Should your firm target your competitors’ customers with lower prices than the competition charges them? When might it make sense, instead, to offer discounts to your own customers? Under what conditions might this sort of approach – known as “targeted pricing” – backfire by driving everyone’s prices down too far? Once widely hailed as a panacea, “targeted pricing” has also been condemned by many as a potential road to ruin. But is “targeted pricing” really either a panacea or a peril? Recent research by Wharton marketing professor Z. John Zhang and several colleagues examines the complex dimensions of “targeted pricing” and suggests that while this approach isn’t for everyone, it can be an effective tool under the right circumstances. Zhang and his colleagues also lay out guidelines to help companies understand when “targeted pricing” might play an effective role in their marketing strategy. Capturing Money Left on the Table Why has “targeted pricing” attracted so much attention among consumer marketers?…