Buver ViewNoteveryone wantsto save money inonline transactions=Customer needs and theirview ofthe value propositionvary,=Each individual weighs the desired and perceivedbenefitsagainstallthecosts.Exampleofthevalueequationtradeoffs=online auctions.Called“the winner's curse,"=Somepeople actuallypaya higherpricefor auctioned products than they would pay an online retailer. Inthe B2Bmarket:car dealers pay significantlymore forusedautomobilesonlinethantheydooffline010010101001111010000100101110100101
Buyer View • Not everyone wants to save money in online transactions. Customer needs and their view of the value proposition vary, = Each individual weighs the desired and perceived benefits against all the costs. • Example of the value equation tradeoffs = online auctions: • Called “the winner’s curse,” = Some people actually pay a higher price for auctioned products than they would pay an online retailer, • In the B2B market: car dealers pay significantly more for used automobiles online than they do offline
Buyer ViewSome peopleprefertoorderbooksfrom Amazon.comwith overnightdelivery,knowingthat.Amazonpricesareoftenhigherthanotheronlinebooksellers,Thebookisinstockatalocalbookstore,Overnight delivery costs quite a bit more.So,why?TheAmazonbrandnameistrustworthy=These customershavehad excellentprevious experiences withAmazon,Theyarefamiliarwiththe site andcanquicklyfindwhattheyneedThose benefitsandtime/energy-savingfeaturesovercome thehigherexpense.01001010100111101000010010111010010
Buyer View • Some people prefer to order books from Amazon.com with overnight delivery, knowing that: • Amazon prices are often higher than other online booksellers, • The book is in stock at a local bookstore, • Overnight delivery costs quite a bit more. • So, why? The Amazon brand name is trustworthy, These customers have had excellent previous experiences with Amazon, They are familiar with the site and can quickly find what they need, Those benefits and time/energy-saving features overcome the higher expense
OverviewThe Internet ChangesPricing StrategiesBuyerandSellerPerspectivesBuyer ViewSellerViewPricing StrategiesFixed PricingDynamic PricingBartering0000OOOOOOOOOOOOOOOOOO010
Overview The Internet Changes Pricing Strategies Buyer and Seller Perspectives Buyer View Seller View Pricing Strategies Fixed Pricing Dynamic Pricing Bartering
Seller ViewPrice =theamountofmoneytheyreceive frombuyers.Pricingfloor=sellercostsforproducingthegoodorserviceUnder,noprofitismadeAbove,marketers seta priceto draw buyers from competing offers,=Price-Cost=ProfitFactorsaffectingpricinglevels.Internalfactors=thefirm's strengths and weaknessesfrom.ItsSwOTanalysis.Itsoverallpricingobjectives,.Itsmarketingmix strategy,.The costs involved in producing and marketing the product..Externalfactors =themarket structure&the buyer'sperspective.0100101000111101000010010111010010
Seller View • Price = the amount of money they receive from buyers. • Pricing floor = seller costs for producing the good or service, Under, no profit is made, Above, marketers set a price to draw buyers from competing offers, Price - Cost = Profit • Factors affecting pricing levels: • Internal factors = the firm’s strengths and weaknesses from: • Its SWOT analysis, • Its overall pricing objectives, • Its marketing mix strategy, • The costs involved in producing and marketing the product. • External factors = the market structure & the buyer’s perspective
Internal Factors: Pricing Objectives1.Profit-orientedobjective(mostcommon strategy):Focusesoncurrentprofitmaximization ratherthan long-term performanceFirstestimate what demand and costs will beat differentprices,Then choose the pricethat will produce the maximum currentprofit, cash flow,ROl2.Market-oriented objective:1.Buildinga larger customerbase=lowercosts&higherlong-runprofitLowpricesgenerallybuildmarketshare.AOLbroadband Internetconnectionservicesislowtoincreasemarket share2. Product-quality leadership =high price to cover higher performance quality and highcostofR&D3.Negotiationandbidding3.Competition-based pricing objective:Priceaccordingto what competitors chargefor similar products,paying lessattentiontothecompany'sowncostsortodemand. Whenoneairlinedrops prices,its competitors usuallyfollowsuit. The Internetgivesfirmsquickeraccesstocompetitivepricechanges070010101001117010000100011010010厂
Internal Factors: Pricing Objectives 1. Profit-oriented objective (most common strategy) : • Focuses on current profit maximization rather than long-term performance, • First estimate what demand and costs will be at different prices, • Then choose the price that will produce the maximum current profit, cash flow, ROI. 2. Market-oriented objective: 1. Building a larger customer base = lower costs & higher long-run profit, Low prices generally build market share. AOL broadband Internet connection services is low to increase market share. 2. Product-quality leadership = high price to cover higher performance quality and high cost of R&D. 3. Negotiation and bidding. 3. Competition-based pricing objective: • Price according to what competitors charge for similar products, paying less attention to the company's own costs or to demand. When one airline drops prices, its competitors usually follow suit. The Internet gives firms quicker access to competitive price changes