Monday, 11 August 2014

Pricing Strategies of online marketing

Fixed Pricing
 Dynamic Pricing
 Price setting is full of contradictions:

• Short term: If the price is too low profits will suffer/ if it is too high sales decline.
• In the long run: an initial low price that builds market share can create economies of
scale to lower costs + increase profits.

• Information technology has complicated pricing:

• Sellers can easily change prices according to each buyer’s previous behavior.
• BUT it is a steep learning curve.
• Pricing objectives produce very different results = a low price will build market share
at the expense of maximizing profit.
• Buyer value perceptions vary between rational and emotional, and not everyone
reacts the same way.
• Firms using multichannel delivery systems must consider the varying costs of each
channel and buyers’ differing value perceptions about purchasing on the Internet
versus the brick and mortar store.
• Pricing is a tricky business, guided by data, experience, and experimentation.

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