interactive marketing week 8 ethan chazin
DESCRIPTION
Great tips, resources, best practices and how-to's on Internet Marketing and Interactive Media esp. on how they affect products to plan launch and grow a wildly successful business.TRANSCRIPT
How the Internet How the Internet Affects PricingAffects Pricing
Effects of the 2Effects of the 2IIsson Pricingon Pricing
• Makes it easier to reach a much wider audience• Easier and cheaper to implement dynamic
pricing strategies.• Easier and cheaper to adjust pricing based on
demand.• Cheaper for consumers to investigate pricing.• Easier to measure customer sensitivity to
pricing promotions.• Easier to receive customer feedback on pricing.
Interactivity Affects PricingInteractivity Affects Pricing
• Consumers make it easier for companies to convey information on the pricing they are willing to pay for specific products.
• Customers can register their preferences with organizations.
• Customers can more easily participate in dynamic pricing processes.
• The Internet (different websites) makes it much easier to cater to different segments, so firms can set specific pricing by segment.
IndividualizationIndividualization
For Discussion
Will the Internet Will the Internet commoditize commoditize
pricing?pricing?
DynamicDynamic Pricing Pricing ModelModel
• Firms react to competitor actions such as changes in pricing.
• Companies change their offerings, enhance existing products, launch new products, and constantly updates their product portfolios.
• 3 Strategies for pricing:– Hi-LoHi-Lo: Prices set high most of the time, then deep
discounts set occasionally.– Every Day Low PriceEvery Day Low Price: Everyday prices set low
(lower than the High in the Hi-Low approach)– Retail/OutletRetail/Outlet: Regular pricing set at retail stores
hardly ever discounted. Merchandise is discounted at the outlet stores.
Dynamic PricingDynamic Pricing
• 2011 final ONE day sales of $1.37 billion was 33% more than 2010’s total $1.03 billion.
• $198.26 average sale was 2.6% more than last year’s $193.24.
• IBM found that about 10.8% of consumers used mobile devices to visit a shopping site while 6.6% made an actual purchase. This increased from 6.9% and 2.3% in 2010.
Cyber MondayCyber Monday
• Cost PlusCost Plus: Add a fixed mark up to the cost of making the product.
• For service-based firms, you apply the mark up to the employees’ hourly based fee.
• Easy to compute but it has a lot of drawbacks.• Not always easy to compute all the costs.• Fixed costs may be applied to expected sales
whose forecasts are off.• Doesn’t take into consideration the relationship
between price and quantity in the demand curve.
Cost Plus Pricing StrategyCost Plus Pricing Strategy
• For mature products/services, you set your pricing to meet/exceed growth rates.
• Three elements to adjust include:– Reducing costs;– Growing sales, and/or– Changing prices.
• In mature markets, costs are relatively fixed so you can experiment with different pricing strategies.
Target Profit Pricing StrategyTarget Profit Pricing Strategy
Brand Pricing
• Setting a high price for a perceived high value brand leads customers to positive feelings of self-worth associated with the value and image of owning the brand.
• Through brand-building the firm hopes consumers will pay a premium for the sense of luxury associated with owning their brand.
Brand Brand Pricing Strategy
Effects of the Internet on Dynamic Pricing
• Decreased menu costs: pricing can be changed easily via the Internet.
• Interactivity: It’s easy for buyers and sellers to interact and agree to pricing online.
• Adjusting pricing to market demands can happen in hours, not months or years.
• With the Internet, DYNAMICDYNAMIC pricing becomes a reality...
Internet Internet on Pricing
• Pricing is NOT set in stone; it’s FLUID.– Few MENU costs, the actual cost associated
with changing prices.– The Internet makes it EASY for buyers and
sellers all over the world to negotiate prices.
• Auctions become a key pricing strategy on the Internet.
DYNAMIC DYNAMIC Pricing
For Discussion
By using the information gathered from customers (from where they live to what
they buy to how much they have spent on past purchases) dynamic pricing allows
companies to adjust the prices of identical goods to correspond to a customer’s
willingness to pay.IS THIS GOOD OR BAD?IS THIS GOOD OR BAD?
Price Discrimination
• Charge customers a different price for the same product.
• Is it okay to offer discounts to students? Children? Seniors? What about volume discounts to frequent users/purchasers, Government employees, corporate rates, special rates through online/offline travel rates, calling the hotel directly…
Price DiscriminationPrice Discrimination
Bundle Pricing
• Offering pricing based on bundles of products.• Easy to implement for firms.• Mix-match complimentary products.• The bundle price is less than the sum total of all
the stand-alone product prices.• Cable company TRIPLE PLAYs.• Web hosting and email service.• Toothbrush & toothpaste.
Bundle Bundle Pricing
• English (ascending/oral) open auctions: competing potential buyers keep raising their prices until only ONE buyer is left.
• Reverse-Price auctions: firms submit an RFP/RFQ to initiate a supply auction. The firm that provides the lowest bid to provide the products/services is selected.
• Dutch auctions: based on selling tulips in the Netherlands, the auctioneer sets a high price, then comes down until a buyer agrees to the price.– On eBay the auctioneer sells multiple units of the
same item
Internet Internet Auctions
• First price select bid auctions: sellers offer a good for potential buyers to consider. Each bidder can submit one sealed price bid fort he product by a pre-determined time.
Internet Internet Auctions
If you wanted to bid on something online, where would you go
FIRST?
DISCUSSIONDISCUSSION
Electronic Exchanges,e-Marketplaces
Online Bartering,Swap Marketplaces
