Friday, March 1, 2013

Nom Nom Nom Oreo

So after siting in the Sloan's Sports Conference Talk about ticket analytics, I began to realize my obsession with marktes and learning when to buy and sell the most useless objects. There has been a lot of debate of recent whether dynamic pricing is great for the consumer or burns them in the long run. I've had a lot of consumer side of the story from Dynamic pricing. My friends always have the rule 'Last one to show up brings Fritos or Double Stuf's'. As someone who is often late, I've come to learn the price of Oero's Double Stuf's.

The Amazon Prime
I come from the naive belief that with my Amazon prime, everything must be the cheapest on Amazon. This is not a bad post on Amazon, because I love them dearly  but not everything is cheapest on the Internet. I bought an Aeropress the other day, and with my regular priced coupon at Bed Bath and Beyond, I actually saved some money. However, this did not stop me from attempting ti subscribed and save to Oreos. I was trolling around their supply when I came across my first real understanding of Oreo pricing. I bought a 4 pack for 9.50 [with free shipping]. At the time I was very knew to the Double Stuff market, but for some reason this seemed good. Sure enough 3 days later, my box arrived with my newly delivered treats.

The Run Out
Like all good things, those Oreos were consumed in my apartment, and we needed to restock. I went back to Amazon, went to click 'reorder' and noticed that the prices were much much higher. Being the Data Scientist I am, I closed the browser, cleared my cookies and even opened a new window incognito. All this effort was a waste, because suddenly the prices were around 18 dollars for the 4 pack, or around 4.5 a pack. Again, I was quite naive to the market, so I decided to investigate.

The Grocery Store / Mega Store Competition
I thankfully, live near both a Super Target and a Grocery store. They both have there perks, and both surely have their downsides. However, as I would begin to pick up these treats ; I began to notice a few odd things that were occurring  At Giant (the grocery store), the price really depended on what was on sale. The sale price was a really good $2.50; but its average price was much higher around 4 dollars even.  Target on the other hand, always seemed to have the same price, set at $3. I've been conducting my ermmm 'Research' for quite a while now, and I've never seen a sale on the Double Stuf's at Target.

So it Begs the Question : Where Do I go.
Lets use so elementary Math, and a little bit of situational circumstances and play my favorite game; where do I buy my double stuf's. Let's assume you dont read those garbage flyers that come in the snail mail, and you dont know if a sale is going on right now. However, you noticed that Oreos are generally on sale once a month, but that week is completely random.

Oreo at Giant |
P(Sale)*(Oreo Price on sale) = 2.5*(1/4) = $.625
P(No Sale)*(Oreo Regular Price) = 4*(3/4) = $3
Total Expected Cost at Giant = $3.625

Oreo at Target = $3.

The key to understanding this, is that if we dont' know when a sale is going to occur, we are the mercy of the inflated price. I'm not saying that we should go out and build the Kayak for Oreo demand, but even the Oreo market has variable pricing.

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