's limited knowledge of the subject. Surge pricing' is considered as greed for the money against consumer interests. Actually, it's demand versus supply.If we do analysis it can help to remove myths surrounding surge pricing concept. We should understand what surge pricing is and how it works.    

 Surge pricing is a signaling mechanism that identifies a gap between demand and supply.

    Let us assume that a specific region experiences a sudden increase in demand. How do the service providers get this information?

               The demand signal is derived from the more number of people are looking for the same service. Similarly, the supply signal is derived from the number of service providers available that point of time.

        A demand signal that is higher than the supply signal signifies a surge in demand over the prevailing supply. This gap between demand and supply can be rectified either by reducing the demand or by increasing the supply. Demand is reduced by increasing the price of availability of the product or services. As the Potential customers are shown the surge pricing in multiples of normal pricing. The higher the demand-supply gap, the higher the multiple. The new price point automatically reduces the demand for the resource and achieves a new equilibrium.

How does the supply increase?

          Depending on the pricing levels, suppliers can opt to move their resources to the region with higher pricing to service the demand and take advantage of it. The price signal is critical in managing demand efficiently as well as reallocating supply.In this context, potential customers are not forced to buy that product or use the service.

The consequence of surge pricing:

1.All demand during surge period doesn't convert into business.

2 Services needs are satisfied by multiple players, due to this service provider may lose customers to these different suppliers while opting for the right pricing strategy.

3.If the price point is higher than the customer's expectations, then there are other options available for the customer, or the customer can decide to wait.

4.If more customers decide the same, then the demand for the product or services would dip, forcing the surge pricing level to plunge.

What would happen if there is no surge pricing?

          The demand-supply gap would never be discovered. The higher multiplier suppresses demand by forcing the customer to rethink as well as conveying the degree of mismatch. This leads to faster corrective action in the market, leading to quick drops in surge prices.

 In Ola and Uber surge price case, cap price would suppress the true nature of the demand-supply gap.

     The theory of surge pricing may be implemented by Uber and Ola are based on their experience, the basics are still defined by simple economic theories. 

         A 5.0X conveys a higher mismatch in demand-supply than a 2.0X surge price. It conveys the scarcity of the resource now than the latter. Similar to models adopted in most sectors with supply constraints, such as aviation and hospitality. Surge pricing by cab aggregators is perhaps the only model which helps tackle both demand and supply side issues.Now Indian Railways is experimenting with dynamic pricing, in these sectors new supply is not created; only demand is regulated by pricing.

How can government help in surge price?          

           Capping price controlled by the government has burdened the industry with inefficiencies. The government can play an enabling role by removing such restrictions to a service provider, which will help in discovering demand-supply gap.

How to become a good product manager:

1.Strive to always be learning, knowing the market.
2. Concentrate more on the basic principle of analytical skills, leadership quality and focused on the goal.
3 .Always believe in the teamwork rather than the individual contributor and should become reachable and approachable.
4. Always having brainstorming session whenever the new problem statement is there in the stack.
5. Understanding the strength and weakness of the team and should try to bring out best in the people
6. Empowering the team while taking any decisions.
7. Understanding of the current technology and having good exposer on the excel as well as query language
8. Having the ability to receive empathy and give empathy and co-creating the empathy to the pain points of the customer by interacting frequently with customer
9. Always do have a good relationship with sales and marketing team frequently to understand the pain points of the customer as they face customers.
10.Doing holistic Research and ground work on the problem statement and then discuss with management team about the revenue model of the feature and convincing management.
11. Do discuss with engineering team about their view and possible to do or not to do the feature
12. Do have command on the technology, so that it will help me in understanding what engineering team is trying to explain me.
13. Do involve the stakeholders while designing the feature.
14. Give detailed requirement document, which should include the impact analysis, if data have driven feature then please attach the data as well.
15. Do interact with peer product manager on the impact of the new feature.
16.  Without fail to attend the daily scrum and giving my work status to the team, it will help in gaining the confidence of the team.
17.  Do motivate the team by giving goodies and surprise gifts to the performers
18. Once the feature is developed high-level testing of the functionality and if required suggestions.
19. Give details of the feature to the tech pub team so that it will help in creating the technical documentation.
20. Take a demo from the engineering team once the feature is tested and certified.
21. Once a product goes live, giving success to the team.

Is Elite College Qualification Required?

Is elite college graduation really matters to move up the career ladder for experienced candidates?

In the real world - Unfortunately, employers tend to place more importance on qualifications from elite college than experience,Qualification is to get the job;experience to do the job.

Qualification from elite college is important provided one can transfer what has been learnt into working life, into action.In an ideal world - Work experienced candidates would be the better option than elite college grads.Depends on industry - some industries place more importance on experience than qualifications, as far more advantageous in knowing how to do a job.

Industry today is ever changing.It saves time for managers, co-workers and minimum training required if recruited the experienced candidates.There is quicker assimilation into a company and practices and procedures can continue with little or no work disruption if company looks for experienced candidates rather than elite college people.As one gets older experience becomes more beneficial.Experience also key regarding communication skills (soft skills) which are less teachable.A person is either born with them or gains them on the job - so experience important.Even in promotions the ones who have the relevant qualification more likely to get the promotion.If employees do not have the right qualifications, the organisation will have to spend time and effort on training its staff in the correct way of working.Most managers would rather spend time on adhoc training, training employees in only those areas that are unique to the business and business model.Very few businesses/managers would want to waste time and money on providing generic training.Skills which are easily transferable or easily applied.Qualifications from elite college important for young people starting off in their careers.

Disclaimer: Individual articles are based upon the opinions of the respective author, who retains copyright as marked. The information on this article is not intended to recruiter not to recruit the the elite colleges grads and is not intended as corporate advice.It is intended as a sharing of knowledge and information from the research.