EXPERIMENTS IN THE USE OF A KNOWLEDGE SUPPORT SYSTEM FOR THE PRICING OF GASOLINE PRODUCTS

In this paper we provide results from controlled experiments on the us e of the knowledge support system 'Price-Strat' for dynamic gasoline p ricing at both the wholesale and the retail levels. In each of these e xperiments, prices were set at a site (wholesale or retail) of an oil company using Price-Strat on a daily basis and the profit performance as well as the sales volumes achieved were compared with those of a 'c ontrol' site owned by the same company within the same trading area. E xperiments of this kind have been carried out for several dozen sites in the United States, the United Kingdom and France for several oil co mpanies and in almost each case significant net margin improvements we re observed (between 6% and 12% for retail sites in the Unites States, 30% for sites in France, 33% for sites in the United Kingdom, 30% for wholesale pricing and 4% for terminal pricing) whilst meeting the pre set sales volume targets. In the paper, we provide a sample of results from these experiments to cover both wholesale (terminals, dealer tan kwagon areas) as well as retail pricing. In all, 17 experiments are de scribed including 2 at the wholesale level and 15 at the retail level. These are taken from work done in France, North East United States an d the Denver region of the United States and different parts of the Un ited Kingdom.