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MARKETING MANAGEMENT - Pricing Policies and Constraints

Pricing on the Internet - Pricing Policies and Constraints

   Posted On :  18.06.2018 11:09 pm

E-Commerce has been arguably the Web’s hottest application. Yet the Internet is more than simply a new ‘marketspace’.

Pricing on the Internet
 
E-Commerce has been arguably the Web’s hottest application. Yet the Internet is more than simply a new ‘marketspace’. Internet-based technologies are actually changing the rules of the market. Here is a short list of how the Internet allows sellers to discriminate between buyers and buyers to discriminate between sellers.
 
Buyers can …
 
1. Get instant price comparisons from thousands of vendors – Consumers now regularly check online prices, compare them with those in their local stores and may well take a peek at what customers in other places/countries are paying and order from overseas. Consumers also may unbundle product information from the transaction themselves. For instance, someone might use the Internet to research on a holiday destination, but visit a travel agency to get some procedural requirements done, go home to use a search engine to find the lowest airfare to that destination. Sites like PriceScan.com lure thousands of visitors a day, most of them corporate buyers. Intelligent shopping agents (known as ‘bots’) take price comparison a step further and seek out products, prices and reviews from as many as 2,000 merchants.
 
2. Name their price and have it met – Taking the example of Priceline. com, the customer states the price he wants to pay for an airline ticket, hotel or car rental and Priceline checks whether any seller is willing to meet that price. Consumers can fix their own prices, and sellers can use it too. Airlines can fill in demand for empty seats and hotels welcome the chance to sell vacant rooms at near zero marginal cost. Volume-aggregating sites combine the orders of many customers and press the supplier for a deeper discount.
 
3. Get products free – Open Source, the free software movement that started with Linux, will erode margins for just about any company doing software. Open Source software is popping up everywhere. The biggest challenge confronting major software producers is now: how to compete with programs that can be had free?
 
 
Sellers can …
 
 
1. Monitor customer behaviour and tailor offers to individuals – Although shopping agent software and price comparison web sites provide published prices, consumers may be missing out on the special deals they can get with the help of new technologies. GE Lighting, which gets 55,000 pricing requests a year, has Web programs that evaluate about 300 factors that go into a pricing quote, such as past sales and discounts, so that it can reduce processing time from up to 30 days to 6 hours.
 
2. Give certain customers access to special prices – CDNOW, an online vendor of music albums, emails certain (loyal) buyers a special website address with lower prices. Unless you know the secret address, you pay full price. Business marketers are already using extranets to get a precise handle on inventory, costs and demand at any given moment in order to dynamically adjust prices.
 
 
Bother buyers and sellers can …
 
 
1. Negotiate prices in online auctions and exchanges – Want to sell hundreds of excess and slightly worn widgets? Post a sale on ebay.co.in (formerly, Bazee.com). Want to purchase air tickets at a bargain price? Go to air ticket auctions at Rediff.com. Thanks to the Internet, pricing is no longer a rigid entity of marketing. It is the era of dynamic pricing in many categories.
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