Lessons

1
Lessons

• Analyze and understand how much you invest in
  producing and selling your information
  
• In a commodity market, be aggressive not greedy
• Differentiate by personalizing
• Conduct market research
• Use market information to sell personalized
  products to customers
  
• Analyze the profitability of selling to groups

2
The Ambiguous Value of Information

• Once you have information, you can sell it
  without divestiture
  
• There is no cost to reproduce information
• Some information has lock-in
• RESULT Aggressive Pricing

3
The overuse of money-off, added- product
promotions re-educates the consumer about the
brands lack of value.How do you justify a
price premium?

• -www.throughtheloop.com

4
Hip Pricing Concepts

• One-to-one marketing
• Dynamic Pricing
• Differential Pricing

5
One-to-One Marketing

• Takes full advantage of the information that is
  readily available about consumers from their
  clickstream
  
• Examples Peppers and Thompson
• British Airways
• Pitney Bowes
• CMGI
• Streamline, Inc.

6
Does One-to-One Work?

• It costs a lot to track information
• 100,000 customers 100,000 websites
• Ex. Engage technologies
• One-to-One ignores the 80/20 rule doesnt
  effectively price segment
  
• Rewards without altering behavior

7
Smarter Spin-offs

• Cross-promoting (bundling)
• Collaborative filtering
• What do you think of this book?

8
Dynamic Pricing

• Will account for 40 of B2B transactions by 2004
  (now 15)
  
• Electric Companies (Puget Sound)
• Amazon
• Gasoline, commodities
• Manugistics, KhiMetrics

9
Differential Pricing

• Setting different prices to capture more consumer
  surplus
  
• Coupons Ameritrade, Virtual Vineyards
• Loss leaders Netscape Navigator

10
Differential Pricing- BrickMortar

• Railroads
• Airlines
• Credit Cards
• Cars
• Education (financial aid)
• Movie Tickets
• Private Lighthouses

11
Differential Pricing- Internet

• Ubiquitous
• Coupons, cross promotions
• Auctions

12
Comparison Shopping

• mySimon, etc.
• Amazon Dont sponsor a forum.

13
Problems with Price Discrimination

• Victorias Secret vs. Staples
• Women cars, razors, salaries
• Can you discriminate without differentiating?

14
What is the value of fixed prices?

• B2B Chemical Exchange
• Automobile sites
• www.Haggleware.com

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