E-Marketing, 3rd editionJudy Strauss, Adel I. El-Ansary,and Raymond Frost Chapter 11: Price © Prentice Hall 2003
Price • The sum of all the values (such as money, time, energy, and psychic cost) that buyers exchange for the benefits of having or using a good or service.
The Internet Changes Pricing Strategies • Change from fixed price policies to dynamic pricing • Buyer power online has increased • Price transparency
Pricing: Efficient Market • Customers have equal access to information about products, prices and distribution • Expectations • lower prices • high price elasticity • frequent price changes • smaller price changes • narrow price dispersion
Mainly true thanks to: Shopping agents Reverse auctions Tax-free zones Venture capital Competition Lower costs: Self service JIT inventory Overhead Customer service Printing and mailing Digital product distribution costs Lower Prices
Frequent price changes due to: Competition Shopping agents Easiness Volume discount Experimentation Smaller price change increments: Price-sensitive consumers Shopping agents Price Changes
Non-efficient market • Price dispersion is not narrow • Explanation for price dispersion: • How goods are priced online • Delivery options • Time-sensitive shoppers • Branding • Switching costs • Second-generation shopping agents • Metamediaries • Other explanations?
Upward Pressure on Internet Pricing • Distribution • Affiliate programs • Site development and maintenance • Marketing and advertising
Pricing Strategies • Penetration pricing • Market skimming pricing • Price leadership • Promotional pricing • Segmented pricing • Negotiation • Dynamic pricing
Key Terms • Dynamic pricing • Efficient markets • Fixed pricing • Price • Price dispersion • Price elasticity • Price leadership • Price transparency • Promotional pricing • Reverse auction • Second-generation shopping agents